Insurance industry officials believe the House will accept the 60-day National Flood Insurance Program extension the Senate passed last week, but an ultimatum in that bill could give the House pause.

News Update: May 31, 2012: House Approves Flood Insurance Extension

Through a resolution that had to be passed by unanimous consent (H.R. 5740), the Senate effectively told the House that to gain an extension of the existing program through July 31, it had to accept a provision requiring the phase out of subsidies for second homes and vacation homes over four years.

The provision goes into effect July 1, and will become permanent law if the House approves the Senate action regardless of what is included in any final NFIP reauthorization legislation.

The requirement that subsidies for second homes and vacation properties be phased out over the four years was the price forced on the Senate by Sen. Tom Coburn, R-Okla., because under Senate rules, action on a bill must be delayed three days from its introduction unless there is unanimous consent.

Coburn refused to provide that consent unless the provision was included.

Coburn argued that after a series of extensions, reforms to the programs should start to be included in the extensions themselves.

“It's either going to be permanent or we are not going to have a flood extension,” Coburn told Roll Call last Thursday in a break of negotiations with Sen. Harry Reid, D-Nev., Senate majority leader, and other members of the Senate.

The House will be required to accept the Senate language when it returns May 30 from its Memorial Day recess or risk suspension of the program just as the hurricane season is about to begin.

The Senate passed its 60-day extension to allow time for it to take action on its five-year-extension bill, S.1940, which would also tighten some mapping rules and provide a road for the private market to participate in the NFIP by giving the NFIP's managers the authority to buy reinsurance on potential claims.

The bill also calls for a study on how the private market could play a larger role in the program.

Two industry officials say they believe the House would accept the Senate bill, but acknowledged that they couldn't assure House action.

Ray Lehmann, deputy director of the R Street Institute, which advises the industry catastrophe issues, says, “The House has a very limited window to act on the temporary extension, and thus might be forced to agree to language they would otherwise not find acceptable.”

An industry lobbyist involved in the talks who asked not to be identified, agrees.

“I think the House will accept the 60-day extension that just cleared the Senate,” he says. “Members don't want to have a lapse and they don't want to be seen as supporting 'subsidies' for vacation homeowners,” he says.

On the five-year bill, the lobbyist says that “if it gets to the Senate floor it will pass [both chambers] easily and everyone agrees that there are no 'deal breaking' issues that can't be resolved in conference.”

This article originally appeared on PropertyCasualty360.com, a sister site of Credit Union Times.

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House Action on Senate's 60-Day NFIP Extension Likely, but Not Assured

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