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 joined Governor Jeff Landry and Senate Insurance Committee Chairman Kirk Talbot today to announce that Louisiana is investing an additional $20 million in Fortified homes, bringing the total amount invested in state Fortified projects this year to $100 million. Governor Landry announced that $20 million from the U.S. Department of Housing and Urban Development will be transferred to the Louisiana Office of Community Development Restore Resilient Opportunities for Overhead Fortification (Restore ROOF) program to strengthen residential structures and reduce long-term disaster risk. Earlier this year, the Legislature passed a bill that allows $50 million in additional Katrina and Rita bond money from Louisiana Citizens Property Insurance Corporation to be added to the Department of Insurance’s Louisiana Fortify Homes Program (LFHP). Also beginning this year, LFHP is projected to receive approximately $30 million annually from taxes and fees the Louisiana Department of Insurance collects from the insurance industry. “Building stronger homes is a vital part of making homeowners insurance affordable in Louisiana,” said Commissioner Temple. “I appreciate Governor Landry’s leadership and support as we work with legislators like Chairman Talbot to make Louisiana a national leader in the adoption of Fortified roofs.” The Louisiana Department of Insurance (LDI) has finalized its promulgation of Regulation 136—Fortify Homes Premium Discounts. The purpose of Regulation 136 is to implement the statutory provisions set forth in La. R.S. 22:1483, et seq. , which require that all Louisiana property and casualty insurers provide premium discounts or insurance rate reductions for homes constructed or upgraded in accordance with the fortified standards created by the Insurance Institute for Business and Home Safety. View Regulation 136 here .
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