Federal legislators have set July 31 as their deadline to approve a long-term extension of the National Flood Insurance Program.
The program was scheduled to end May 31, but legislators approved a two-month postponement to buy time for working out a multi-year program extension.
The government-run National Flood Insurance Program has borrowed nearly $18 billion from the Treasury Department to pay claims resulting from the 2005 hurricane season. The government pays flood insurance claims, while private insurers sell policies and manage claims under the program, which was created in 1968. Flood insurance is required for federally regulated lenders and government-back mortgages in flood-prone areas. Insurance industry groups say the program’s rates are too low.
More than 20 percent of the 5.6 million homeowners in the program receive subsidized rates. The subsidies are directed at homes built before 1975 and homes that were built before the nation’s flood-mapping system was established to designate high-risk areas.
The bill would gradually remove those subsidies for second homes and for commercial properties and properties with a history of repeated flood damage. However, some property owners would continue to receive support.
The increases would more than double premiums for about 440,000 policyholders who pay $1,174 a year on average.
