Washington–Insurance companies and agents can resume processing and paying flood damage claims that had been held up pending a renewal of financing for the federal program, the acting head of the National Flood Insurance Program said late last night.
David I. Maurstad, acting National Flood Insurance Administrator and acting director of the Federal Emergency Management Agency's Mitigation Division, issued the statement after President Bush signed legislation passed by Congress Friday that raised the NFIP's borrowing authority to $18.5 billion from $3.5 billion.
"We're extremely pleased that Congress has passed and President Bush has signed legislation authorizing the National Flood Insurance Program to borrow up to $18.5 billion, which will allow insurance companies to continue paying claims from the 2005 hurricane season," Mr. Maurstad said.
"FEMA will be working to immediately notify insurers that additional borrowing authority has been granted and that they should resume processing and paying claims as soon as possible," he added.
Claims-processing and paying for insurers and agents who participate in the NFIP Write-Your-Own program had been in limbo for approximately 10 days.
That is when FEMA notified those participating in the W-Y-O that they could continue evaluating claims but could not make payments beyond their existing lines of credit.
The legislation was passed after the House agreed late Friday to Senate amendments imposing some reforms on the program.
Industry trade groups have sent out memos to their members over the last several days saying Congress is expected to work on legislation when it resumes work Dec. 5 that would increase the borrowing authority by an additional $4.5 billion and impose additional reforms.
The total $22.5 billion in borrowing authority is projected by Congress to be all that is needed to cover all current and expected claims from the recent storms, according to the Financial Services Roundtable.
The National Association of Mutual Insurance Companies also said that when Congress returns in January, it will likely take up legislation to further extend NFIP's borrowing authority, "so that the remaining $7-to-$15 billion in expected claims can be paid expeditiously."
David Winston, senior vice president-Federal Affairs for NAMIC, said that the enactment of the interim increase in funding of the NFIP was critically important. However, he noted that many members of Congress have indicated that "any additional funding will be contingent on several possible reforms of the NFIP."
Among the possible reforms are mandatory coverage for everyone who lives in the natural 100-year flood plain, extending the flood zone to 1-in-500-year flood zones, and increasing the level of coverage from the current maximum of $250,000.
Mr. Maurstad alluded to the possibility of reforms when he noted in his statement, "In the coming weeks, FEMA will continue to work with lawmakers on securing additional borrowing authority, if needed, and will work with Congress as discussions continue strengthen the flood insurance program."
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