The Obama administration will ask Congress to raise the NationalFlood Insurance Program's borrowing authorityby more than $4billion to $25 billion during the current lame-duck session,according to federal, state and industry officials. The currentborrowing authority is $20.775 billion.

The administration will move promptly on the issue to ensure norepeat of what happened in 2005 in the aftermath of HurricaneKatrina, according to Don Griffin, vice president of personal linesat the Property and Casualty Insurers Association of America andhead of the industry's flood insurance coalition.

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That was when the Federal Emergency Management Agency had totell write-your-own companies to stop writing checks to pay claimsbecause the NFIP was out of money and borrowing authority, Griffinsaid.

At the same time, Michael Chaney, Mike Cheney, Mississippiinsurance commissioner and head for the flood insurance workinggroup of the National Association of Insurance Commissioners, saidan informal survey of congressional delegations indicates concernin Congress about revisiting the program so soon after Congressjust passed legislation in July extending the program untilSeptember 2017.

But Steve Harty, president and CEO of National Flood Services,Inc. in Kalispell, Mont., which provides back office services toWYO companies, said Congress will have to act.

“This is not an entitlement program,” Harty said. “This is acontract with the American people.”

Harty said that, “Hurricane Sandy crashed unexpectedly into thelives of millions of homeowners, renters and businesses. Morethan 100,000 of them will file a claim, quite a few for the totalinsured value of their now-destroyed homes.”

Harty said that while many more people should have bought floodinsurance when they had the chance, the federal government has anethical and legal obligation to pay in full the claims filed bypeople who have loyally paid their NFIP premiums year in and yearout.

“Paying a claim is not an emergency handout – it's fulfillingthe government's part in an insurance contract. It's returning topolicyholders the money they paid in over the years aspremium.”

Harty said it is clear that losses from Sandy will exhaustavailable NFIP reserves, requiring the program to exercise itsalready–authorized borrowing authority.

“But if the NFIP is going to stand up and deliver on thoseinsurance contracts, it will need additional borrowingauthority.”

He said, “If Congress doesn't increase that authority – and doit very soon – tens of thousands of families and businesses will bewithout the cash they need to restore their homes, their businessesand their lives.

“Now-homeless people in Staten Island and New Jersey and on theLong Island shoreline, living in shelters with their homesdestroyed, can't be made subject to the timetable of politics. Thisauthorization has to proceed on the timetable of both good businesspractices and human compassion,” he said.

Tony Bullock, lobbyist for the NFS in Washington, added that itmight be premature to project what the borrowing limit should beincreased because it is still too early to tell what floodinsurance losses from Sandy might be. He said the current estimateis between $6 billion and $8 billion.

Anyway, he said, “an increase in NFIP borrowing authority willbe tucked into must-do legislation before Congress leaves for theyear.”

He added, “Members of Congress won't want to be responsible fordefault of this program.”

Edward L. Connor, deputy associate administration of the FederalInsurance and Mitigation Administration, a unit of the Departmentof Homeland Security, explained the issue to industry officialsWednesday at a meeting of the Federal Advisory Committee onInsurance convened by Michael McRaith, director of the FederalInsurance Office.

He said the “burn rate” at which the agency is going throughmoney will require it to use up its $900 million in cash and itsremaining $2.9 million in borrowing authority by the end of themonth in order to pay claims generated by Superstorm Sandy.

Cheney said his concerns are based on informal talks withvarious congressional delegations by insurance commissionersdealing with the Sandy issue.

This indicated concern by some members of Congress about dealingagain with the NFIP so soon after Congress voted a 60-monthextension of the NFIP in July after five years of effort.

“There doesn't appear to be support in some congressionaldelegations for an increase in borrowing authority because theprogram has just been reauthorized until September 2017. “Theirconcern is that they don't want to revisit the issue this soon,”Cheney said.

At the same time, Cheney said a “compromise is likely to bestruck by the Obama administration and Congress before the lameduck session ends.”

Cheney spoke from the quarterly meeting of the National Councilof Insurance Legislators, now being held in Mobile, Ala.

He said commissioners from Louisiana, Alabama, Texas andMassachusetts held a meeting about the issue in Mobile yesterdaywith industry and FEMA officials, and a panel discussion on theissue is being convened later Friday.

He said commissioners would meet with members of Congress whileattending the quarterly meeting of the NAIC in National Harboroutside Washington, D.C. the week after Thanksgiving and he willhold a public hearing on the issue Dec.2 during the NAIC meeting inNational Harbor.