Washington– The Senate voted today to again extend borrowing authority for the nearly bankrupt National Flood Insurance Program up to $21.2 billion to cover the costs of claims relating to Hurricane Katrina.
The bill, S. 2275, was approved by a voice vote, and comes four months after the federal government increased the NFIP's borrowing authority to $18.5 million in November.
The Federal Emergency Management Agency, which administers the program, has said that the total amount of claims from Hurricane Katrina is expected to be approximately $23.5 billion, making it likely that FEMA will have to seek another extension in the coming months.
The $23.5 billion expected to be paid out for Katrina-related claims is more than the program has paid out since its inception in 1968, and ten times the previous highest amount paid in the wake of a series of hurricanes in 2004.
“Today's Senate vote to extend the NFIP's borrowing authority is necessary and very welcome,” said Patrick O'Brien, director of federal government affairs for the Independent Insurance Agents and Brokers of America.
He noted that, “The busy hurricane season in 2005 completely overwhelmed the existing resources, and government action was the only way to alleviate the shortfall.
All money borrowed by the NFIP is required by law to be paid back to the Treasury with interest.
In recent hearings of the Senate Banking Committee however, both witnesses and committee members have said that it is unlikely the program, which takes in approximately $2 billion in premiums annually, would be able to repay the full amount of Katrina-related debt.
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