The devastation resulting from Hurricane Irene has renewed efforts, unsurprisingly, for new efforts and calls for flood insurance reform.
Congress has at times renewed the flood insurance program, but so far has failed to enact real, comprehensive long-lastiong programmatic improvements resulting in a large shortfall and deficit.
The National Flood Insurance Program (NFIP) is plagued by a debt of more than $17 billion. Because of that the Property Casualty Insurers of America (PCI) was pleased that the House of Representatives too k action to stablaize the NFIP, but the Senate thus far has not acted.
In a recent report, PCI has calculated a rough approximation of the true market-risk cost of flood insurance, based on recent analyses by the Congressional Budget Office (CBO) and Government Accountability Office (GAO) of the NFIP's costs plus the additional amounts necessary if coverage were to be provided in the private sector (such as reinsurance, cost of capital, and taxes).
2011 Predicted to be Intense Hurricane Year
Congress undoubtedly saw the predictions of a more active hurricane season but may have been distracted by the debt crisis and health care reform issues.
Much of the debate concerning the flood insurance reform effort has been on the government, and particularly FEMA's role, going forward.
Federal Role in Flood Insurance
"Yes there’s a federal role, yes we’re going to find the money. We’re just going to make sure that there are savings elsewhere,” Representative Eric Cantor, the No. 2 Republican in the House, told Fox News.
Irene's death toll has now increased to 33 people and caused substantial property damage from North Carolina to Vermont over the weekend. Cantor’s Virginia district was among the areas hit by the storm as well as the epicenter of an earthquake last week.
Obama administration officials said they had no estimate of the storm’s cost as they were still assessing the damage, but other elected officials and companies have indicated that it will likely amount to $10-20 billion, or more.
The administration will likely have to ask Congress for additional funding for FEMA at a time when lawmakers are debating further budget cuts. The Federal Emergency Management Agency has suspended funding for some rebuilding programs from earlier disasters to ensure that its disaster-relief fund will not run out of money, according to agency administrator Craig Fugate.
FEMA currently has $972 million in the fund, according to congressional Republicans, as reported by the Insurance Journal.
President Barack Obama has signed declarations committing the federal government to help states from North Carolina to New Hampshire cover disaster-response costs. Obama also approved federal funding for individuals in Puerto Rico who were also impacted by Irene. People in other storm-ravaged areas also could become eligible for federal money once damage assessments are completed, Fugate said.
Political Stalemate
This year has been one of the most extreme for weather in U.S. history, with $35 billion in losses so far from floods, tornadoes and heat waves. FEMA has struggled to fund these recovery efforts, warning lawmakers that its disaster-relief fund is running low.
The Republican-controlled House passed a bill in June that would give FEMA an additional $1 billion in disaster-relief funds for the current fiscal year, which ends Sept. 30, as well as $2.65 billion for the coming fiscal year.
Hopefully, for all the homeowners and businesses impacted by Hurricane Irene, not to mention the rest of hurricane season, Congress will act to shore up FEMA and the national flood insurance program.
