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National Flood Insurance Program reform proposals circulate

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The National Flood Insurance program would be revamped and reauthorized for five years, according to a series of legislative proposals from the House Financial Services Committee.

The circulated drafts revolve around six key areas of reform: addressing consumer cost and affordability; providing greater private market access, competition and consumer choice; encouraging flood mapping reforms and fairness; enhancing mitigation efforts for properties that flood frequently; strengthening taxpayer protections; and implementing NFIP claims processing and Superstorm Sandy reforms.

The private market section includes a provision calling for the elimination of the noncompete requirement, meaning elimination of the regulatory restriction that currently prevents insurers participating in the NFIP’s Write Your Own program from selling both NFIP and private flood insurance policies, according to the draft.

The taxpayer protection section includes a provision requiring the Federal Emergency Management Agency administrator to use risk transfer tools such as reinsurance, catastrophe bonds, collateralized reinsurance, resilience bonds and other insurance-linked securities to reduce direct taxpayer exposure to insurance losses.

The NFIP is in currently in debt to the tune of $24.6 billion.