The House of Representatives overwhelmingly approved a bipartisan bill to reauthorize the National Flood Insurance Program for five years and to improve the troubled program's financial standing.
Congressman Jack Kingston (R-GA) supported the measure and praised its efforts to minimize taxpayer risk, phase out subsidies and encourage private sector involvement. The Senate must act by September 30 when the program is set to expire.
"Flood insurance is an absolute necessity for homeowners and communities in flood plains," said Kingston. "The program must be reformed, however, to reduce taxpayer exposure to risk and to remove barriers to private-sector involvement in the market. This bill is an important first step toward accomplishing the task at hand."
The National Flood Insurance Program, which today covers 5.6 million households and businesses, was established in 1968 to reduce the nation's flood exposure. It was funded in part by congressional appropriations until 1986 when policy premiums and fees covered all expenses and claim payments. After Hurricanes Katrina, Rita, and Wilma brought $17 billion in flood claims in 2005, the program became insolvent.
In addition to extending the program for five years, the bill passed by the House would begin phasing in risk-based premiums and reducing subsidies for certain properties such as those subject to repeat claims. It also raises the cap on annual premium increases to 20 percent, from the current 10 percent cap, and indexes maximum coverage limits to inflation.
The bill encourages the Federal Emergency Management Agency, which manages the program, to seek private reinsurance to reduce taxpayer exposure to risk and orders the agency and the GAO to issue reports on how to encourage private-sector involvement in the market.
Among other reforms, the bill creates a Technical Mapping Advisory Council (TMAC) to establish new rate maps and update flood insurance rates accordingly. The Council also will provide Members of Congress and concerned stakeholders a venue to comment on the new rates as well as voice concerns over existing controversial rates.
Additionally there is language in the bill that stops FEMA from creating new flood maps until TMAC creates its new rate standards.