(Press Release from FEMA.)
INTERGOVERNMENTAL
ADVISORY
April 23, 2012
FEMA’s
Administrator Requests Reauthorization of the National Flood Insurance Program
Prior to
Expiration on May 31, 2012
As we approach a potentially active
hurricane season, FEMA’s Administrator, W. Craig Fugate, is reaching out to
Congressional Leadership and Members to strongly recommend Congress reauthorize
the National Flood Insurance Program (NFIP) for two years. The NFIP will expire
on May 31, 2012. Administrator Fugate’s
letter to the Senate Banking Committee leadership and the House Financial
Services Committee leadership is attached above.
The NFIP plays a key role in our
Nation’s efforts to prevent and recover from flood disasters. Reauthorization
of the NFIP before it expires on May 31, 2012, is essential to our Nation’s
efforts to prevent and recover from flood disasters. Floods are the
number one natural disaster in the United States in terms of lives lost and
property damaged. The NFIP identifies areas of flood risk; it encourages
communities to implement measures to mitigate against the risk of flood loss;
it provides financial assistance to help individuals recover more rapidly from
flooding disasters; and it lessens the financial impact of flood disasters on
individuals, businesses, and all levels of government.
In
recent years, a series of short-term reauthorizations and temporary suspensions
of the NFIP have eroded confidence in the program among stakeholders, including
state governments, tribal governments, local communities, individual policyholders,
mortgage lenders, and the private insurance industry. In addition to
disrupting the program's day-to-day operations, short-term reauthorizations and
temporary suspensions create significant uncertainty regarding the federal
government's long-term commitment to underwriting and indemnifying flood
losses. In the absence of such a commitment, our stakeholders are less
likely to make the investments needed to successfully sustain, strengthen, and
grow the program — thereby undermining the NFIP’s effectiveness and efficiency
over time.
A
two year re-authorization will send a clear signal to citizens, communities,
and private sector partners that the federal government will continue to
support our nation's efforts to manage flood risk. If Congress does not
re-authorize the NFIP before it expires on May 31, 2012:
•
The NFIP can issue no new policies, renewed
policies, or policy modifications. Although policies that were
already effective when the NFIP lapses will remain in coverage until their
expiration date, the NFIP cannot issue new and renewal NFIP polices, nor can it
increase coverage on the existing policies.
•
Property owners will be unable to complete new
mortgage transactions. Property owners who would normally be
required to purchase flood insurance to fulfill lending requirements will be
unable to obtain affordable coverage. The National Association of
REALTORS estimates that a lapse in authorization jeopardizes an estimated 1,300
sales each day or about 40,000 mortgage closings per month.
•
The Disaster Relief Fund will bear additional costs
when flood strike. Property owners who are unable to obtain
flood insurance coverage may seek and be eligible for assistance from the
Disaster Relief Fund. Consequently, failure to reauthorize the NFIP will
result in transferring a portion of the costs of flood losses that otherwise
would have been paid by the NFIP to the taxpayer through the Disaster Relief
Fund.
•
The NFIP may have to halt payment of claims for
recent events,
including Hurricanes Irene and Lee, if a lapse in authorization substantially
reduces cash flow into the program from premiums or a significant flood event
follows the lapse and drains the remaining, non-renewable funds.
If
you have any further questions please feel free to contact FEMA’s
Intergovernmental Affairs Division at (202) 646-3444 or at FEMA-IGA@fema.dhs.gov.
FEMA's
mission is to support our citizens and first responders to ensure that as a
nation we work together to build, sustain, and improve our capability to
prepare for, protect against, respond to, recover from, and mitigate all
hazards.