President Barack Obama signed a bill on July 6 that extends the National Flood Insurance Program for five years.
Property owners in Ocean City and other coastal areas rely on the federally subsidized program to protect their homes — and the success of local real estate industry hinges on the program's existence.
Hurricane Katrina in 2006 dealt a $16 billion blow to a federal program that was already operating at a deficit. The continuation of the program has been in doubt since then, and the Senate had passed only a 60-day extension in May.
"The uncertainty over the National Flood Insurance Program (NFIP) has come to an end as Congress passed a five-year extension of the federal flood insurance program on June 29, 2012 as part of a larger surface transportation authorization bill," U.S. Rep. Frank LoBiondo (R-2nd) said in a news release.
LoBiondo voted with the majority as the bill passed in the House of Representatives, 373-52. The Senate voted, 74-19, to pass the bill the same day.
"The agreement on the NFIP extension comes after years of uncertainty about the federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses in exchange for state and community floodplain management regulations that reduce future flood damages," LoBiondo said.
LoBiondo's office provided the following detail on the program:
"Almost one year ago, the House of Representatives overwhelmingly passed a five year reauthorization of the NFIP. However, the lack of action in the Senate on that measure resulted in numerous temporary extensions of the program and even one shutdown of the NFIP. This uncertainty about the NFIP's future has negatively affected the real estate market for homes in areas which are prone to flooding.
The NFIP extension passage will put those fears to rest and also will help reform the program to make it stronger for the future. The bill includes provisions to reform the program, including requiring the government to explore ways that private sector can participate in the flood insurance market. Specifically, it would require the Federal Emergency Management Agency (FEMA) to assess whether the private market could bear the risks of offering flood insurance instead of taxpayers bearing the entire risk for flood insurance in the United States.
Participation in the NFIP is based on an agreement between communities and the Federal Government. If a community adopts and enforces a floodplain management ordinance to reduce future flood risk to new construction in floodplains, the federal government will make flood insurance available within the community as a financial protection against flood losses. This insurance is designed to provide an insurance alternative to disaster assistance to reduce the escalating costs of repairing damage to buildings and their contents caused by floods.
For more information on the NFIP reauthorization, please contact Congressman LoBiondo's Washington DC office at 202-225-6572 or our Mays Landing District office at 800-471-4450."