Under the bill, the claim would then go to an arbitration panel to settle the differences between NFIP and the wind insurance carrier.

This initiative follows a bitter dispute last month in the House, resulting in the House leadership pulling a bill before a floor vote could be taken on legislation that would add windstorm coverage to the NFIP.

That bill–H.R. 1264, the Multiple Peril Insurance Act, introduced by Rep. Gene Taylor, D-Miss.–could still be taken up at any time, but for the moment insurance industry representatives are satisfied that the House did not pass the measure after debating it on July 22.

Ben McKay, senior vice president for federal government relations at the Property Casualty Insurers Association of America, told NU it is believed the bill was pulled because Rep. Taylor did not have enough votes to secure passage. The official said the bill could be on hold until September, when NFIP is scheduled to expire.

In a statement, Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, said his members are "pleased to see that the House leadership decided to pull the bill from consideration, recognizing that this bill could effectively lead to nationalized insurance for windstorm coverage."

He added that "the NFIP is already facing a debt of nearly $20 billion, which was borrowed from the taxpayers in the wake of the 2005 hurricanes. Even [the Federal Emergency Management Association, which administers the NFIP] has acknowledged that it will never be able to repay that debt, and by expanding the NFIP this bill would put the taxpayers at risk for an even greater exposure."

Mr. McKay said PCI has "mixed emotions" about the House's actions, noting the group would have preferred it if the bill was voted down. "However, we think it's a positive sign," he said, noting that if Rep. Taylor had the support, the vote would have gone forward.

He said House members are sympathetic to Rep. Taylor and his constituents, but noted this bill is "just such a bad public policy." He cited opposition from tax groups, environmentalists, the insurance industry and President Obama.

PCI, Mr. McKay said, is going to continue under the assumption that the bill could resurface at any time, noting that Rep. Taylor will not stop trying to gain support.

A day before the House tabled the Taylor bill, the Obama administration signaled its opposition to adding windstorm coverage to the flood program.

In its statement of policy issued by the Office of Management and Budget, the administration said that although it believes in strengthening NFIP for the benefit of policyholders and taxpayers, "the central rationale for the program–the difficulty of obtaining flood insurance through either the private market or state programs–simply does not apply to windstorm insurance in most markets."

The statement further said "expanding NFIP to cover windstorm insurance would unnecessarily duplicate available insurance products and could 'crowd out' such products where they are offered, while offering little to no savings to the American public. At a time when the NFIP is already facing serious challenges, the administration cannot support such an expansion."

A PCI statement said H.R. 1264 amounts "to a government takeover of this private homeowners' insurance marketplace."

In a letter to House members, PCI President and CEO David Sampson called "this approach…a mistake that could deliver devastating results to the U.S. jobs market and add billions to the federal deficit."

In response to PCI's warnings, Brian Martin, Rep. Taylor's policy director, indicated that NFIP would be paying commissions to private agents to sell the policies; paying administrative subsidies to private insurers or private contractors to handle the policies; and paying loss adjustment expenses to private companies or contractors to adjust claims.

"All the money would go to the private sector without them bearing the risk or the capital costs," he said.