NFIP Reform Bill Passes House with Bipartisan Support
Amy Fennell • November 16, 2017
Source: Stamford Advocate - House Passes Bill to Renew Flood Insurance Program
Washington, D.C. - The House on Tuesday , November 14 backed legislation that will increase flood insurance premiums for many property owners to help firm up a program under stress from ever-more frequent and powerful storms. The bill's passage was secured when sponsors made a variety of changes to accommodate lawmakers determined to protect constituents from even steeper rate hikes or from being booted out of the program altogether. The vote was 237-189.
The program is the only flood insurance available to most Americans. Homeowners who live in areas that have a 1 percent chance of being inundated by flood waters in any given year must purchase flood insurance as a condition of having a federally backed mortgage.
But the premiums paid by policyholders are not keeping up with the expense of flood claims. Massive storms such as Hurricane Katrina and Superstorm Sandy generated huge expenses, and with climate change, the scope of flooding seems only to get worse.
The House Financial Services Committee passed legislation in June reauthorizing the National Flood Insurance Program for five years. Some of the changes sought had strong bipartisan support, such as clarifying that flood insurance policies written by private carriers satisfy the government's requirements when it comes to obtaining a federally backed mortgage.
Yet, other aspects of the bill would have increased costs beyond what some Republicans could accept.
Behind the scenes, Texas Rep. Jeb Hensarling, the Republican chairman of the Financial Services Committee, negotiated with Majority Whip Steve Scalise, R-La., on a compromise. The final legislation removed a provision that would have prohibited the program from insuring newly constructed structures after 2021 as well as a provision prohibiting insurance for houses with replacement values exceeding $1 million.
The lawmakers also agreed that the program would account for frequently flooded properties by increasing premium rates based on future flood claims rather than on past flood claims.
"This bill is important. It has really good reforms for taxpayers. It gives real certainty to policyholders," said Scalise, whose congressional district covers most of southeast Louisiana and was devastated by Hurricane Katrina.
From the Louisiana Department of Insurance: Insurance Commissioner Tim Temple announced today that the Louisiana Department of Insurance (LDI) continues its work to develop a regulation creating benchmark discounts for Fortified roofs in Louisiana. The LDI is working with the National Association of Insurance Commissioners (NAIC) to develop the benchmark discounts using Louisiana-specific data, hurricane modeling and actuarial considerations. “With over 11,000 Fortified roofs in Louisiana and two years-worth of insurer experience with rating for those roofs in our state, now is an appropriate time for the LDI to establish benchmark discounts for homeowners insurance companies operating in our market,” said Commissioner Temple. “These benchmarks are being thoughtfully developed to help consumers receive the discounts they deserve for fortifying their homes while making sure insurers know the benchmarks reflect how much Fortified roofs actually mitigate their exposure to risk across Louisiana.” Like in Alabama’s Fortified benchmark discount structure, the LDI regulation would require Louisiana insurance companies to either meet the minimum benchmark discount established by the LDI or provide actuarial justification for why the company’s discount does not meet the benchmark. Louisiana is the fastest growing state for Fortified roofs in America. To date, over 11,000 Fortified roofs have been installed in Louisiana, including over 4,100 through the Louisiana Fortify Homes Program.
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