FLOOD INSURANCE – CONGRESS CONTINUES TO PLAY GAMES

On July 31, 2018 President Trump signed S. 1182, the “National Flood Insurance Program Extension Act of 2018,” which reauthorizes the Federal Emergency Management Agency to enter into new contracts for flood insurance and borrow from the Treasury up to specified amounts through November 30, 2018.

The House Amendment to S. 1182 extends the National Flood Insurance Program, which was set to expire July 31, 2018, through November 30, 2018. This amendment does not include any reforms to the program; it is only a short-term extension.

The NFIP was originally set to expire on September 30, 2017. On September 8, 2017, Congress passed a short-term extension set to expire on December 8, 2017.

Recognizing the program is broken and in need of repair, Congressman Sean Duffy (R-WI) introduced the 21st Century Flood Reform Act (H.R. 2874), a collection of seven bills approved by the House Financial Services Committee that would reauthorize the NFIP for five years, introduce private market competition, and provide programmatic reforms to help policyholders.

In the wake of massive storms, including hurricanes Harvey, Irma, and Maria, on November 14, 2017, the House overcame its points of contention and passed the 21st Century Flood Reform Act. The Senate, however, did not act on this legislation.

As a result, on December 8, 2017, the NFIP received a second short-term extension through December 22, 2017 and a third short-term extension through January 19, 2018. The NFIP lapsed between January 20, 2018 and January 22, 2018, but received a fourth short-term reauthorization through February 8, 2018. The NFIP lapsed for approximately eight hours during a brief government shut-down in the early morning of February 9, 2018. However, the NFIP received an extension in the omnibus spending bill through July 31, 2018.

With the July deadline approaching, on June 28, 2018, the U.S. Senate approved its version of the farm bill, which includes an amendment that would extend the authorization of the NFIP for six months. The House opposes a six-month extension because it would leave the fate of the program up to the 116th Congress. The House Amendment to S. 1182 only extends the program until November 30, 2018, maximizing pressure on Congress to enact a permanent solution that makes necessary reforms and provides certainty for insurance providers and housing markets.

When the flood insurance program was broken in 2005 it took Congress seven years to fix it. It has been broken again for about 12 months. How long will it take to complete the repairs this time?

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