House to vote on expansion of flood insurance program

WASHINGTON — The House of Representatives is expected to vote Thursday on expanding the federal flood insurance program to include coverage of wind damage — a landmark change brought on by the insurance industry response to Hurricane Katrina.

Rep. Gene Taylor, D-Miss., who lost his home in Katrina, pushed for the "multi-peril" provision to the Flood Insurance Reform and Modernization Act of 2007, after seeing constituents get little or no payments for wind damage from insurers, yet receive full payment and coverage from the federal flood program. Taylor sued his insurer over wind damage and settled earlier this year.

After pushing for such a bill for more than two years, an invigorated Taylor is looking forward to the upcoming vote.

"I'm excited about it," he said. "I'm not taking anything for granted. We've got almost every Democrat and some Republicans on the Gulf Coast from Louisiana, Mississippi, Alabama and Florida. It should be the necessary margin."

"The bill has widespread support," said Steven Adamske, a spokesman for the House Financial Services Committee. "We feel good about where this bill is positioned."

Under the bill, which the House Financial Services Committee approved 38-29 in July, policyholders of the flood insurance program would be able to purchase wind insurance policies, although wind coverage wouldn't be available as a stand-alone policy.

The multiple-peril residential policy limit would be set at $500,000 for the structure and $150,000 for contents. The bill increases the maximum coverage for flood insurance policies from $250,000 to $335,000 for residences. The program would be paid for from actuarially determined premiums.

The legislation has a powerful advocate in the House — Speaker Nancy Pelosi, D-Calif., who made the issue a personal promise to the Gulf Coast communities in visits to the region on Katrina anniversaries in August 2006 and last month.

Pelosi's support has "been an incredibly huge help," Taylor said, adding that Pelosi lobbied or "whipped" Democrats when the bill was before the House Financial Services Committee. "She went to wavering Democrats," Taylor said, "and that's what it's going to take."

Pelosi is expected to push the issue again Wednesday at the weekly Democratic Caucus meeting.

Opponents of the bill, including insurers and some public interest groups, say that the flood insurance program is essentially bankrupt and that adding another liability would eventually hurt taxpayers. The flood insurance program, which is administered by the insurers, had to borrow $17.5 billion more than it took in because of Katrina and Hurricane Rita claims.

"We don't think this is the time to expand the flood insurance program, " said Don Griffin, a vice president of Property Casualty Insurers Association of America. "You don't know how many people will buy the program, so you don't know how to price it."

Dennis Kelly, a spokesman for the American Insurance Association, said, "We do not want to see any mechanisms that displace the private market."

But Taylor and other bill supporters point to the role that the states have had to take, such as creating so-called "wind pools" in Mississippi and Florida to provide coverage to coastal residents after insurers stopped writing policies.

Taylor said he is bracing for an insurance industry-backed battle on the House floor. "I expect a very contentious fight," he said.