Tag Archives: Flood Insurance

NFIP Lapses Again

Insurance Journal reports that the National Flood Insurance Program (NFIP), which expired at midnight on May 31 after Congress failed to act on legislation reauthorizing the program, is not expected to be able to issue new policies for a week or longer.

This is the fourth time in recent months that the program has been allowed to lapse. The hiatus means that the NFIP is not authorized to sell new policies, issue increased coverage on existing policies, or issue renewal policies.

However, NFIP policies that are in force will remain in force and claims under those policies can continue to be paid after May 31.

Allowing the NFIP to lapse at the start of the 2010 hurricane season is irresponsible, according to the National Association of Mutual Insurance Companies (NAMIC). In a press release, NAMIC federal affairs director Kathy Mitchell said:

Millions of homeowners and businesses will be left vulnerable to storm losses because of Congress’ failure to act as one of the worst possible times†¦Given the forecast for this summer’s storm season, it is unfortunate that Congress would fail to act on this issue and put millions of Americans’ financial security at risk.†

It’s worth noting that it was the widespread flooding associated with Hurricane Katrina in 2005 that put a spotlight on the NFIP and started the debate about how to improve it. Five years later, that debate continues.

After its last hiatus the NFIP was granted a temporary extension until May 31. That renewal was retroactive to March 28, covering the more than two-week period when Congressional inaction allowed the program to lapse.

On the FEMA Web site, the agency says the hiatus period is expected to end soon. FEMA has issued guidance including a set of Frequently Asked Questions concerning NFIP authorization to help insurers participating in the program to communicate with insurance agents and policyholders. Check out I.I.I. information on flood insurance.

Nashville Flooding

Massive storms that struck Tennessee and northern Mississippi the weekend of May 1-2 left death and destruction in their wake. In Nashville, more than 13 inches of rain fell during the two-day period, and the Cumberland River crested at 51.86 feet, a level not seen since 1937. There have been 23 confirmed fatalities in Tennessee alone.

Claims Magazine reports that the city of Nashville expects damage from the flooding to surpass the billion dollar mark. It cites a press release from Nashvillle Mayor Karl Dean that the city has identified over $1.56 billion in property damage throughout Davidson County. The damage figures include only building damage and not personal property or infrastructure damage.

Currently, there are no estimates for damage insured by the National Flood Insurance Program (NFIP).  I.I.I. flood insurance facts and stats show there were 25,501 flood  policies in force in Tennessee   in 2008 for a total of $4.9 billion in liability limits.

In addition to losses sustained by homeowners and businessowners, a number of high profile musicians lost instruments stored at SoundCheck, a storage and rehearsal site near the Cumberland River. The New York Times reports on the musicians’ flood losses here.

According to the Tennessean.com, 42 Tennessee counties have been declared disaster areas by the Federal Emergency Management Agency (FEMA). FEMA and the Tennessee Emergency Management Agency have also created a Facebook page for online information sharing in the response and recovery to the flooding event. The response and recovery can also be followed at www.twitter.com/FEMARegion4.

Flood Insurance Reform Debate

Legislative proposals to reform the National Flood Insurance Program (NFIP) were once again up for debate at a hearing before the U.S. House Financial Services Subcommittee on Housing and Community Opportunity yesterday. The NFIP recently was granted another temporary extension until May 31. The renewal is retroactive to March 28, covering the more than two-week period (March 28-April 15) when Congressional inaction effectively allowed the program to lapse. In testimony at yesterday’s hearing, Orice Williams Brown, of the Government Accountability Office (GAO) noted that the NFIP is not actuarially sound. Key points made by GAO are:

  1. While NFIP’s financial condition has improved slightly due to an increase in the number of policyholders and moderate flood losses, it is unlikely to pay off its full $18.8 billion debt, especially if it faces catastrophic loss years.
  2. Many property owners are paying premium rates that do not reflect the full, long-term risk of flooding. Almost 25 percent of property owners pay subsidized premium rates, and even “full-risk† premium rates may not reflect the actual risk of flooding.
  3. NFIP cannot deny insurance on the basis of frequent losses and thus provides policies for repetitive loss properties, which represent only 1 percent of policies, account for 25 to 30 percent of claims.

For further coverage of the hearing, check out an article in  the Biloxi Gulfport Sun Herald by Anita Lee. Check out I.I.I. information on flood insurance.

Flood Insurance Hiatus

A  post on  The Hill’s finance and economy blog  says Congress intends to retroactively fund the National Flood Insurance Program (NFIP), after the Senate adjourned Friday until April 12 without passing a measure that would have extended the program beyond its Sunday expiration date. This is the third time in recent months that the NFIP has been allowed to lapse. A report  at ifawebnews.com quotes National Association of Mutual Insurance Companies (NAMIC) spokesman Matt Brady saying that coverage will remain in place for those who have protection through the NFIP, but that there is a serious impact on those looking to close a home sale in flood-prone areas. The NFIP provides guidance here on operating during a hiatus. Check out a March 26 National Underwriter article for more on this story. The National Oceanic and Atmospheric Administration’s (NOAA) National Weather Service recently warned that more than one-third of the U.S. faces a high or above-average flood risk as spring rain combines with the melting of record snowfall. A 2008 Insurance Information Institute (I.I.I.) poll found that only 17 percent of Americans have a flood insurance policy, with the take-up rate higher (20 percent) in the Northeast than in other parts of the U.S. Check out I.I.I. facts and stats on flood insurance.

Flood Insurance Program Extension Unclear

Insurance Networking News reports that another reprieve for the National Flood Insurance Program (NFIP) is in question after yet another temporary extension to the program was dropped from a jobs bill advancing in the Senate. The development comes less than two weeks before the NFIP is set to expire. Â  The Hiring Incentives to Restore Employment Act would have extended the NFIP until May 31, but this option was dropped as Senate Majority Leader Harry Reid sought to trim the $85 billion legislation to a more politically viable $15 billion package, INN reports. The most recent extension for the program to February 28 came as part of the 2010 Defense Appropriations Bill passed by the Senate in December 2009. Speaking of flood insurance, as the snow melts and looking ahead to springtime showers, now is a good time to purchase an NFIP policy given the 30-day waiting period before flood insurance takes effect. The average premium for an annual flood insurance policy is around $542, yet a 2008 poll by the I.I.I. found that only 17 percent of Americans have a flood insurance policy. Flood damage is excluded under standard homeowners and renters insurance policies. Check out I.I.I. info on flood insurance.

Another Two Month Extension for NFIP

With all eyes focused on passage of healthcare reform legislation, it’s good to see that a short term extension of the National Flood Insurance Program (NFIP) was passed by the Senate in the 2010 Defense Appropriations Bill over the weekend, albeit for just another two months. The program is now set to expire on February 28, 2010. The move keeping the NFIP in place was applauded by the advocacy trades, but they cautioned that a longer term solution will be required to address the program’s financial troubles. In a statement, the Property Casualty Insurers Association of America (PCI) said it looks forward to working with the House and Senate in 2010 to advocate a long-term extension ensuring the program’s fiscal soundness that protects homeowners. Similarly, the National Association of Mutual Insurance Companies (NAMIC) called on members of Congress to use the latest short term extension to complete reforms to the NFIP. In a press release NAMIC said: “While it’s important that the NFIP remain in place for the next two months, Congress needs to stop kicking the can down the road and start working on meaningful reforms.† At the end of 2008, the NFIP had some 5.7 million policies in force and losses paid by the program totaled $2.6 billion that year. The average premium for an annual flood insurance policy is around $542, yet a 2008 poll by the I.I.I. found that only 17 percent of Americans have a flood insurance policy. Flood damage is excluded under standard homeowners and renters insurance policies. Check out I.I.I. info on flood insurance.

Flood Insurance Update

In case you missed the news, funding for the National Flood Insurance Program (NFIP) which was set to expire on October 31, 2009, has been extended once again by Congress until December 18, 2009. This is the latest in a series of temporary extensions for the program approved by the House and Senate as part of an appropriations bill for the Department of the Interior. An overhaul of the 41-year-old program is currently taking a back seat to healthcare reform and other major legislation on Capitol Hill. Ever since Hurricane Katrina in 2005, there has been debate over how to improve the NFIP. Significant property damage caused by storm surge from Hurricane Ike in 2008, has fuelled that debate. Flooding related to hurricanes Katrina, Rita and Wilma in 2005 led to loss payments of $17.6 billion under the program. At the end of 2008, the NFIP had some 5.7 million policies in force and losses paid by the program totaled $2.6 billion that year. The average premium for an annual flood insurance policy is around $542, yet a 2008 poll by the I.I.I. found that only 17 percent of Americans have a flood insurance policy. Flood  damage  is excluded under standard homeowners and renters insurance policies. Check out I.I.I. information on flood insurance.

Mudflows Covered by NFIP

Another reason to have a flood insurance policy. A report from the U.S. Geological Survey warns that rainstorms this year in the area hit by the recent Station Fire in Southern California have the potential to trigger mudflows. The USGS said conditions in many of the areas burned by the fire indicated high probabilities of producing large mud and debris flows that may impact neighborhoods at the base of the San Gabriel Mountains as well as areas in Big Tujunga Canyon, Pacoima Canyon, Arroyo Seco, West Fork of the San Gabriel River and Devils Canyon. USGS warned that some rainstorms could generate debris flows of up to 100,000 cubic yards of material – large enough to fill approximately a football field 60 feet deep with mud and rock. Standard homeowners, renters and business insurance policies do not cover flood, mudslide and mudflow damage. However, damage from a mudflow (a river of liquid and flowing mud on the surfaces of normally dry land areas) is covered under a flood insurance policy available from the National Flood Insurance Program (NFIP). Note: other earth movements, such as landslide, slope failure, or a saturated soil mass moving by liquidity down a slope, are not considered mudflows by the NFIP. Check out I.I.I. info on flood insurance.

NFIP Minimum Flood Elevation Rules Woefully Inadequate

Just a year since Hurricane Ike – the third most costly hurricane in U.S. history – hit coastal communities in Texas with a powerful storm surge, a new study by the Institute for Business and Home Safety (IBHS) says government minimum flood elevation requirements for Gulf Coast properties vulnerable to storm surge are woefully inadequate. Its report on property damage caused by Hurricane Ike finds that many properties are not built high enough to withstand storm surges. The IBHS study questions the current basis for elevating properties along the Gulf Coast and urges the National Flood Insurance Program (NFIP) to provide greater incentives for building well above the minimum elevations now in place. As well as providing flood insurance, the NFIP establishes base flood elevation (BFE) levels for properties. All but a handful of properties located closest to the coast on the Bolivar Peninsula, Texas and even built to the highest elevation requirements, were washed away during Hurricane Ike. By contrast, the study found that 10 homes on the Bolivar Peninsula designed and built under the IBHS Fortified†¦for safer living program, survived the storm with minor damage. The Fortified homes had outdoor decks at 18 feet that were destroyed, but the homes themselves which were elevated to 26 feet, survived. According to IBHS, most homes in coastal areas are built to or slightly above 100-year BFEs. “A 100-year flood means that the level of flood water has a 1 percent chance of being equaled or exceeded in any single year. However, it is well recognized in the engineering community that coastal homes built to this level have a 26 percent chance of being flooded or demolished over the life of a 30-year mortgage,† says IBHS Chief Engineer Dr. Tim Reinhold. Check out I.I.I. information on flood insurance.

Flood Insurance Program Extension

Legislation that would extend the National Flood Insurance Program (NFIP) through March 31, 2010, was introduced in the House late last week. The NFIP is currently set to expire September 30, 2009. Check out  a July 10 online article at Insurance Journal  for more on this story. At the end of 2008, the NFIP had some 5.7 million policies in force. The average premium for an annual flood insurance  policy is around $542, yet a 2008 poll by the I.I.I. found that only 17 percent of Americans have a flood insurance policy. Check out I.I.I. facts and stats on flood insurance.