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The House Financial Services Committee has adopted a series of measures to reform and reauthorize the National Flood Insurance Program for five years.
The program is set to expire on Sept. 30, 2017, and the committee has been working on a series of proposals to revamp the program, which it adopted over the past week.
“We’re pleased that they are moving forward,” said Steve Ellis, vice president of the Washington-based Taxpayers for Common Sense. “We know that Sept. 30 is right around the corner. Having gotten through the committee and hopefully getting to the House floor within a month or so would put us in a good position and show leadership to the Senate to get them to start moving on their legislation as well.”
H.R. 1422, the Flood Insurance Market Parity and Modernization Act, would clarify that flood insurance policies written by private carriers satisfy the mandatory purchase requirement, meaning that people who buy private flood insurance would 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. It passed the committee by a vote of 58-0.
Taxpayers for Common Sense pushed hard for inclusion of the parity provision, which ultimately received unanimous bipartisan support, Mr. Ellis said.
H.R. 1558, the Repeatedly Flooded Communities Preparation Act, would amend the National Flood Insurance Act of 1968 to ensure community accountability for areas repetitively damaged by floods by requiring them to develop mitigation plans. It passed the committee by a voice vote.
While these properties comprise of just 1% of the claims filed through the NFIP, they have historically accounted for between 25% and 30% of the program’s losses, said Laura Lightbody, director of the flood-prepared communities’ initiative of the Pew Charitable Trusts in Washington.
“The committee paid a lot of attention to properties that flood over and over again,” she said. “The reason they are important to address is that they are a big financial drain on the NFIP, which is nearly $25 billion in debt. There’s a real interest from both sides of the aisle to reduce that financial burden and make these people safer.”
H.R. 2246, the Taxpayer Exposure Mitigation Act of 2017, would repeal the mandatory flood insurance coverage requirement for commercial and multifamily properties located in flood hazard areas and to provide for greater transfer of risk under the NFIP to private capital and reinsurance markets. The bill passed the committee by a vote of 36-24.
H.R. 2565 would require the use of replacement cost value in determining the premium rates for flood insurance coverage under the National Flood Insurance Act and for other purposes. The bill passed the committee by a vote of 34-25.
H.R. 2875, the National Flood Insurance Program Administrative Reform Act of 2017, would make administrative reforms to the NFIP to increase fairness and accuracy and protect taxpayers from program fraud and abuse. It passed the committee by a vote of 58-0.
“I think the process is a good start to making improvements to the program,” Ms. Lightbody said.
Reform of the National Flood Insurance Program should include a shift toward risk-based premium rates so property owners know the true cost of the risk and an emphasis on mitigating the risk for repeatedly flooded properties, according to experts.