In my last two posts I wrote about the threatened expiration of the National Flood Insurance Program (NFIP) and stop-gap legislation that averted the lapse. NFIP’s authorization to operate is now extended to May 31, 2019. Despite the reauthorization legislation, FEMA announced it would halt NFIP’s authority to issue new and renewal flood policies until the full government reopens, citing the partial shut-down and lapse in appropriations.

On December 26, 2018, FEMA announced changes to NFIP’s operations due to the shutdown. FEMA advised that NFIP insurance policies in force before midnight on December 21, 2018 (the date the President signed the reauthorization legislation), remain in force and pending claims under those policies will be paid. FEMA also said the NFIP will now have “limited ability” to issue new policies, issue increased coverage on existing policies, or issue renewal policies.

As noted in my last post, during past shutdowns the NFIP stopped issuing new flood insurance contracts or renewing existing policies, which complicated and delayed home sales and closings.

FEMA announced NFIP’s limited operations even though the reauthorization legislation was intended to keep the NFIP up and running during the partial shutdown. FEMA did not define “limited ability” or indicate how long this change would be in effect.

On Friday December 28, 2018, in response to criticism from lawmakers and the banking, insurance, and real estate industries, FEMA reversed its position by announcing that all NFIP insurers will immediately resume the normal sale of new insurance policies and renewal of expiring flood policies.

The December 28 order rescinds FEMA’s prior decision to limit NFIP’s authority to issue new and renewal policies.

We will continue to follow this situation so check back for additional information. FEMA is not updating its website due to the shutdown.