The Federal Emergency Management Agency will draw $194 million from the U.S. Treasury to meet claim payments from spring floods in Missouri and Louisiana as well as future floods.

FEMA Director James Lee Witt said no taxpayer money will be used to repay the loan; instead, FEMA will pay back the Treasury within three years at the Treasury interest rate of 7 percent.

The reimbursement will be made with money obtained from the National Flood Insurance Program, which gets more than $2.3 million every day in flood insurance premiums.

"This is a rare but not unprecedented action," Witt said Monday. The first time since 1986 that FEMA used this line of credit was in December 1993 following floods in nine Midwestern states. Witt said FEMA borrowed $11 million and paid the loan back with interest within six months as it received additional premium income.

Federal flood insurance could be obtained in 1993 with a five-day waiting period. However, the National Flood Insurance Reform Act of 1994 changed the waiting period to 30 days.

The law also increased the maximum coverage for homes and businesses: from $185,000 to $250,000 for homes and from $60,000 to $100,000 for contents; and for businesses, from $250,000 to $500,000 for buildings and from $300,000 to $500,000 for contents.

The waiting period was extended to prevent residents in flood-prone areas such as Southeast Missouri to become last-minute buyers. Such was the case in 1993.

Between April 1, 1993, and Sept. 30, 1993, when floodwaters covered homes, farms and businesses, 7,820 new flood insurance policies were written in Missouri. Of that total, 1,874 policyholders experienced flood losses that resulted in $48 million in paid claims. Their collective premiums totaled more than $625,000.

More than 1,300 of the policyholders received $38.2 million in claims for flooding that occurred less than 30 days after the policies were purchased. In May 1994, there were almost 22,000 flood insurance policies written, a peak after the 1993 flood. But by March, less than a year later, the number of policies had dropped by nearly 3,000 to slightly more than 19,000.

The record payouts on federally backed flood insurance will save the government between $200 million and $263 million, Witt said.

Witt said that because Louisiana flood victims took flood insurance, 88 percent of the money for flood victims came from the National Flood Insurance Program. Only 12 percent of aid to Louisiana victims had to be financed by taxpayers through FEMA individual and family grants, minimal home repair funds and the interest subsidy for Small Business Administration disaster home loans.

In 1993 these programs, which were funded by taxpayers, represented 59 percent of total aid.

"Flood insurance not only greatly reduces government expenditures for disaster relief, it provides victims with much greater compensation," Witt said. "Disaster grants are a help, but they are very limited, and disaster loans have to be repaid.

"I wish everybody had a flood insurance policy," said Witt. "It is one of the best mitigation measures each of us can take." He said almost 90 percent of all disasters in this country are flood related.

FEMA has statutory authority to borrow up to $1 billion from the Treasury if the number of claims from a catastrophic flood or series of flood events temporarily threatens to deplete the National Flood Insurance Fund.

Approximately 35,000 claims from the Louisiana flood in May are expected. It was preceded by floods in Missouri in May, Louisiana in April, California in March and January, and Texas in October.

Witt said only 10,000 claims were filed after the 1993 Midwest floods, generating $268 million from the National Flood Insurance Program. "The difference is that nearly 40 percent of Louisiana flood victims were covered by flood insurance compared with only 10 to 20 percent of the 1993 Midwest flood victims," he said.

FIA Administrator Elaine A. McReynolds said: "All claims, operating expenses, administrative overhead, and commissions to insurance agents who write and service flood insurance policies are paid from policyholder premiums, not taxpayer dollars. There is no profit margin involved, and premiums are kept low in order to encourage property owners to purchase and maintain flood insurance."