National Flood Insurance Program Temporarily Restored

The U.S. Senate last night passed legislation that includes an extension of the federal flood insurance program until March 28. President Obama has signed the measure.

The extension means that the National Flood Insurance Program (NFIP), which has been unable to issue policies since its authorization expired at midnight on Feb. 28, should be able to again start issuing new and renewal policies. NFIP issued a memo on Feb. 26 that included guidelines for operations during a hiatus. However, the agency has not yet released any follow-up guidance for insurers or agents following this reauthorization.

The several days' hiatus did not affect NFIP claims paying. The program insures more than 5 million properties.

The emergency legislation reauthorizing funding for the flood program was part of a larger $10 billion bill dealing with unemployment insurance, subsidies for COBRA benefits, transportation projects and several other federal programs.

The legislation had been held up by Sen. Jim Bunning, R-Ky., who objected that it did not address funding. Supporters noted that as emergency legislation, it was exempt from the "pay-as-you-go" law. Bunning eventually agreed to lift his hold after he offered an amendment on funding, which was defeated. The unemployment benefits legislation with the flood insurance reauthorization then passed with a bipartisan vote of 79-19.

The NFIP sunset caused delays for some consumers waiting to close on the sale of a property within a flood hazard area.

While no new policies could be issued during the lapse in authorization, consumers with current policies remained covered by the federal program, according to the National Association of Insurance Commissioners.

This short-term extension is itself an extension of a previous emergency authorization of NFIP. In December, the Senate extended it to Feb. 28.

Last Thursday, the House passed the bill addressing the expiring federal programs, but Bunning's opposition kept the Senate from advancing the legislation before the NFIP's Feb. 28 deadline.

Congress has been working on longer-term legislation to authorize NFIP for up to five years, which would be welcomed by the insurance industry.

"We applaud the Senate for recognizing the urgency in extending the National Flood Insurance Program," said David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI). "This vitally important program protects over five million families across the country. The recent debate in Congress underscores the need to bring greater certainty and stability to the flood program in 2010 and advance a long-term extension that ensures the program's fiscal soundness."