Washington – The House voted Thursday to strengthen the Katrina-swamped National Flood Insurance Program, but provisions to extend the 40-year-old program to cover wind damage drew a White House veto threat.
The legislation, passed 263-146, extends through 2013 a program that provides affordable insurance, not always available on the private market, to homeowners in flood- prone areas while imposing land-use and building requirements aimed at reducing future flood damage.
It is estimated that the program, which takes in about $2.7 billion in premiums annually, normally saves the Treasury $1 billion a year in flood-loss expenses.
But that all changed with the 2005 hurricane season when claims from Katrina and Rita exceeded the aggregate amount of all claims previously paid in the history of the program.
The program’s borrowing authority, limited by law to $1.5 billion before 2005, was raised three times by Congress, to the current $20.8 billion. The new legislation would increase that to $21.5 billion. The NFIP owes the Treasury about $18 billion.
The bill also tries to make the program more fiscally sound by phasing out, at estimated savings of $335 million a year, subsidies now given to about 450,000 vacation homes, second homes and commercial properties built before 1974.
It allows the Federal Emergency Management Agency to increase policy rates by 15 percent a year, up from the current 10 percent, while requiring FEMA to update and modernize the nation’s flood maps.
Most controversial, the bill expands the flood-insurance program to make available optional multi-peril insurance coverage against personal-property losses arising from windstorms. Only those with flood insurance would be eligible for wind coverage.
The provision was promoted by Rep. Gene Taylor, D-Miss., whose Bay St. Louis home was destroyed by Katrina.
Taylor said his roof ended up 450 feet from his home, but the insurance adjuster claimed there was no evidence of wind damage. He later reached a settlement with State Farm over damage coverage.
