Claims against the National Flood Insurance Program for hurricanes Katrina and Rita will far exceed existing funding and will require an emergency appropriation from Congress of as much as $5 billion, an official for the Federal Emergency Management Agency, which runs the program, told Congress last week.
Claims are expected to reach as much as $22 billion, the highest ever, David Maurstad, the acting director of the program, told the Senate Banking Committee during Tuesday's hearings. But several witnesses testifying at the hearing noted that even more flood losses caused by America's worst natural disaster are uninsured, potentially passing on those losses to credit unions, banks and other mortgages lenders.
Sen. Richard Shelby (R-AL), chairman of the banking panel, suggested that Congress will bail out the flood program and provide the necessary funding to make it solvent. "As FEMA currently lacks the reserves to pay the expected claims from Hurricane Katrina, I believe bringing the insurance fund to financial solvency is necessary to assure that all claims are paid in a timely and fair manner, so that impacted families can rebuild their lives as quickly as possible," said Shelby.
