Schumer Backs Wind-Damage Coverage in Flood Insurance Overhaul

By Victoria McGrane, CQ Staff

At least one influential Senate Democrat wants to see the federal flood insurance program expanded to include wind-damage coverage, setting up a potential clash with Republicans.

Sen. Charles E. Schumer, D-N.Y., praised the flood insurance overhaul bill (HR 3121) passed last week by the House, noting that it would allow individuals and businesses to purchase wind-damage coverage through the National Flood Insurance Program.

“I believe we should do the same in the Senate, and will work toward that,” Schumer told a Banking committee hearing Tuesday. He said property and casualty insurers have stopped writing wind-damage policies in many coastal areas, including Long Island.

At the same time, he observed, private insurers largely oppose the House bill for its inclusion of wind in the federal program.

“Gentlemen, ladies — you can’t have it both ways,” Schumer said.

While the House passed an overhaul of the flood insurance program, a Senate version has not yet been introduced in the 110th Congress. Democratic and GOP panel members however, praised the legislation the Senate Banking panel approved unanimously in the 109th Congress — which then stalled in the Senate — indicating that could be a starting point for a bill panel Chairman Christopher J. Dodd is drafting.

Yet the issue of wind coverage is a new element of the debate. The proposed coverage expansion is an outgrowth of insurance disputes that arose after Hurricane Katrina devastated the Gulf Coast in 2005.

The inclusion of wind damage in the House bill was spearheaded by Mississippi Democrat Gene Taylor, one of hundreds of thousands of Gulf Coast residents whose homes were destroyed by Katrina, who then had their insurance claims denied when they sought to collect. The industry asserted that homes and businesses were destroyed by flooding, covered by the federal program, and not by wind damage, which private policies cover.

The administration strongly opposes the expansion of the program to include wind damage coverage and the White House said it would veto the House bill if such language was included.

None of the Republicans on the Senate Banking panel weighed in on the wind program during opening remarks Tuesday, though Sen. Mel Martinez of Florida asked witnesses to testify on its ramifications. Aside from some Gulf Coast Republicans, House GOP members opposed the wind-damage coverage in the House bill.

Private insurers are lobbying the Senate to exclude the wind provision.

The flood bill approved by the Senate panel in the 109th Congress sought to move the program toward actuarial soundness by mandating more accurate flood maps and ensuring premiums reflected the risk of catastrophic years such as 2005.

Louisiana’s senators, Democrat Mary L. Landrieu and Republican David Vitter, blocked floor action on that bill, however, saying the legislation would make living in coastal areas too costly.

The devastating 2005 Gulf Coast storms left the program, established in 1968, with about $17.5 billion in debt owed to the federal Treasury.

David I. Maurstad, assistant administrator and federal insurance administrator for the Federal Emergency Management Agency, which oversees the flood program, told lawmakers that the agency expects total 2005 costs, including interest payments to the Treasury, to approach $20 billion.


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