Flood Program Needs Another Infusion

The National Flood Insurance Program will need another infusion of cash by Feb. 10 to continue to pay claims related to hurricanes Katrina, Rita, and Wilma that are estimated to total $23 billion.The flood insurance program needs $5.6 billion to pay claims through Sept. 30, according to David Maurstad, who oversees the NFIP. Since the hurricane season, Congress has already provided $15 billion in additional borrowing authority. Mr. Maurstad also urged the Senate Banking Committee to consider structural reforms to the NFIP. These reforms should reduce the current subsidies of flood insurance premiums and increase homeowner participation. In addition, Congress should require mandatory purchase of flood insurance for the value of the home and for the life of the mortgage. He also said penalties for lender noncompliance should be increased. Senate Banking Committee Chairman Richard Shelby, R-Ala., said significant reforms are needed to make the "bankrupt" flood insurance program actuarially sound. "I certainly do not underestimate the difficult task that lies ahead," Sen. Shelby said.