NFIP Set to Expire Sept. 30, Creating Uncertainty in Housing Market
After Monday the House and Senate have only nine days of legislative action scheduled before the program expires.
The authorization for the National Flood Insurance Program (NFIP) is scheduled to expire at the end of the month and without congressional action, the power to provide new insurance contracts would disappear.
“Without available flood insurance, real estate transactions in an [flood hazard areas] potentially would be significantly hampered,” the Congressional Research Service warned in a report last week.
Deadlocked over proposed plans to overhaul the flood insurance program, Congress regularly has enacted short-term extensions to keep the program operating.
Since the end of the 2017 fiscal year, Congress has passed 12 short-term extensions of the program.
After Monday the House and Senate have only nine days of legislative action scheduled before the program expires. In that time, Congress also must pass a short-term Continuing Resolution to keep much of the government functioning past the end of the fiscal year.
Congress could attach a short-term NFIP extension to that measure.
In its report, the CRS said that if Congress does not act, flood insurance contracts entered into before the expiration date would continue until the end of their policy term of one year.
In addition, the authority for the NFIP to borrow funds from the U.S. Treasury would be reduced from a little over $30 billion to $ billion.
Under those circumstances, the Federal Emergency Management Agency would continue to pay claims as premiums were paid by people having flood insurance. If the funds available to pay claims were depleted, claims would have to wait until Congress approved the funds.
The NFIP program has run in the red for years. In October 2017, Congress cancelled $16 billion the program owed the federal government, with a remaining debt being serviced through revenues from premiums.
In an effort to reduce the federal role, Congress, as part of a 2012 law, allowed federal agencies to begin accepting private flood insurance policies.
However, the CRS said that the private insurance market has been slow to grow.