Congress will need to raise the borrowing authority of the National Flood Insurance Program to cover expected claims due to the flooding caused by Hurricane Sandy, according to the National Association of Professional Insurance Agents.
The trade group estimates that the NFIP will receive 143,000 claims related to Sandy totaling $12 billion due to flooding along the coasts of New Jersey, New York, Connecticut and Rhode Island.
The federal flood insurance fund currently has $2.9 billion in borrowing authority and less than $1 million in cash, according to NAPIA.
The NFIP had to borrow from the U.S. Treasury to pay claims in the wake of Hurricane Katrina and it still owes the Treasury $18 billion. Congress passed flood insurance reform bill in June, but it did not address NFIP’s debt problem.
"Since and until Sandy, NFIP claims have been managed with no additional request for funds," said NAPIA president Andrew Harris.
But the flood insurance program will need additional resources to deal with the Sandy catastrophe, according to the insurance agents.
So far, it appears the Obama administration has not requested any funds to deal with Hurricane Sandy.