Flood Insurance Reform

Updated August, 2010

Given the devastating consequences of hurricane seasons in recent years, the issue of flood insurance has garnered much attention from lawmakers in Congress. 

During the 110^th Congress Rep. Maxine Waters, chairwoman of the House Financial Services Subcommittee on Housing and Community Outreach, introduced the Flood Insurance Reform and Modernization Act (H.R. 3121).    This measure would have reauthorized the National Flood Insurance Program (NFIP) for five years, increased the NFIP borrowing authority, and updated the maximum insurance limits and increased the fines for lenders who do not enforce the mandatory flood insurance policy purchases requirements for those living in a flood-plain and holding a federally-backed mortgage. The bill also included language addressing the issue of multi-peril insurance. H.R. 3121 passed the House in September 2007.

In 2008, the Senate took up H.R. 3121 and amended the measure to include a significantly different version of comprehensive flood insurance reform.  The Senate passed bill would have forgiven NFIP’s debt of $17.5 billion, and did not include the addition of wind insurance as prescribed in the House passed bill.  At the conclusion of the 110th Congress, House and Senate conferees attempted, unsuccessfully, to resolve the key differences in the House and Senate flood insurance reform bills.

Despite the lack of consensus on flood insurance reform legislation, the 111^th Congress has acted to ensure that basic NFIP authorities remain in force by passing several short term extensions of the NFIP.  The most recent extension was passed by on June 30, and will extend the NFIP through the end of September, as well as retroactively cover the lapse that had existed since May 31. NAFCU has long promoted more stability in the program and weighed in with lawmakers several times in June urging them to swiftly renew the NFIP in a retroactive manner.

Just weeks after passing the last short term NFIP extension, on July 15 the House passed a separate piece of legislation (H.R. 5114) also introduced by Maxine Waters that would make structural changes to the NFIP and permanently extend it for an additional 5 years. NAFCU is encouraged that the legislation, which would provide much needed stability in the program, passed overwhelmingly by a vote of 329-90. It is unclear whether the Senate will take this measure up during the 111th Congress.

It’s also noteworthy that in late July the House was schedule to take up legislation (H.R. 1264) introduced by Rep. Gene Taylor of Mississippi that would give homeowners the option of purchasing wind coverage through the NFIP. While the House considered and passed a rule to govern debate on the bill, it was subsequently pulled from the House floor. The administration, just one day prior, released a statement expressing serious concerns about the merits of the bill.    

Other flood insurance related legislation currently pending consideration include Rep. Frank Pallone’s bill (H.R. 777) to suspend flood map changes until the administrator of the Federal Emergency Management Agency submits a community outreach plan to Congress, and Rep. Joseph Cao’s legislation that would give stability to the NFIP by extending the program for three additional years until December of 2013.