Industry reacts to last-minute extension of NFIP, avoiding a lapse in coverage

Updated May 31, 2019, 5 p.m. ET

Congress voted to extend the National Flood Insurance Program (NFIP) by two weeks on Thursday, May 30, effectively meeting Friday’s midnight deadline and avoiding a lapse in coverage. Pres. Trump promptly signed the legislation, postponing the next expiration date to 11:59 p.m. on June 14, 2019.

This is the 11th extension since the NFIP’s last long-term authorization expired on Sept. 30, 2017.

Associations and insurance leaders across the industry issued prompt responses Thursday evening in reaction to the latest short-term fix of the ever-ongoing NFIP struggles.

The industry reacts

The Independent Insurance Agents & Brokers of America (the Big “I”) released the following statement by Charles Symington, Big “I” senior vice president of external, industry & government affairs:

“The Big ‘I’ is relieved that Congress was finally able to extend the NFIP before the program expires on May 31. However, we are disappointed that the extension is only for two weeks. Both chambers of Congress had previously passed legislation that would extend the NFIP through Sept. 30 in an overwhelmingly bipartisan fashion,” Symington said.

“Yet, brinksmanship from a few members of Congress brought us to the eve of an expiration and left more than five million policyholders and countless others who depend on the program with only a two-week extension of the NFIP. With historic flooding in the Midwest and hurricane season upon us, it is vital that Congress passes a longer-term extension of the program when it returns to session next week to provide more certainty for consumers.”

The National Association of Professional Insurance Agents (PIA National) is pleased that the House passed by unanimous consent S. 1693, a bill to extend the National Flood Insurance Program (NFIP) for a two-week period ending on June 14.

“PIA National is pleased that, once signed into law by the president, the NFIP will not lapse Friday,” said Jon Gentile, vice president of government relations for PIA National. “Hurricane season begins June 1, and several states over the last few weeks have been dealing with disastrous flooding. Bringing the NFIP to the brink of lapse is unfair to homeowners who rely on this vital program.”

“PIA National now calls on Congress to pass the disaster relief legislation (H.R. 2157) next week when the House returns to Washington as its first order of business. H.R. 2157 includes a four-month extension of the NFIP, reauthorizing it until Sept. 30, 2019. Congress must then get serious about passing a long-term reauthorization of the NFIP before its next expiration date,” added Gentile.

Congressional failures

Craig Poulton is the chief executive officer of the Salt Lake City-based Poulton Associates, LLC, which administers the country’s largest private flood insurance program, the Natural Catastrophe Insurance Program at CATcoverage.com. Poulton commented on the NFIP extension, stating:

“If you were a member of Congress and you knew that instead of raising its rates by a weighted average of about 15% annually as required by the Homeowners Flood Insurance Affordability Act, the NFIP has actually reduced its weighted average rate by about 1% over the last five years, you might just be angry enough to sit down and say ‘I’m not voting for a temporary reauthorization until we get some common sense reforms built into the legislation’,” Poulton said.

“Because the NFIP has failed to raise rates as instructed, they’ve passed up about $9 billion in additional capital that must now fall on the back of taxpayers. It would be hard to blame any Congressman that refused to vote on a temporary reauthorization of the NFIP based on that fact alone. After all, the NFIP has cost taxpayers around $40 billion over its lifetime which represents over 40% of all claims dollars paid. It’s just not working the way it was intended,” he added.

Poulton expressed common sentiments among insurance professionals on the NFIP, adding, “I empathize with members of Congress and with the good folks who are trying to steer the NFIP. On one hand, they have allowed the NFIP rate structure to stifle the private market to the extent that the NFIP is absolutely necessary. On the other hand, the NFIP seems unwilling or unable to raise its rates as directed by Congress and continues to engage in efforts that result in impeding the growth of the private market.”

“The American taxpayer has paid a terrible price for those decisions. At some point, Congress will be forced to allow the invisible hand of the marketplace to make the NFIP our flood insurer of last resort. Doing so is mostly just a matter of raising rates.”

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