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 CongressÃ¢â‚¬â„¢ failure to act as one of the worst possible timesÃ¢â‚¬ ¦Given the forecast for this summerÃ¢â‚¬â„¢s storm season, it is unfortunate that Congress would fail to act on this issue and put millions of AmericansÃ¢â‚¬â„¢ financial security at risk.Ã¢â‚¬
ItÃ¢â‚¬â„¢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.