Last Friday evening, the Federal Emergency Management Agency (FEMA) announced that the National Flood Insurance Program (NFIP) will resume the normal sale of new insurance policies and the renewal of expiring policies.
This order rescinded an earlier decision that halted sales operations by the NFIP because of the current government shutdown and lapse in appropriations.
The reversal came after banking, insurance and political leaders from both parties criticized the halting of sales of new and renewal flood policies. Critics said that FEMA was ignoring the intent of Congress to keep the NFIP operating during a shutdown expressed when on Dec. 21, 2018, it passed legislation that reauthorized the NFIP until May 31, 2019.
Critics also argued that any disruption in sales of flood insurance could hold up real estate closings. “FEMA’s unexpected decision will complicate and delay loan closings for borrowers who are required to carry flood insurance and seek NFIP coverage for as long as the government shutdown continues,” the American Banking Association (ABA) said in a statement earlier yesterday.
FEMA said all NFIP insurers have been directed to resume normal operations immediately and advised that the program will be considered operational since Dec. 21, 2018 without interruption.
Sen. John Kennedy, R- La., a sponsor of the NFIP reauthorization bill, was among the lawmakers trying to get FEMA to restart normal operations.
“It’s taken a lot of phone calls to Washington, D.C., but FEMA finally came around to what I recognized from the beginning. My reauthorization legislation, which was signed by President Trump into law, prevents any disruption to the National Flood Insurance Program,” said Sen. Kennedy.
Rep. Maxine Waters, D-Calif., ranking member of the House Committee on Financial Services, was among those who also urged FEMA to reconsider what she called its “harmful and incorrect interpretation of its authority” and resume its “important work of providing flood insurance.”