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Industry hails bipartisan win for NFIP, lauds mapping initiative

Mississippi River flooding

Federal legislators are finally heeding the call to put more resources into flood mapping and mitigation activities to ease the financial burden on the debt-ridden National Flood Insurance Program, experts say.

The U.S. House of Representatives Financial Services Committee on Wednesday approved H.R. 3167, the National Flood Insurance Program Reauthorization Act of 2019, on a 59-0 vote.

“A long-term reauthorization that’s bipartisan is perhaps one of the most striking aspects of the legislation and one of the most important ones given the inability for us to pass a long-term reauthorization that’s truly bipartisan in the previous Congress,” said Jon Gentile, vice president of government relations for the National Association of Professional Insurance Agents in Washington. “This is a really good bill.”

“I think both sides compromised, and that’s not a dirty word,” he added.

The bill would provide $500 million per year over five years for flood mapping and requires the Federal Emergency Management Agency to utilize updated mapping technology, such as LiDAR, and to ensure that maps are adequate for identifying future flood risk.

“I think everybody recognizes the mapping infrastructure in many geographies is a decade-plus old,” said John Dickson, president of Aon Edge in Kalispell, Montana, which sells flood insurance policies. “Having outdated maps doesn’t do anyone any valuable service. Every stakeholder in the industry has been calling for this for a quite a while, so seeing funds specifically attributed to that effort is a huge step forward.”

The bill would provide $200 million each year for five years for the predisaster hazard mitigation program and create the first community assistance program for floodplain management by providing community assistance grants and technical assistance — funding the effort with $20 million each year for five years.

“I think they did a very good job of addressing some concerns,” said Patty Templeton-Jones, president of Wright Flood, a Write Your Own insurer in St. Petersburg, Florida. “Mitigation and mapping — these are all very important things.”

The bill would also allow NFIP policyholders who leave the program to purchase a private policy to return to the NFIP without penalty — a move widely praised by experts who believe it will support the expansion of the private flood insurance market.

“We’re starting to see private companies come into the marketplace,” Ms. Templeton-Jones said. “This is a reassurance to the property owner that if for some reason that market changes or covenants change, that they do have the ability to go back to the NFIP. I think that’s going to open up additional markets for flood insurance.”

But the bill did not place much emphasis on the problem of repetitive loss properties, which 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.

“This is a problem that we have focused a lot on not, only because these properties are a financial drain on the federal insurance program, (but) they can be a real problem for homeowners and for communities,” she said. “But (the bill) could go further in terms of really holding communities accountable to take on these problem areas that have been identified as areas that flood over and over again.”

Alan Rubin, a New York-based principal with Blank Rome Government Relations LLC who works with the firm’s severe weather emergency recovery team, praised many aspects of the bill, including its provision to change the Increased Cost of Compliance program, which currently provides up to $30,000 to help cover the cost of mitigation measures to reduce flood risk and enable policyholders to use ICC coverage to reduce their risk before the property floods, by raising the maximum amount available to $60,000. But he expressed concern that there was no requirement to purchase flood insurance.

“I’d like to see it be mandatory,” Mr. Rubin said. “The states can opt into this. There’s no general way to enforce this. I’d like to see it as more of a requirement out of the banking industry. When banks loan, they don’t necessarily require it. I think they should require it on the residential side, and I think they should require it on the commercial side.”

The NFIP’s current authority is scheduled to expire on Sept. 30, meaning the program would not be able to sell or renew flood insurance policies, start new mapping, continue certain floodplain management activities or award mitigation assistance after that date. The NFIP has experienced 12 short-term extensions and lapsed twice since fiscal year 2017.

“Having the program extended as is obviously has not been the recipe for success,” Mr. Dickson said. “It’s caused a lot of collateral issues that the industry has had to deal with. Seeing the Congress come together and tackle some of these meatier topics — mitigation, mapping — and providing some meaningful time for the program to operate is very welcome legislation.”

Stakeholders are cautiously optimistic about the bill’s chances in the full House and the U.S. Senate, especially because it does not tackle more divisive issues such as how to address the program’s nearly $21 billion debt. Rep. Maxine Waters, D-Calif., chairwoman of the committee, has repeatedly called on Congress to forgive the debt.

“I do have some concerns that the debt was not addressed,” Ms. Templeton-Jones said, adding that she believes Rep. Waters will get Congress to forgive the debt eventually. “I don’t see how FEMA can ever overcome that debt.”

A companion bill would likely emerge from the Senate Banking, Housing and Urban Affairs committee. “The fact that the House could move something that has bipartisan support should light a fire under the banking committee to put some pen to paper when it comes to reforming this program, and not just (short-term) reauthorizations, of which we’ve seen 12 since Hurricane Harvey,” Ms. Lightbody said. “We certainly would like to see more momentum and energy around making this a priority in the Senate.”

The severity and length of the recent flooding disasters in the Midwest underscored the imperativeness of reforming the NFIP, according to some experts.

“At this point in time, I think they recognize what happens when you don’t take action, and they didn’t take action,” Mr. Rubin said. “They recognize you can’t just wait any longer, because there will be another disaster. The debt becomes higher, and if you don’t take remediation actions, it’s just going to happen over and over and over again, and I think they see it now.”


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