Senate committee puts National Flood Insurance Program a step closer to being rescued
A U.S. Senate committee on Sept. 8 approved a bill that would keep the National Flood Insurance Program from expiring at the end of September.
The Flood Insurance Reform and Modernization Act of 2011 was passed by the Senate Banking Committee on a unanimous voice vote. The full Senate now must consider the bill. If the Senate OKs the bill, lawmakers still must work out differences between the Senate legislation and a similar measure passed by the House in July.
|U.S. Rep. Judy Biggert authored the flood insurance reform bill passed by the U.S. House.|
U.S. Rep. Judy Biggert, an Illinois Republican who’s spearheading the House flood insurance bill, says she’s confident a compromise can be reached on the flood insurance reform legislation before the Sept. 30 deadline.
“Given the inclement weather and severe flooding throughout the country, it is especially critical that this program be reauthorized and extended so that no home or business is without the ability to receive coverage,” Tom Santos, vice president for federal affairs at the American Insurance Association, a trade group, says in a statement.
The Senate version of the flood insurance legislation would forgive about $18 billion in debt owed by the National Flood Insurance Program (NFIP), which is run by the Federal Emergency Management Agency. The House version would not forgive the debt, which was caused largely by Hurricane Katrina.
Also, the House version would allow annual rate increases of up to 20 percent for flood insurance, rather than the current 10 percent. Under the Senate version, rate increases would be capped at 15 percent a year.
Both bills seek to better match flood risks with prices paid for flood insurance, and both would extend the program through September 2016.
The House and Senate legislation would “put the program on sound financial footing,” Charles Symington, senior vice president of government affairs at the Independent Insurance Agents & Brokers of America trade group, says in a statement.
“For too long, the NFIP has been run as a government subsidy rather than an insurance program, and the results have been disastrous,” Jimi Grande, senior vice president of federal and political affairs at the National Association of Mutual Insurance Companies, a trade group, says in a statement. “A stronger, stable National Flood Insurance Program is in everyone’s best interest.”
More than 5.6 million American policyholders, mostly homeowners, are covered by the National Flood Insurance Program. Only a few private insurers offer flood insurance on their own.
Some critics have called for eliminating the National Flood Insurance Program and letting private insurers be the only sellers of flood insurance.