UPDATE 1-U.S. Senate renews flood insurance program

(Adds comments from industry groups, background, byline)

By Kevin Drawbaugh

WASHINGTON, May 13 (Reuters) - The U.S. Senate voted on Tuesday to extend until 2013 a federal program that insures millions of homes against floods and to forgive $17 billion in debt the program built up during Hurricane Katrina.

In an issue of concern to major insurers such as Allstate Corp (ALL.N: Quote, Profile, Research) and State Farm SFITX.O, the Senate approved renewing the National Flood Insurance Program (NFIP) in a 92-6 vote. Last week, it rejected adding wind damage coverage to the program.

The House of Representatives last year also voted to extend the program, but added wind coverage, and refused to forgive the debt. Negotiators from both chambers must now work out those stark differences in a compromise bill to send to President George W. Bush for his signature.

Bush has threatened to veto the House bill. The insurance industry opposes adding wind coverage to the program.

"Including wind coverage in the NFIP would likely have serious long-term repercussions for the program, from which it might not be able to recover," said Carl Parks, senior vice president for government affairs at the National Association of Mutual Insurance Companies, an industry group.

Insurers argue that a wind add-on would expose the flood program to higher risks, a view backed up by a report last week from congressional investigators.

Insurers also say adding wind coverage would crowd them out of a viable business. But some lawmakers complain that it has become difficult to get wind coverage in coastal areas.