US House of Representatives approves flood insurance reform

US House of Representatives approves flood insurance reform

The U.S. House of Representatives has passed the Flood Insurance Reform and Modernization Act of 2007, by a vote of 263 to 146.

The legislation reauthorizes the National Flood Insurance Program (NFIP) for five years, provides for reforms to the NFIP, improves flood mapping, and expands the NFIP to provide for multiple peril coverage.

Maxine Waters (D-CA), chairwoman of the Financial Services Subcommittee on Housing and Community Opportunity and sponsor of the bill, said: “Flood insurance reforms are needed because, as we have seen, storms will become stronger and more intense, and we need a program that can contend with the worst that mother nature can throw at us. Simply put, we cannot let another hurricane season pass without putting the National Flood Insurance Program on solid footing.”

In an effort to make the NFIP more actuarially sound, the bill phases out subsidized rates on commercial properties, vacation homes, and second homes built before 1974. Multifamily rental properties are excluded from the phase-out of the subsidy.

“Flood insurance reforms are needed because, as we have seen, storms will become stronger and more intense, and we need a program that can contend with the worst that Mother Nature can throw at us. Simply put, we cannot let another hurricane season pass without putting the National Flood Insurance Program on solid footing.

Maxine Waters (D-CA), chairwoman of the Financial Services Subcommittee on Housing and Community Opportunity

Additional optional policy coverage is added, allowing business owners to purchase business interruption coverage at actuarial rates to better prepare them to meet payroll and other obligations during the next big storm.

The bill requires FEMA to conduct a thorough review of the nation’s flood maps. The bill makes the updating and modernization of flood maps an ongoing process, and increases funding for mapping. The bill also authorizes the Technical Mapping Advisory Council made up of industry professionals to advise FEMA on flood mapping.

Provisions protecting policy holders include clarification of disclosures about flood insurance availability and plain language information on flood insurance policies.

The bill also requires FEMA to report to Congress annually on the financial status of the NFIP, increases the amount FEMA can raise policy rates in any given year from 10% to 15%, and authorizes funding for additional staff at FEMA to carry out the requirements of this bill.