The House Financial Services Committee today unanimously approved a long-awaited overhaul of the National Flood Insurance Program (NFIP). The bill, a five-year reauthorization, was authored by U.S. Representative Judy Biggert (R-IL-13), who chairs the Subcommittee on Insurance, Housing and Community Opportunity. Lawmakers hope to send the bill to the President's desk before September 30th, when the program's current authorization is set to expire. Passed by a vote of 54 to zero, H.R. 1309 would improve the NFIP's financial stability, reduce the burden on taxpayers, and provide avenues to increase private sector participation in the flood insurance market.
"Flood waters across the South and Midwest are on the rise, and so is the debt owed by this program," said Chairman Biggert. "We need to put the National Flood Insurance Program back on stable financial footing so that it can provide homeowners with reliable coverage without putting taxpayers on the line for billions in losses. This legislation will give the program long-term stability, help draw better flood maps, and initiate actuarially sound pricing."
NFIP, which currently operates with a debt of $17.75 billion, is administered by the Federal Emergency Management Agency (FEMA) to compliment the private insurance market and expand the availability of flood insurance for U.S homes and businesses. Since 2006, auditors at the Government Accountability Office have identified the program as high-risk, and it has been widely criticized for under-pricing risk and promoting development in flood-prone areas that are more suitable for conservation.
"This program is too important to let lapse, and too in debt to continue without reform," said Biggert. "We listened closely to members from every region to ensure that this legislation reflects a strong consensus among homeowners, businesses, industry experts, and taxpayers. Today's bipartisan vote reflects a widespread recognition that Congress cannot ignore this opportunity to enact the first significant reform of the NFIP since 2004."
Cosponsored by Maxine Waters (D-CA-35), Shelly Moore Capito (R-WV-2), Scott Garrett (R-NJ-5), Robert Dold (R-IL-10), and Steve Stivers (R-OH-15), the bill would reauthorize the program for five years, phase in risk-based premiums, and reduce subsidies for certain properties, including high-risk buildings subject to repeat claims. It also addresses risk mapping standards and mitigation assistance. Finally, the bill confirms FEMA's authority to utilize private reinsurance in lieu of taxpayer exposure to mitigate risk, and directs the agency to report on proposals from the private market for assuming risk within the program
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.