President Donald Trump signed a three-month extension to the National Flood Insurance Program on Friday, giving Congress more time to come up with a long-term financial solution for the program.
Trump signed the extension, which was included in H.R. 601, after the House passed the extension in a legislative package on Friday that also provides funding for hurricane relief and other priorities. With this new extension, the program will now expire on Dec. 8, 2017.
Flood insurance, whether it’s private or the national flood insurance program, has struggled to gain a lot of attention over the years.
But the devastating destruction of Hurricane Harvey and the ongoing threat of Hurricane Irma pushed the urgency for a solution to the program to the surface.
The government, however, was working with a tight deadline. The program was established in 1968, and authorization for the program, which is administered by Federal Emergency Management Agency, was set to expire on Sept. 30, 2017.
According to the FEMA’s website, “The National Flood Insurance Program aims to reduce the impact of flooding on private and public structures. It does so by providing affordable insurance to property owners and by encouraging communities to adopt and enforce floodplain management regulations.”
“These efforts help mitigate the effects of flooding on new and improved structures. Overall, the program reduces the socio-economic impact of disasters by promoting the purchase and retention of general risk insurance, but also of flood insurance, specifically,” it stated.
This isn’t the first time the government’s been up against the wall to come up with a solution. The National Association of Realtors has pointed out that when the NFIP expired in 2010, more than 1,300 home sales were disrupted every day as a result.
NAR, which has championed many of the efforts on the program's importance, released the following statement on the extension. “Extending the National Flood Insurance Program was a must-do item, and Congress delivered,” said NAR President William E. Brown.
“That’s good news for consumers, as well as an opportunity for proponents of meaningful reform. With a short extension on their side, leaders in the House and Senate should continue work on the 21st Century Flood Reform Act to strengthen the NFIP and ensure the long-term certainty that current and future homeowners demand,” said Brown.
Just how financially rocky the program is came to light earlier this week after a report on the stability of it came out from the Congressional Budget Office, a nonpartisan analysis for the U.S. Congress.
According to the CBO’s report, the program has an expected one-year shortfall of $1.4 billion.
The CBO did caution that the estimate of expected claims accounted for low-probability, high-cost events, such as Hurricane Harvey, which first made landfall in Texas one week before this report was published.
As a result, the estimate is probably greater than actual costs would be in a typical year, although lower than costs could be in the aftermath of a catastrophic storm, the CBO stated.
The National Association of Professional Insurance Agents stated that they view this short-term extension as a chance for Congress to provide taxpayers with the financial stability such a program requires by passing an essential long-term reauthorization of the NFIP.
“It has become apparent during this historic hurricane season that far too few homeowners have flood insurance, a situation that must be changed,” the association stated. “In the aftermath of recent disasters, and, unfortunately, with more to come in the future, we encourage lawmakers to seize the opportunity provided by the short-term extension of the NFIP through December 8 to engage in considered deliberations on a long-term reauthorization that provides greater protection to more people and more properties. Now is not the time to play politics with flood insurance.”
