Wind Damage Provision Pullled from Flood Insurance Bill

WASHINGTON — A Senate measure that would have added windstorm coverage to the National Flood Insurance Program was withdrawn at the last minute Wednesday because sponsors said it didn't have enough support.

The Senate Banking Committee then unanimously adopted a bill to forgive more than $20 billion of the program's debt.

The windstorm provision is "tremendously important" to coastal states that are vulnerable to hurricanes, Sen. Mel Martinez, R-Fla., told the Banking Committee. But just before the meeting, Martinez said the amendment he and fellow panel member Sen. Charles Schumer, D-N.Y., had been pushing would be withdrawn.

"People in Florida don't realize it's very difficult to get senators who are not from coastal areas to support" the windstorm coverage, Martinez said. About 40 percent of the roughly 5 million flood insurance program policyholders are in Florida.

Sen. Chris Dodd, D-Conn., the committee's chairman, said that while he sympathized with the intent of adding wind coverage to the flood insurance program, he would have opposed the amendment because its cost was unclear.

Dodd noted that the committee already has supported a bill by Martinez and Sen. Bill Nelson, D-Fla., to establish an advisory commission to make recommendations about national catastrophe coverage. He said he expected the wind coverage issue to be considered by the panel.

Efforts to expand the federal flood program to cover wind damage have drawn sharp opposition from the insurance industry.

"Our concern is that the federal government ... doesn't enact measures that would displace the private market," said Dennis Kelly, spokesman for the American Insurance Association. "In this case, the private market does provide wind coverage."

"It would be monumental for the (program) to take on that exposure" by adding wind coverage, he said.

The House passed a flood insurance bill last month, 263-146, that would allow people who purchase flood insurance to add a wind coverage provision. The bill would require that such coverage carry actuarially sound premiums.

A provision in the House bill calls for a study of what impact the wind coverage measure would have on state insurance programs such as Citizens Insurance Co. in Florida.

But the odds appear slim that the wind provision will stay in the final flood insurance bill the two chambers are to negotiate later. The White House Office of Management and Budget has warned that it would recommend that President Bush veto the final bill if it includes the provision.

The bill approved Wednesday by the Senate panel, like the House bill, would allow flood insurance premiums to increase 15 percent a year, rather than the current 10 percent.

Also, like the House bill, it would phase out over five years premiums on vacation houses, second homes and commercial properties built before 1974 that are not actuarially sound.

Dodd said the federal government had to forgive the flood insurance program's debt, because otherwise annual premiums would have to be roughly doubled. He noted that interest costs alone on the debt are about $900 million a year.