The National Flood Insurance Program (NFIP) was blindsided by FEMA Wednesday evening.
Earlier this month, the flood insurance program was facing an expiration. Our Senator John Kennedy sponsored a bill, S. 3628, that was approved by the Senate and accepted by the House of Representatives in a bipartisan vote of 315 – 48 to extend the program until May 31, 2019. Then, the federal government shutdown occurred which brings us to where we are now.
How this affects you?
Our flood insurance carriers will continue to underwrite coverage but will not be able to issue the policies until the shutdown and funding of the NFIP is resolved. We can still submit complete applications and accept payment through our insurance carriers. They will underwrite it and approve the coverage but will not issue the policies until approval by FEMA is provided. Renewals will still be processed, and your coverage will continue without interruption. Some billings may be delayed.
How this happened?
Congress worked hard to keep the flood program operating, and it appeared that it was a successful bipartisan effort. However, FEMA’s executive administrators and their legal department decided to ignore the past precedence followed in prior years. They concluded there was no significant threat or need for the “protection of property”. This was the basis of an exception to the rules set in the 1980 Anti-Deficiencies Act. This interpretation is counter to what Congress passed and should not have been the course of action.
The effect is that a moratorium has immediately been placed on new policies, renewal of policies, and endorsements to policies by FEMA. The reason is that if these activities continued, the government would incur new obligations and expend additional funds during the shutdown period. Since the Federal Government is shutdown, FEMA must also. One exception is that the processing and payment of any claim can continue.
This situation will be fast tracked, and we will see it resolved very soon. In the end, FEMA and Homeland Security will be pointing fingers to deflect blame. I confidently predict that the results will be that no one will lose coverage, and all effective dates will be honored.
Bryan Duplantier, CPCU
Alpha Insurance Agency, LLC