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Flood cover bill makes progress in Congress

Posted On: May. 8, 2016 12:00 AM CST

Supporters of a greater private insurance presence in the flood insurance market may get closer to their goal — if the congressional calendar doesn't run out.

That's because the House of Representatives voted 419-0 in favor of the Flood Insurance Market Parity and Modernization Act in late April. The legislation clarifies that people who buy private flood insurance should receive the same treatment as those who purchase it through the National Flood Insurance Program if they're trying to obtain federally backed mortgages that require flood insurance.

Although private insurers already provide flood insurance for commercial enterprises, insurers have shied away from underwriting homeowner and some smaller business accounts. Meanwhile, the NFIP has fallen more than $20 billion into debt for losses dating back to Hurricane Katrina in 2005.

The bill enjoys the support of the insurance industry and outside groups. Although companion legislation had been introduced in the Senate, it hasn't been the subject of a hearing, let alone a vote. With the legislative calendar shrinking and national elections looming, the measure could face long odds in the Senate.

Meanwhile, the NFIP itself is up for reauthorization next year, and some observers think the reform measure could hurt that effort.

But for now, supporters draw hope from the overwhelming support H.R. 2901 enjoyed in the House.

“I am optimistic, given the unanimity of the House vote,” said Jenn Fogel-Bublick, a partner in the Washington advocacy firm Capitol Counsel L.L.C., which represents SmarterSafer.org.

SmarterSafer includes insurers, environmental groups, free-market advocates and others that support reforming the NFIP.

“I think given the vote, we feel like we have a good shot of getting the Senate to consider it. I think any concerns with the bill hopefully will be erased given that every representative on both sides of the aisle supported the bill, Ms. Fogel-Bublick said.

“We'd certainly like to see the Senate take action” on the noncontroversial bill that enjoys bipartisan support, said Frank Nutter, president of the Washington-based Reinsurance Association of America.

Ray Lehmann, senior fellow at free-market advocacy group R Street Institute in Washington, which is a member of SmarterSafer, called the bill a “step toward a private market.”

He noted that one potential source of opposition has not materialized.

“The lending community is where there would be objections, and the bankers and other groups have not raised any serious concerns,” Mr. Lehmann said. “It has support from the Realtors. Most of the organizations that are interested are either neutral or positive.”

“It came out of committee 53-0 and out of the House 419-0,” said Tom Santos, a vice president at the Washington-based American Insurance Association. “I think there are opportunities here.”

Despite cautioning that “there are always difficulty with calendars,” Mr. Santos said that “this is something that is eminently doable” and that he thought the House vote created momentum.

Other supporters sounded a more cautious approach.

“Anytime you have 419 to zero, that's a pretty good start,” said Nat Wienecke, senior vice president in the Washington office of the Property Casualty Insurers Association of America.

“We know we have a lot of support, but the trick's going to be what could the process be for this bill to be considered.”

It's “unlikely” that Senate Majority leader Mitch McConnell, R-Ky., “would schedule valuable, precious floor time for a bill like this,” Mr. Wienecke said. “Our question is, is this something we can get the Senate to take a look at” by attaching it to other legislation “or to consider through some sort of truncated time agreement between the majority and minority?”

“The outlook is uncertain, which doesn't portend well for the looming expiration of the program next year,” said Jimi Grande, senior vice president in the Washington office of the National Association of Mutual Insurance Companies. “This doesn't seem to be top priority for the Senate, but it's certainly on the list for a few key senators to try to find a way to get done.

“When I say it doesn't portend well for next year, this is a simple, no-brainer, bipartisan step in the right direction, and it's having trouble getting through Congress. So the far more controversial program reauthorization and reform is going to be a heavy lift,” he said.