WASHINGTON – Congress has agreed to boost the borrowing power of the federal flood insurance agency, which is fast running out of money needed to meet some 225,000 claims from hurricanes Katrina and Rita.
The legislation, passed by voice vote in the Senate late Thursday, allows the National Flood Insurance Program to borrow up to $20.8 billion from the Treasury, up from the current ceiling of $18.5 billion.
A year ago, before last summer's hurricanes, the borrowing limit was set at $1.5 billion.
The measure, approved by the House last month, now goes to the president for his signature.
The NFIP, set up in 1968 to help homeowners in flood-vulnerable areas get flood insurance at a reasonable rate, operates within the Federal Emergency Management Agency.
It has estimated claims liabilities from Katrina and Rita at $24 billion, more than the total of all claims paid in the history of the program. The agency had said that, without congressional action, it would hit its current borrowing ceiling this month and would have to tell insurance companies that administer claims payments to stop all such payments.
The NFIP insures about 4.4 million policyholders in some 20,000 communities across the country. Participating communities must agree to carry out floodplain management and other steps to reduce losses from floods.
Also on Thursday, the House Financial Services Committee approved a bill to improve the financial viability of the NFIP by giving FEMA greater authority to raise rates and increasing fines for non-enforcement of the mandatory purchase requirement. The measure would also increase the program's borrowing authority to $25 billion.
The Senate Banking Committee plans to take up a similar measure in the next few weeks.
That legislation follows on an act passed by Congress in 2004 to crack down on property owners who file repeated claims for flood damage without relocating or floodproofing their homes.