[h=3]By ANDREW GROSSMAN And ALAN ZIBEL[/h]WASHINGTON—The House of Representatives Friday voted overwhelmingly to approve an increase in the borrowing authority for the federal flood-insurance program, the first piece of a package aimed at helping Northeastern states recover from superstorm Sandy.
The $9.7 billion measure allows the National Flood Insurance Program to keep paying out claims. The fund, which provides almost all flood insurance in the U.S., was set to run out of money sometime next week in large part because of the increase in claims due to Sandy.
The Senate was expected to take up the package Friday afternoon.
Members of Congress from New York and New Jersey had hoped that the House would take up a $60 billion Sandy relief bill that included flood insurance before the last Congress adjourned Thursday morning. But House Speaker John Boehner (R., Ohio) canceled that vote late Tuesday.
Instead, House Republican leaders decided to take up the flood-insurance measure Friday and consider the rest of the package on its first full legislative day, Jan. 15.
The easy approval of the flood-insurance measure won muted praise from congressmen from the Northeast, many of whom had been livid after Mr. Boehner put off the vote on the larger package.
"It's a good first step, a good down payment," said Rep. Peter King, the Republican from Long Island, N.Y., who was among the loudest critics of Mr. Boehner's move. "The real fight's on Jan. 15, and I am confident we're going to have votes on the 15th. But I'm not taking them for granted."
Rep. Carolyn Maloney, a Democrat from Manhattan's Upper East Side, called the move a "baby step."
Congress had no choice but to raise the program's borrowing authority because policyholders have valid claims that need to be paid, said Ray Lehmann, senior fellow at the R Street Institute, a free-market think tank focused on insurance issues.
But in the long term, he said, it's unrealistic to expect the flood-insurance program will ever repay its debt. "Eventually, Congress will have to bite the bullet, forgive the debt and, one hopes, institute even stronger reforms to ensure that taxpayers never again are asked to pick up this cost," Mr. Lehmann said.
Federal law requires people who buy houses in designated flood-hazard areas with federally backed mortgages to purchase policies from the National Flood Insurance Program, though not all buyers maintain coverage for the life of the loan. Nationwide, about 5.6 million people have federal flood-insurance policies, according to government figures, with nearly 450,000 held by homeowners and businesses in Connecticut, New York and New Jersey.
The private-sector insurance claims from Sandy are projected at around $20 billion, making the superstorm the third-costliest storm since 1980. Hurricane Katrina in 2005 cost insurers nearly $48.7 billion in 2012 dollars, while Hurricane Andrew in 1992 cost an inflation-adjusted $25.6 billion. The figures exclude flood damage covered by the federal program.
The U.S. government has provided flood coverage since the late 1960s, filling a void left by a private-sector insurance industry that generally views floods as too unpredictable and too expensive to cover. But the federal program has been in financial trouble, having borrowed billions from the Treasury Department to pay for claims in recent years. The largest hit—$16 billion in claims—came from Hurricane Katrina.
Write to Andrew Grossman at [email protected] and Alan Zibel at [email protected]
The $9.7 billion measure allows the National Flood Insurance Program to keep paying out claims. The fund, which provides almost all flood insurance in the U.S., was set to run out of money sometime next week in large part because of the increase in claims due to Sandy.
The Senate was expected to take up the package Friday afternoon.
Members of Congress from New York and New Jersey had hoped that the House would take up a $60 billion Sandy relief bill that included flood insurance before the last Congress adjourned Thursday morning. But House Speaker John Boehner (R., Ohio) canceled that vote late Tuesday.
Instead, House Republican leaders decided to take up the flood-insurance measure Friday and consider the rest of the package on its first full legislative day, Jan. 15.
The easy approval of the flood-insurance measure won muted praise from congressmen from the Northeast, many of whom had been livid after Mr. Boehner put off the vote on the larger package.
"It's a good first step, a good down payment," said Rep. Peter King, the Republican from Long Island, N.Y., who was among the loudest critics of Mr. Boehner's move. "The real fight's on Jan. 15, and I am confident we're going to have votes on the 15th. But I'm not taking them for granted."
Rep. Carolyn Maloney, a Democrat from Manhattan's Upper East Side, called the move a "baby step."
Congress had no choice but to raise the program's borrowing authority because policyholders have valid claims that need to be paid, said Ray Lehmann, senior fellow at the R Street Institute, a free-market think tank focused on insurance issues.
But in the long term, he said, it's unrealistic to expect the flood-insurance program will ever repay its debt. "Eventually, Congress will have to bite the bullet, forgive the debt and, one hopes, institute even stronger reforms to ensure that taxpayers never again are asked to pick up this cost," Mr. Lehmann said.
Federal law requires people who buy houses in designated flood-hazard areas with federally backed mortgages to purchase policies from the National Flood Insurance Program, though not all buyers maintain coverage for the life of the loan. Nationwide, about 5.6 million people have federal flood-insurance policies, according to government figures, with nearly 450,000 held by homeowners and businesses in Connecticut, New York and New Jersey.
The private-sector insurance claims from Sandy are projected at around $20 billion, making the superstorm the third-costliest storm since 1980. Hurricane Katrina in 2005 cost insurers nearly $48.7 billion in 2012 dollars, while Hurricane Andrew in 1992 cost an inflation-adjusted $25.6 billion. The figures exclude flood damage covered by the federal program.
The U.S. government has provided flood coverage since the late 1960s, filling a void left by a private-sector insurance industry that generally views floods as too unpredictable and too expensive to cover. But the federal program has been in financial trouble, having borrowed billions from the Treasury Department to pay for claims in recent years. The largest hit—$16 billion in claims—came from Hurricane Katrina.
Write to Andrew Grossman at [email protected] and Alan Zibel at [email protected]