Subject to the dangers of hurricanes, Hawaii has an interest in the vitality of the National Flood Insurance Program (NFIP) that is set to expire on September 30, 2008, unless renewed by Congress.

     The program was created in1968 because the private sector does not adequately provide flood insurance. Under the program, ninety insurers sell and service flood policies on the government’s behalf.  The companies process claims and collect premiums, which are passed to FEMA.  Both the House and Senate are considering bills to make incremental changes in the program.

     Reuters reports the Government Accountability Office is preparing a report that is expected to focus on the potential conflict of interest presented by insurers that sell both wind and flood policies to the same homeowner.  Insurers contend they have not unfairly attributed wind damage from Hurricane Katrina to water.  Another concern is the amount of money FEMA pays private insurers for flood claims.

     The Gulf hurricanes of 2005 left the NFIP $17.3 billion in debt.   The Senate bill would forgive this debt, but would not expand coverage to wind damage.  The House would not forgive the NFIP’s debt, but would extend coverage to wind damage.  The Bush administration threatens to veto the House bill, and the extension to cover wind damage is opposed by the insurance industry.