Insurance Industry Applauds $9.2 Billion NFIP Funding Increase
Vote for balance of $60 billion Superstorm Sandy aid package scheduled for January 15.
Insurance Networking News, January 4, 2013
Industry organizations have responded enthusiastically to news that Congress has agreed to a $9.2 billion authorized increase to the National Flood Insurance Program (NFIP), which is necessary to pay claims resulting from Superstorm Sandy. The bill had already passed the Senate and President Barack Obama is expected to sign it.
Congressional Republicans had recently been criticized for House Majority Speaker John Boehner’s decision to delay a vote on a $60 billion aid package that has been passed by the Senate. A vote is expected on January 15 for the $51 billion balance of the proposal.
"Failing to provide the needed funding for NFIP claims would only have added to the hardships being endured by victims of Superstorm Sandy, and we applaud Congress for acting swiftly to pass this needed extension of the NFIP’s borrowing authority," said Jimi Grande, SVP of Federal and Political Affairs for National Association of Mutual Insurance Companies (NAMIC).
Without the additional borrowing, NFIP could have exhausted its ability to pay claims during the week of January 7, and NFIP said payments on more than 115,000 claims would have been delayed.
“The Big ‘I’ commends Congress for today’s action on flood insurance which ensures that flood insurance claims are paid promptly, so homeowners and small businesses can begin recovering from the horrible damage inflicted by Sandy,” said Robert Rusbuldt, president & CEO of Independent Insurance Agents & Brokers of America (IIABA).
“Some experts estimate that damage from Sandy could generate as many as 139,000 claims, but without an increase in the borrowing authority, only about 12,000 of these can be covered from existing funds,” said Charles Symington, IIABA SVP of government affairs. “The Big ‘I’ strongly supports raising the NFIP borrowing authority in order to ensure that NFIP policyholders, who had the prudence to purchase protection and have been paying their premiums, receive the claims payment they are due.”
The Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 was signed into law in July, extending the NFIP for five years and making needed reforms to the program, which had fallen into debt by $18 billion.
“Today’s vote – which passed with strong bipartisan support – is essential to the reliability and solvency of the NFIP, which more than 5.6 million policyholders nationwide depend on as their main source of protection against property losses that result from flooding,” said James Ballentine, EVP of congressional relations and political affairs for American Bankers Association and subsidiary American Bankers Insurance Association.
The Property Casualty Insurers Association of America also commended Congress for passing the bill. “PCI and our members are committed to helping the citizens affected by Sandy,” said Nat Wienecke, PCI’s SVP federal government relations. “This additional funding for the NFIP is necessary so insurers with NFIP claims can continue to help these citizens. We are pleased that Congress acted today and that a vote is planned for additional relief on January 15.”
NAMIC’s Grande also urged passage of the Safe Building Code Incentive Act, which creates incentives for states to adopt and enforce minimum safety standards in construction statewide. Stronger building codes would have reduced wind damage from Hurricane Katrina by 80 percent, according to the Louisiana State University Hurricane Center. In addition, federal disaster aid spending would have been reduced by $11 billion had the Safe Building Codes Incentive Act been in place during the past 25 years, according to a study conducted by consulting and actuarial firm Milliman Inc. last year.
"As we help the victims of Sandy recover, it's also important that Congress consider what can be done to prepare for the next storm,” Grande said. “Studies have shown that every dollar of spending on disaster mitigation equates to four dollars in savings from reduced losses. Strong building codes have repeatedly been shown to be the most effective and efficient means of reducing losses from storms, and Congress can help encourage their use by including the Safe Building Code Incentive Act in the broader Sandy relief package to be considered later this month."
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