Flood Insurance Program Fully Reauthorized

Release Date: January 13, 2003 Release Number: HQ-03-011

Washington, D.C. -- President George W. Bush today signed into law legislation restoring the authority of the National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA), to enter into new insurance contracts, thus ending a brief hiatus that began when the previous authority expired on December 31, 2002.

"The quick restoration is a testament to the hard work of many--the Administration, the legislation's bipartisan sponsors, and our indispensable partners who help us deliver this important program to the public," FEMA Director Joe M. Allbaugh said.

H.R. 11, the National Flood Insurance Program Reauthorization Act of 2003, passed by the House on January 8 and by the Senate on January 9 without amendment, enables FEMA and its insurance industry partners to resume issuing new flood insurance policies and renewing or increasing coverage for existing policies. This is especially important to home buyers in high flood-risk areas, where flood insurance is required by law in order to qualify for mortgage loans from federally regulated lenders.

The law makes the reauthorization retroactive to December 31, 2002, which means that insurance companies may now resume processing all flood insurance applications, renewals and requests for increased coverage received during the hiatus. They can also deposit the premiums they held during the hiatus and assign an effective date of the coverage according to the NFIP's rules--as if there had been no hiatus.

In a message to the insurance companies, Federal Insurance and Mitigation Administrator Anthony S. Lowe said, "The adjustment of any claims that have been held, where coverage was awaiting retroactive reauthorization, should proceed without further delay."

Congress adjourned on November 22, 2002, without certain aspects of the NFIP having been reauthorized. Although this had no effect on the vast majority of flood insurance policyholders, whose coverage remained in effect during this hiatus, it was of concern to property owners who needed to renew their policies or purchase new flood insurance after December 31, 2002. Most other aspects of the NFIP, including floodplain management activities and the use of official flood map information, were unaffected by the interruption.

Under the NFIP, federally backed flood insurance is made available to homeowners, renters and business owners in communities that adopt and enforce floodplain management ordinances designed to reduce future flood losses by regulating new construction. Currently, nearly 4.4 million policies are in force in approximately 20,000 communities, representing $623 billion worth of coverage. The program is self-supporting; claims and operating expenses are paid from policyholder premiums, not tax dollars.