House votes to expand flood insurance program

by Kevin Drawbaugh

Reuters
Thursday, September 27, 2007; 6:41 PM

WASHINGTON (Reuters) - The U.S. House of Representatives voted on Thursday to expand the federal government's flood insurance program to cover wind damage in a bill closely watched by insurers and developers.

Prompted by Katrina and other hurricanes in 2005, the bill would add wind damage to perils covered under the National Flood Insurance Program (NFIP), which protects millions of American homeowners.

The White House has vowed to veto the bill, saying it would expose taxpayers to excessive claims, crowd out private coverage and encourage over-development in high-risk areas.

There is no similar measure currently before the Senate.

But Democratic Rep. Gene Taylor told Reuters after the 263-146 vote that he expects fellow Mississippian Sen. Trent Lott, a Republican, to take up the idea of adding wind damage to the national flood insurance program in the Senate.

Taylor's home was destroyed in Hurricane Katrina two years ago. Like many of his neighbors, he found after the storm that his insurer would not cover the damages as he had hoped.

Taylor said his bill will simplify coverage and "cut out a situation that I'm convinced bilked the federal government out of billions of dollars."

Some lawmakers questioned the bill in House floor debate.

"I am deeply concerned that we haven't come to grips with the financing of our flood insurance program," said Oregon Democrat Earl Blumenauer.

West Virginia Republican Shelley Moore Capito said, "We must not let the desire to meet every perceived problem with a new government program drive us toward premature action that yields unwanted consequences."

The flood insurance "program is already financially unstable," he added.

The American Insurance Association warned that adding wind damage to the program would lead to a "fundamental realignment" of both the national flood insurance program and the private wind insurance market.

Marc Racicot, president of the association, which represents property and casualty insurers, said: "We believe the solution rests in improving, not displacing, the private sector's ability to serve homeowners and businesses in the path of potential storms."

© 2007 Reuters

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