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Flood cover debate set to heat up as expiration nears

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SAN ANTONIO — The National Flood Insurance Program will be the subject of a “major showdown” in Congress as it approaches its scheduled expiration on July 31, according to legislative experts.

The $1.3 trillion omnibus spending bill signed by President Donald Trump in March raised concerns about the fact that the NFIP was decoupled, meaning separated, from must-pass funding of the federal government. This means that the NFIP is scheduled to expire and run out of borrowing authority in the middle of the 2018 hurricane season.

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, “is trying to box in the Senate to force them to move on a package that would have more reforms that are dedicated to actuarial soundness,” Joel Wood, Washington-based senior vice president for government affairs for the Council of Insurance Agents & Brokers, said at the Risk & Insurance Management Society Inc.’s 2018 annual conference in San Antonio on Monday. “But he hasn’t been successful on jamming the Senate on much of anything over the last five years.”

“They try to put leverage on the Senate to act, and the Senate doesn’t accept that leverage and then it gets down to all the lenders in the country jumping on the members backs” about mortgages that will be out of compliance with their terms and the inability to lend money because required flood insurance is unavailable, said James McIntyre, partner and founder of Washington-based law firm McIntyre & Lemon P.L.L.C. and RIMS Washington counsel.

Rep. Steve Scalise, R-La., will be a key legislator to watch because more than half of his district is below sea level, and actuarially sound rates could mean significant rate increases for his constituents, Mr. Wood said.

“This is going to be a major showdown at the end of July,” he said. “I think this is … from a property/casualty standpoint, the biggest remaining issue of the year in the Congress.” “There’s a lot of pressure being brought on members of Congress to reauthorize this program,” Mr. McIntyre said. “I think it will be reauthorized. Many of the reforms probably will not be adopted until after 2018 midterm elections.”

The same inaction could be true in relation to efforts to create a national cyber security standard, experts say.

Fifty states now have data security laws, creating a “patchwork quilt” of legislation, so RIMS has been lobbying for a national standard outlining what constitutes a breach, who must be notified — whether individuals and/or regulators — and timelines to ensure uniformity, Mr. McIntyre said.

“I don’t see much left that this Congress in this political environment is going to be able to achieve, even when there is a lot of bipartisan sentiment, even when much of this is not liberal/ conservative, Republican/Democratic,” Mr. Wood said. The caveat is that “the next Equifax, they’re going to move on it. If there is a very significant breach that is a national headline-grabbing event, which I don’t think any of us would be shocked to see in the coming months, this could be something that could be on the rocket docket.”