Senate passes legislation for federal flood program
The Senate Committee on Banking and Urban Affairs yesterday passed its version of a bill to reauthorize and reform the financing of the National Flood Insurance Program (NFIP). Largely as a result of Hurricane Katrina, the program is $18 billion in debt. The new bill, the Flood Insurance Reform and Modernization Act, is designed to keep the program viable through 2016.
The NFIP, which insures homeowners against flood damage, is the main protection for homeowners in flood prone areas. The old program is set to expire at the end of this month.
The bill now goes to the full senate for a vote and then will be reconciled with a House of Representatives version passed this summer.
“We’ve worked hard on this. We’ve worked on it for years,” said Senator Richard Shelby, who sits on the Banking Committee. “It’s a complicated bill and I think we’re going in the right direction.”
The Senate proposal addresses premium increases, levy-building, business interruption insurance and floods in progress. It would forgive the old program’s $18 billion debt and permit rates to rise by 15% a year to reach actuarial levels that reflect true flood risks.
The program, which provides over $1.2 trillion in coverage, is under added pressure from Hurricane Irene, which caused severe and widespread flooding in populated areas of the Eastern United States. Tropical Storm Lee is adding to the area's flood woes.
“Given the inclement weather and severe flooding throughout the country, it is especially critical that this program be reauthorized and extended so that no home or business is without the ability to receive coverage,” said Tom Santos, vice president for federal affairs at the American Insurance Association (AIA). “With more than 5.6 million policy holders dependent upon the NFIP for their protection against floods, we hope the full Senate will now move to enact these reforms.”
Senate committee passes federal flood insurance reform legislation (http://www.insurancejournal.com/news/national/2011/09/08/214022.htm). Insurance Journal, September 8, 2011
Senate advances bill for flood insurance (http://www.chicagotribune.com/news/politics/sns-rt-us-flood-insurance-senatetre787782-20110908,0,7652534.story). Chicago Tribune, September 8, 2011