Flood Insurance Overhaul Passes House

By a vote of 406 to 22, H.R. 1309, the Flood Insurance Reform Act of 2011 has passed the House of Representatives.

The passage of the bill, which extends the National Flood Insurance Program for five years and phases in more accurate risk-based pricing and establishes a Technical Mapping Advisory Council to more accurately define flood plains, is drawing praise from the industry.

“The five-year extension and reforms included in H.R. 1309 will provide certainty in the flood program thereby increasing consumer and business confidence in the NFIP while putting it on a more sound financial footing,”   Leigh Ann Pusey, president and CEO of the American Insurance Association (AIA), said in a statement. “The certainty and stability of this program is an essential component of protecting the homes and businesses that may incur losses as a result of flooding.”

Jimi Grande, SVP of federal and political affairs for the National Association of Mutual Insurance Companies, expressed relief that an amendment by Rep. Candice Miller (R-Mich.) to eliminate the NFIP by early next year was soundly defeated. “The Miller amendment would have been devastating for taxpayers and consumers, and defeating it was a top priority” Grande said. “There is no viable private market for flood insurance, and eliminating the NFIP won’t create one.” 

Grande is less optimistic about the Senate passing a companion bill before the program’s temporary funding expires on Sept. 30. While another temporary extension of the debt-ridden program, which has limped along for the past few years and lapsed several times, is not out of the question it is viewed as suboptimal. He noted that such ad hoc funding causes significant uncertainty and disruptions in the market. “Given the fragile state of our economy, we can no longer afford the stop-and-start cycle for the NFIP,” Grande said. “When the program is allowed to lapse, it causes needless delays for developers, lenders and ordinary Americans trying to buy or sell a home.”

Whether this message will spur action in the Senate is unclear. Grande added that although the Senate Banking Committee has held two hearings on the NFIP this year, at this time no legislation has been introduced to fix or extend the program. “September 30 is fast approaching and there’s no time to lose,” said Grande. “The House has done its part to address this issue. The ball is now in the Senate’s court and the clock is ticking.”