Senators Seek to Alter NFIP Provision

A group of 13 U.S. Senators are questioning a provision of the Flood Insurance Reform and Modernization Act of 2011 that would require homeowners and businesses to purchase coverage from the National Flood Insurance Program (NFIP).

In a letter to Senate Banking Committee Chairman Tim Johnson (D-N.D.) and ranking member Richard Shelby (R-Ala.), the group asked the committee to address concerns regarding Section 107, which designates “areas of special flood hazard,” subject to flood insurance purchase requirements and land-use restrictions.

The letter, spearheaded by Senators Thad Cochran (R-Miss) and Mark Pryor (D-Ark.), argues the language unfairly targets communities that have already invested in levees and other flood control structures.

“While we appreciate the Banking Committee’s commitment to ensuring that flood insurance is available to those who are at flood risk, a mandatory purchase requirement for those protected by healthy flood control infrastructure inequitably targets only particular types of flood risk,” the letter states . “Areas protected by properly constructed and maintained levees, dams, and other flood control infrastructure should not be arbitrarily declared areas of special flood hazard.”

The remapping of flood zones is one of the primary components of the effort to restructure the debt-laden NFIP, which has survived on a series of temporary extensions in recent years and lapsed four times during 2010. Backers of the Flood Insurance Reform and Modernization Act, which would extend the NFIP for five years, say actuarially sound rates that reflect the costs of expected claims are intrinsic to the program’s long term viability. In the letter, Cochran and Pryor concede that long-term reauthorization of the NFIP is critically important, but argue that responsible communities should not be compelled to “pay twice” for flood protection.

“We also share the Banking Committee’s concern for the solvency of the National Flood Insurance Fund, but we believe there are means by which to balance the ledger other than forcing the financial burden onto citizens who have, in many cases, chosen to invest responsibly in flood control infrastructure for decades with an understanding that flood insurance purchase could remain an option,” the letter states. “It should not be the policy of the United States to discourage future and existing economic activity in areas protected by sound levees, dams and other flood control infrastructure.”

The timing of the letter is noteworthy considering that the program is set to lapse on Nov. 18. Ben McKay, SVP of federal government relations for the Property Casualty Insurers Association of America, said previous lapses in NFIP coverage left homes and businesses vulnerable to flooding and urged Congress to move toward a resolution. “The flood program is set to expire in less than 72 hours,” McKay said in a statement. “More than 5.6 million Americans rely on flood insurance. While PCI continues to urge a long-term reauthorization for the NFIP, our first priority is avoiding a program lapse.”