Big "I Applauds House Passage of Flood Insurance Reform Bill

 

Calls on the Senate to enact flood extension and reform legislation.

On Tuesday, the U.S. House of Representatives passed H.R. 1309, the “Flood Insurance Reform Act of 2011,” by an overwhelming 406-22 vote. The legislation, introduced by Subcommittee on Insurance, Housing and Community Opportunity Chairman Judy Biggert (R-Ill.) and cosponsored by Ranking Member Maxine Waters (D-Calif.), would extend the National Flood Insurance Program (NFIP) for five years and make needed reforms such as phasing out subsidies for many properties and indexing coverage limits to inflation.

A five-year extension is of the utmost importance to the Big “I,” as are reforms to put the program on sound financial footing. The association was especially grateful that the House rejected a number of problematic amendments offered during floor consideration. Chief among these was an amendment offered by Rep. Candice Miller (R-Mich.) that would have completely eliminated the NFIP by 2013. As there continues to be no evidence of a private market for flood insurance and the program currently protects 5.6 million policyholders who would completely lose all flood coverage, the Big “I” aggressively fought against this amendment. The amendment lost on the House floor by a 38-384 vote. Another concerning amendment was offered by Rep. Jeff Flake (R-Ariz.) and would have removed the inclusion of optional business interruption and additional living expenses coverage. These provisions are meant to better safeguard consumers against flood loss and the Big “I” lobbied against the amendment. A number of conservative interest groups view these coverages as an “expansion” of a government program and have lobbied against their inclusion in any flood insurance reform bill. While the Big “I” ultimately prevailed and the Flake amendment was defeated, it ended up being a relatively close vote. This issue certainly becomes an even tougher battle ahead in the Senate, where a single senator’s objection could be enough to derail its inclusion.

In addition to these concerning amendments which were defeated, there were also some important amendments which the Big “I” supported that passed. Principal among these was an amendment offered by Rep. Brad Sherman (D-Calif.) and supported by Financial Services Committee Chairman Spencer Bachus (R-Ala.) which would limit the NFIP Direct program to 10% of total NFIP policies and direct the program to develop regulations to transfer excess policies back onto the WYO carriers. This amendment also includes explicit language protecting an agent’s rights during any such transfer of policies out of NFIP Direct. The Sherman amendment passed by voice vote. Finally, there was also an amendment offered by Rep. Lee Terry (R-Neb.) that would attempt to deal with the “flood in progress” issue affecting many in the Midwest. The amendment would clarify that flood insurance coverage begins immediately upon the completion of the 30-day wait period, even for a “flood in progress,” provided that the building has not already sustained damage from that flood event. The Terry amendment was agreed to unanimously.

The Senate is also set to begin work on flood insurance reform legislation, with consideration by the Senate Banking Committee expected soon. The Big “I” is urging the Senate to work towards a long-term reauthorization with needed reforms before the program’s expiration at the end of September.