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Congress avoided a lapse in the federal flood insurance program when the Senate today voted 86-12 to extend authorization for the program by four months to Nov. 30.

The National Flood Insurance Program would have expired at the end of today had the Senate not acted.

The House also voted last week to temporarily reauthorize the program.

President Trump is expected to sign the reauthorization before the program lapses.

The reauthorization does not include any reforms to the program.

Despite years of debate and proposals to reform the program, reforms have stalled. Instead, Congress has passed six short-term extensions of the program. Lawmakers also let the program lapse in 2017 and 2018.

The House passed legislation with reforms more than a year ago; the Senate has yet to do so.

Some in the insurance industry are concerned that Congress may again let the program lapse after this latest renewal and continue to postpone reforms.

“A lapse in the NFIP during the height of hurricane season could impact the ability of the program to promptly pay claims if there is a major flooding event, delay recovery efforts related to the catastrophic 2017 storm season and disrupt real estate markets across the country,” said Jennifer Webb, federal affairs counsel for the Big “I” independent agents association. She said the Big “I” supports a “long-term extension of a modernized NFIP” that would increase flood insurance buyers in both the NFIP and in the private insurance market.

“Congress has avoided disaster by passing this extension of the National Flood Insurance Program, but simply kicking the can down the road is not a solution,” said Jimi Grandi, senior vice president, Government Affairs, National Association of Mutual Insurance Companies. “The problems with the NFIP are well known, and a four-month extension amid the politics of the midterm elections does not inspire much hope for meaningful reform that would provide needed stability for the NFIP and the millions of policyholders who rely on the program,”

There are 5.2 million NFIP policies in force.

The House of Representatives passed a measure to reauthorize the nation’s flood insurance program for four months beyond its current July 31 expiration date.

The House measure to renew the National Flood Insurance Program (NFIP) until November 30, 2018, contains no reforms.

The Senate must still act as well to avoid a lapse in the program. A spokesman for Senate Majority Leader Mitch McConnell told the Washington publication The Hill that the Senate would go along. In June, the Senate included a six month NFIP extensionin a broad farm bill that is now in conference committee between the two legislative bodies.

Today’s House action was taken over a protest by Rep. Jeb Hensarling, R Tex., chair of the House Financial Services Committee, who argued against another short-term extension without reforms. Congress has passed six short-term extensions of the program; it also let the program lapse in 2017 and 2018.

Hensarling argued the House should force the Senate to vote on reforms.

“I want to make it very clear, Mr. Speaker, I believe this program needs to be re-authorized, and the House has done its work,” he said in remarks on the House floor. “The House passed a bill with reforms last November. Never underestimate the Senate’s capacity to do nothing, and unfortunately the Senate has done nothing. But this is a program, Mr. Speaker, that continues to be in dire need of reform. And now we have re-authorized it without reforms not once, not twice, not three times, not four times, not five times – six times since the Financial Services Committee first reported this bill out. Enough is enough.”

Hensarling reminded his fellow lawmakers that 116 lives were lost last year to flooding and there were billions and billions of dollars of property loss, “[A]nd yet, we have a program unreformed that incents people to live in harm – incents people to live in harm’s way. We should not do this, Mr. Speaker,” the Republican said.

House leadership went ahead with the vote and the four-month stop-gap funding bill passed overwhelmingly, 366-52.

Insurance, banking, consumer and taxpayer groups welcomed the House move to avoid a shutdown on July 31 but joined Hensarling in calling on Congress to address the need for reform of the program.

“It is good news that the House voted to keep the NFIP going, but Americans who face the devastating peril of flooding should be able to hold Congress to a higher standard than simply avoiding a lapse,” commented Jimi Grande, senior vice president, Government Affairs, for the National Association of Mutual Insurance Companies. “The time for doing the bare minimum is long past.”

Lenders warned of the effects on the real state market if the Senate fails to follow through. “If there is a lapse, many loan closings in high-risk areas will be delayed or otherwise complicated, resulting in additional costs and borrower frustrations,” said Rob Nichols, president and CEO for the American Bankers Association.

The Independent Insurance Agents and Brokers of America (Big “I”) also urged prompt action by the Senate to extend the NFIP. “A lapse in the NFIP during the height of hurricane season could impact the ability of the program to promptly pay claims if there is a major flooding event, delay recovery efforts related to the catastrophic 2017 storm season and disrupt real estate markets across the country,” said Jennifer Webb, Big “I” counsel, federal government affairs.

Nat Wienecke, senior vice president of federal government relations at the Property Casualty Insurers Association of America (PCI), had a similar message, noting the while the “four-month extension provides homeowners and businesses with certainty through hurricane season,” Congress should enact reforms that will provide “more consumer options and greater financial stability to the NFIP.”

The environmental and taxpayer coalition SmarterSafer called it “disheartening” that Congress has once again declined to enact reforms to the NFIP, which it noted has borrowed more than $25 billion from taxpayers. “We urge Congress to use the next four months to create a comprehensive legislative package that ensures that the program better protects people in harm’s way, the environment and taxpayers,” the group said.

There are at least three reasons for an individual to buy a personal umbrella policy.

To begin with, the primary policies otherwise available generally do not provide liability limits commensurate with the exposure such individuals may face.

Second, the cost of this excess coverage is comparatively cheap.

Third (and perhaps most importantly), umbrella policies not only provide coverage when losses exceed the available primary limits, but add coverage for certain types of losses, such as “personal injury” claims that are generally not covered by primary policies.

Although the limits of homeowners insurance and other forms of personal primary insurance have increased, most only provide coverage with “per occurrence” limits of $300,000 or $500,000. Substantial as that sum may seem, it is hardly sufficient to satisfy the liability an insured may face due to a serious accident.

Umbrella coverage is also surprisingly affordable. As a result, umbrella insurers are willing to quote coverage of $1 million to as much as $10 million at rates that are proportionally cheaper than primary insurance. Umbrella carriers can quote coverage with confidence that statistics show their insureds are unlikely to be sued, and any resulting suits are likely to be resolved within the limits of the insured’s primary coverage.

Umbrella insurance not only boosts available coverage limits at a relatively advantageous cost compared to dollar limits on primary policies, but it does so with respect to a portfolio of primary risks. Thus, an insured has excess coverage available for serious auto or premises liability claims without having to pay to increase limits on primary insurance policies that would insure these separate risks.

Umbrella insurance presents a particular feature that separates it from other types of excess insurance.

Umbrella policies (deemed “bumbershoot” policies in the London market) not only provide insurance coverage once the primary limits are exhausted, but they drop down to provide primary coverage for certain types of losses that may not be covered under the insured’s primary policy.

For instance, umbrella policies typically include “personal injury” coverage for quasi-intentional tort losses, such as claims for wrongful entry or eviction, defamation or disparagement and malicious prosecution or false arrest that many homeowners policies do not cover. Umbrella policies may also define “bodily injury” to include claims for emotional distress that primary policies do not cover. In these cases, the umbrella insurer will step in to defend the underlying claim and fill a gap in the insured’s coverage profile that might otherwise prove expensive and perilous.

While the decision to purchase umbrella coverage should be an obvious one for most policyholders, deciding whether to buy umbrella coverage from the same company that underwrites your primary policies may be more difficult. Some primary insurers may be willing to discount the cost of such insurance when the policyholder agrees to buy a package of policies. Using the same insurer may also avoid a seamless web of insurance and avoid unexpected gaps due to conflicting wordings.

At the same time, having a different insurer write the excess coverage may be to the benefit of the insured in cases where the primary insurer is reluctant to accept coverage and the excess insurer acts in concert with the policyholder to apply pressure to the primary carrier to pay the loss or defend.

Personal umbrella policies can help customize insurance coverage by filling gaps in a client’s coverage profile and raise the limits of coverage to safer levels. In short, the answer to the question of whether an insured should buy personal umbrella insurance is not “yes, you should” but rather, “why on earth would you not.”

The federal government has approved Florida’s request for $616 million that will be partially used to repair homes destroyed or damaged by Hurricane Irma last year.

Gov. Rick Scott and Housing Secretary Ben Carson announced the approval in a conference call last week.

Irma hit the Florida Keys on Sept. 10 as a Category 4 storm, destroying 1,200 homes and damaging 3,000 there.

The storm was a Category 3 when it reached the mainland near Naples. It weakened but did significant damage as far north as Jacksonville.

The state’s plan says $273 million will be spent fixing and rebuilding 6,000 homes. Another $100 million will be used to build affordable housing, $75 million to buyout homes in high-risk areas, $62 million for administration and $60 million for small business recovery.

Cost savings in two Florida funds paid into by workers’ compensation carriers are expected to equal a nearly $20 million reduction in expenses for insurers operating in the state next year, according to a statement from the Florida Department of Financial Services.

The cost reductions are a direct result of the sound financial management of the Workers’ Compensation Administration Trust Fund (WCATF) and the Special Disability Trust Fund (SDTF), two funds that workers’ compensation carriers contribute to, DFS said.

Florida Chief Financial Officer (CFO) Jimmy Patronis said the reductions in costs for insurers are expected to translate into savings for Florida businesses in 2019.

“Reducing the cost of doing business for workers’ compensation carriers by $20 million means additional savings could be passed on to Florida businesses, easing financial burdens,” Patronis said.

Legislative changes in 1997 resulted in the SDTF being prospectively abolished and statutorily prohibited from accepting any new claims for dates of accident after Dec. 31, 1997. However, in accordance with Florida law, insurers and individual self-insured employers continue to be assessed to fund a small number of older claims. Further, fiscally responsible management of the WCATF has allowed for assessment rates to be reduced.

The 2019 assessment rate reduction will be the seventh reduction for the WCATF, and the ninth for the SDTF.

DFS said other factors that contribute to a healthy Workers’ Compensation Administration Trust Fund (WCATF) that enable the CFO to reduce the assessment rate, include but are not limited to:

• Division of Worker’s Compensation, Bureau of Compliance enforcement actions;
• Increase of exemption applications processed due to a healthy economy;
• Other regulatory fines, fees and infrequent wind-falls for the WCATF;
• Decrease in COLA payments to seriously injured claimants.

These expected costs reductions come on the heels of the Florida Office of Insurance Regulation approving a 1.8 percent decrease in workers’ comp rates, effective June 1, 2018. The decrease, filed by the National Council on Compensation Insurance (NCCI), was attributed to a change in the profit and contingency factor thanks to the recently-passed Tax Cuts and Jobs act. DFS estimated the change could equal a $79.5 million savings for Florida businesses.

Scientists at Colorado State University’s Tropical Meteorology Project have decreased their forecast and now believe that 2018 hurricane season will have below-average activity.

According to the forecasters, the tropical and subtropical Atlantic is currently much colder than normal, and the odds of a weak El Niño developing in the next several months have increased.

With the decrease in the forecast, the probability for major hurricanes making landfall along the United States coastline and in the Caribbean has decreased as well, report Philip J. Klotzbach and Michael M. Bell.

The Colorado team now estimates that the rest of 2018 will see additional 4 hurricanes (median is 6.5), 10 named storms (median is 12.0), 41.50 named storm days (median is 60.1), 15 hurricane days (median is 21.3), 1 major (Category 3-4-5) hurricane (median is 2.0) and 2 major hurricane days (median is 3.9).

The forecast cites a 22 percent probability of a direct hit to the eastern United States; the average is 31 percent.

This revised prediction is a decrease from the group’s prior seasonal forecasts issued in April and June and there remains some uncertainty with this forecast. This forecast is based on an extended-range early July statistical prediction scheme that was developed utilizing 36 years of past data.

In explaining the changed forecast, they note that the tropical Atlantic is much colder than normal. “A colder than normal tropical Atlantic provides less fuel for developing tropical cyclones but also tends to be associated with higher pressure and a more stable atmosphere,” the forecasters note. “These conditions tend to suppress Atlantic hurricane activity.”

Also, the odds of a weak El Niño for the peak of the Atlantic hurricane season in 2018 have increased somewhat. If El Niño were to develop, it would tend to lead to “more vertical wind shear in the Caribbean extending into the tropical Atlantic, tearing apart hurricanes as they are trying to develop and intensify.”

At the start of the hurricane season in June, National Oceanic and Atmospheric Administration estimated total of 10 to 16 named storms, tropical-strength or stronger, would likely affect the U.S., Mexico and the Caribbean. NOAA predicted that one to four of them might become major hurricanes.