Washington, DC-- U.S. Representative Judy Biggert (R-IL-13)today introduced legislation to reform the beleaguered National Flood Insurance Program (NFIP). Biggert, who chairs the Financial Services Subcommittee on Insurance, Housing and Community Opportunity, launched hearings on the topic last month, concluding today with testimony from Craig Fugate, the Federal Emergency Management Agency (FEMA) Administrator, who oversees the program. Following the hearing, Biggert introduced her proposal, H.R. 1309, the Flood Insurance Reform Act of 2011, which provides for a long-term reauthorization of the NFIP and important reforms that would improve its financial stability, reduce the burden on taxpayers, and provide avenues to increase private sector participation in the flood insurance market.
"NFIP is deeply in debt, and its current structure simply cannot provide the reliable protection that homes and businesses need without putting taxpayers at extraordinary risk," said Chairman Biggert. "By putting the program on sound financial footing and encouraging private sector participation within the market, our bill addresses the concerns of homeowners, businesses, industry experts, and taxpayers."
The NFIP currently operates with a $17.75 billion debt, and the Government Accountability Office has listed the NFIP as high-risk since 2006. Last reformed in 2004, the program has been widely criticized for under-pricing risk and promoting development in flood-prone areas that are more suitable for conservation.
"We need to restore the financial integrity of NFIP, and that requires better flood maps, actuarially sound pricing, and direction for FEMA to better manage risk," said Biggert. "The Flood Insurance Reform Act does all three. Next Wednesday, our subcommittee will hold a mark-up on the bill, and I look forward to working with my colleagues on both sides of the aisle to expedite its passage."
Cosponsored by subcommittee members Maxine Waters (D-CA-35), Scott Garrett (R-NJ-5), Robert Dold (R-IL-10), Shelley Moore Capito (R - WV),and Steve Stivers (R-OH-15), the bipartisan legislation would reauthorize the program for five years. Lawmakers hope to pass the bill before the current authorization for the program expires this September. According to the Illinois Department of Natural Resources, more than 250,000 Illinois buildings and 15% of Illinois land lies in floodplains, which could be affected if the program were allowed to expire.
H.R. 1309 reflects changes made to an earlier draft of the bill released last month. Among those changes are technical clarifications to language regarding risk mapping standards and to FEMA's authority to consider the demolition or rebuilding of certain properties as an eligible activity for mitigation assistance. Also, new language was added to the bill to clarify FEMA's authority to utilize private reinsurance in lieu of taxpayer exposure to mitigate risk, as well as a requirement that the agency seek and report on proposals from the private market for assuming risk within the program.