PCI urges the US Congress to pass NFIP extension as Harvey hits
The Property Casualty Insurers Association of America has called on the US Congress to pass an extension of the National Flood Insurance Program (NFIP).
The Congress faces a deadline to reauthorize the existing national programme by Sept. 30.
The Federal Emergency Management Agency (FEMA), which runs the program, owes the Treasury and taxpayers $25 billion for the program’s debt.
US insurers are making their case to state regulators to help ease federal policy restrictions to make it easier for companies to enter the flood insurance market.
“PCI calls on Congress to pass at least a six-month extension of the National Flood Insurance Program to provide FEMA Administrator Long and his staff the space they need to help the people devastated by Hurricane Harvey put their homes and businesses back together,” said David Sampson, president and CEO of the PCI.
Hurricane Harvey developed into a Category 4 and made landfall near Rockport, Texas on Friday, Aug. 25. In addition to direct losses, the storm is causing heavy rainfall and storm surge-related losses along coastal Texas.
“While PCI and our members support meaningful reforms to the program, passing a minimum six-month extension of the program will allow time for the majority of the claims from Hurricane Harvey to be settled and any ongoing concerns identified and addressed before Congress and FEMA make significant reforms to the program,” continued Sampson.
Insured losses from Harvey may reach $20 billion, economic losses could be as high as $75 billion, according to estimates.
The NFIP run by FEMA could require emergency additional funding in the aftermath of flood losses in Texas as the high losses complicate its already perilous financial position. According to the Insurance Council of Texas, only about 20 percent of homeowners have flood insurance, almost all of which is through the NFIP programme.
“Any extension should provide for the borrowing authority necessary to pay claims, and include The Flood Insurance Market Parity and Modernization Act,” said Sampson. This act was unanimously supported in the House Financial Services Committee and passed the House unanimously last year.
“The bill would allow more private sector risk-bearing, thus relieving some of the taxpayer burden that the program is under now. One immediate lesson that we have already learned from Harvey and recent previous storms, is that too few homeowners and businesses have flood protection and this bill also would expand consumers’ flood options,” concluded Sampson.
PCI is composed of nearly 1,000 member companies, writing more than $183 billion in annual premium, 35 percent of the nation's property casualty insurance. Member companies write 42 percent of the US automobile insurance market, 27 percent of the homeowners market, 32 percent of the commercial property and liability market and 34 percent of the private workers compensation market.
