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News Now

Washington
Sens. Johnson Shelby NFIP reforms needed
WASHINGTON (6/10/11)--Sen. Tim Johnson (D-S.D.) on Thursday said that while he hopes to ensure the National Flood Insurance Program, which provides more than $1.2 trillion in coverage to Americans in flood-prone areas, continues to function, the program is in need of reform. Johnson, the Senate Banking Committee Chairman, added during a Thursday committee hearing that the NFIP “needs certainty” and said he wants to provide it that certainty by approving an extension of the program. Lapses in the program, some of which have occurred recently, “have detrimental effects on both the insurance and housing markets,” Johnson said. Noting that the NFIP is $18 billion in debt to the U.S. Treasury, ranking committee member Sen. Richard Shelby (R-Ala.) said that every aspect of the NFIP “must undergo significant revision for it to survive and continue on a sustainable path.” Cheney suggested that the committee examine the relationship between the NFIP and participating insurance companies, with particular attention paid to increasing transparency and accountability. The types of properties that the NFIP is covering should also be examined “to ensure that its resources are spent effectively,” and privatization of portions of the program should also be considered, Cheney added. The NFIP is currently set to expire on Sept. 30, and legislation that would extend the program for an additional five years was approved by the House Financial Services Committee last month. That legislation would also preserve the rights of credit unions to protect their collateral from flood hazards and would clarify that flood insurance purchased by credit unions "would date back to the date the existing policy lapsed or became insufficient in coverage amount, including any premiums or fees incurred during the 45-day notification period." CUNA has backed these planned changes to the NFIP. For the full comments of Johnson and Shelby, use the resource links.
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