Federal Wind Coverage Looks Unlikely

Mis­sis­sippi Rep­re­sen­ta­tive Gene Tay­lor (D-Bay St. Louis) has been try­ing for the past sev­eral years to secure either all-peril insur­ance cov­er­age or, more recently, wind cov­er­age into the National Flood Insur­ance Pro­gram (NFIP).  How­ever, his cru­sade has fell vic­tim to sev­eral fac­tors:  vicious oppo­si­tion, sus­pi­cions, and bad timing.

The rea­son it has fell vic­tim to bad tim­ing is because of the recent $700 bil­lion gov­ern­ment bailout of Fan­nie Mae, Fred­die Mac, Lehman Broth­ers, AIG, etc.  It’s look­ing like the cur­rent NFIP, which is set to expire on Sep­tem­ber 30, will get an exten­sion — noth­ing more.

“The impor­tant thing is that the pro­gram would not lapse,” Tay­lor said. House Finan­cial Ser­vices Com­mit­tee Chair­man Bar­ney Frank, D-Mass., said last week that he wanted a seven-month exten­sion until April 30. He intro­duced a bill late last week, H.R. 6965, that would extend the pro­gram by April 30. It may be on the House floor as soon as today, although Tay­lor aide Brian Mar­tin said a vote was more likely Wednesday.

Accord­ing to the Sun Her­ald arti­cle, Con­gress is expected to adjourn on Fri­day and the two sides are nowhere near a con­sen­sus — espe­cially on the wind cov­er­age por­tion of the bill.

I’m not sure how I feel about this.  I can see the sense of includ­ing wind cov­er­age into flood insur­ance to ensure the entire prop­erty is cov­ered.  How­ever, I can also see how this would enable peo­ple to develop homes in places where they wouldn’t oth­er­wise build.  I guess I’m a strong pro­po­nent of let­ting peo­ple who can afford to build in flood– and high-wind prone areas.  In those cases, if you can afford to build there, you can afford to pay higher insur­ance pre­mi­ums that the rest of the region and/or coun­try doesn’t have to help you pay.

I’m just not in favor of mak­ing the rest of the Nation pay for high-risk prop­er­ties.  Of course, I’m also not in favor of the Gov­ern­ment bail­ing out peo­ple who bought houses they couldn’t afford, either.  But that’s a sub­ject for another day.

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