Despite enactment of legislation late last week to reauthorize the operational authority of the NFIP through May 31, the NFIP has started orderly shutdown procedures. Yesterday, the NFIP told stakeholders that the program will be operated in a limited capacity during the ongoing government shutdown.
Further guidance from the NFIP is expected, but for the time being, the NFIP will not issue new policies or make changes to existing policies. Renewal policies cannot be issued, either. However, other aspects of the NFIP will continue to operate, including claims processing.
FEMA’s reasoning for this limited operation is that during the shutdown, the sale of policies may continue only if necessary for the protection of property under a federal statue referred to as the Anti-Deficiency Act. FEMA’s current opinion is that the short-term interruption of flood insurance sales does not rise to the level of necessary market impact to warrant an exception to the Anti-Deficiency Act.
However, should the shutdown continue for a substantial period of time, the NFIP could start issuing policies again if FEMA believes there to be a significant market impact.
The Big “I,” and many others in the insurance market, are extremely disappointed with FEMA’s bureaucratic decision, which defies the clear intent of Congress. Over the holidays, the Big “I” has been working with Congress and the Trump Administration to encourage FEMA to reverse its decision, and is also leading a coalition of trade associations to respond to FEMA’s decision.
The Big “I” will keep members updated via the News & Views e-newsletter as new developments arise.
Jennifer Webb is Big “I” federal government affairs counsel.