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The U.S. Senate Committee on Banking, Housing and Urban Affairs has introduced a bipartisan bill to reauthorize and reform the National Flood Insurance Program for six years.
Committee Chairman Mike Crapo, R-Idaho, and Ranking Member Sherrod Brown, D-Ohio, introduced the National Flood Insurance Program Reauthorization Act of 2017 to extend the program, which expires on Sept. 30.
“We have held multiple hearings and worked on a bipartisan basis to hear thoughts and concerns from the program’s stakeholders, regulators and from banking committee members,” the senators said in a joint statement. “This bill represents the many areas where we have found agreement and we look forward to working with our colleagues to address outstanding issues.”
One such provision relates to community preparation for repetitively flooded areas. The bill would direct the Federal Emergency Management Agency administrator to require communities participating in the NFIP and meeting certain repetitive loss criteria to identify areas with, and assess ongoing risks to, repeatedly flooded structures and develop and implement a community-specific plan for mitigating these areas.
The FEMA administrator would be authorized to impose sanctions to noncompliant communities with due consideration of community-specific constraints such as available resources and with due notice.
The bill would clarify that the administrator may utilize risk transfer tools other than traditional reinsurance, including catastrophe bonds, collateralized reinsurance, resilience bonds and other insurance-linked securities. It also directs the administrator to incorporate replacement cost value into the calculation of premium rates, phased in over three years, with full implementation no later than four years after enactment of the legislation.
The bill would also continue an existing authorization of $400 million for the National Flood Mapping Program through 2023.
The package of bills adopted by a key House of Representatives committee to reform the National Flood Insurance Program and put it on a path to financial solvency could help ease private insurers into the market — but some reform provisions conflict with each other, and even bolder ones may not survive the legislative process, experts say.