Stalemate of the National Flood Insurance Program

Tomorrow, the US Senate will vote on a broad bill that includes an extension of the National Flood Insurance Program. Partisan fighting over other aspects of the bill including an extension of unemployment benefits and a provision of subsidies for COBRA health insurance premiums have stalemated the passing of the bill.

Because the National Flood Insurance Program was not renewed, it had not been able to issue new polices since March 28th. Therefore, "[i]nsurance agents have not been able to provide new or renewal flood insurance policies, which are required by lenders to close on some real estate sales" (Insurance Journal).

This stalemate creates particularly acute problems considering the extensive flooding in New England in the past few weeks. A coalition of insurance groups, homebuilders and mortgage bankers have appealed to Congress to quickly pass the program noting that the program will be paying out post-disaster relief while unable to collect premiums from renewing current flood insurance policies.

The letter to Congress stresses that not reauthorizing the federal program “will severely harm real estate markets, putting consumers at risk of uninsured losses and potentially putting additional tax money at risk to cover relief efforts."

In other and somewhat related news, thanks to census data, we know that populations along the coast are growing at almost 2.5 times the national population growth rate.

Along the hurricane-prone stretch of coast, from North Carolina to Texas, the population has grown from 14 million in 1960 to 36.2 million which is a 158 percent increase. In comarison, the US population has grown from 180 million in 1960 to 300 million which is a 69 percent growth.

For more information:

http://www.property-casualty.com/News/2010/4/Pages/Senate-Inches-Toward-Extending-Flood-Insurance-Other-Programs.aspx

http://www.insurancejournal.com/news/national/2010/04/12/108931.htm

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