About six months after Congress passed a short-term reauthorization, the National Flood Insurance Program (NFIP) will soon expire—a prospect that coul
d cause coverage lapses for policyholders with expiring contracts at
the traditional height of hurricane season, and major problems for real estate transactions.
Components of NFIP will cease when September ends, just as a polarize
d Congress threatens a government shutdown over the federal budget, which also faces an Oct. 1 deadline.
In the event of a lapse, the Federal Emergency Management Agency (FEMA), administrator of NFIP, would still
make sure valid claims were paid with available funds. However, no new policies would be sold, according to FEMA’s website.
About 1,300 property sales per day and about 40,000 closin
gs per month would be impacted, according to the National Association of Realtors (NAR). In a letter to lawmakers
earlier this month, NAR recommended a long-term reauthorization of NFIP with reforms to include improved flo
d maps, mitigation efforts, and policy pricing. According to its research, NAR said NFIP supports about 500,000 home sales annually.
The prospect of any long-term thinking before Oct. 1 on the matter of federal flood insurance seems unlikely
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under the circumstances, but the insurance industry and state legislators urge a reauthorization before the program’s deadline.
“Congress must act swiftly to prevent any lapse in the NFIP, particularly as we enter the height of hurricane sea
son,” said New York Assemblywoman Pamela Hunter, president of the National Conference of Insurance Legislator
s (NCOIL). “A long-term reauthorization is overdue, but in the meantime, we cannot risk leaving families, businesses, and communities vulnerable.
“The NFIP provides critical stability for policyholders and insurers alike, and it is essential that
Congress comes together to deliver lasting reforms and ensure continued protection for those who need it most.”
Related: Viewpoint: The Imperative of Long-Term NFIP Reform
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance
Companies (NAMIC) said, “Congress cannot allow” the expiration of NFIP policies at the peak of hurricane season.
“Everyone agrees the NFIP is in dire need of reform, and NAMIC will be an active participant in those conversations, but as the government runs up against a shu
tdown, Congress must first ensure that homeowners have the protection they need at such a pivotal time,” he said.
The American Property Casualty Insurance Association (APCIA) also called on Congress to extend the federal insurance program to “ensure that new home mortgages can close and policyholders can continue protecting their largest financial investment,” said Sam Whitfield, senior vice president of federal government relations. APCIA has been in favor of a long-term authorization of NFIP.