House panel passes flood insurance overhaul bills

The House Financial Services Committee on Wednesday passed four bills intended to reduce the National Flood Insurance Program’s (NFIP) financial burdens and assist homeowners struggling to get claims approved by the federal insurance agency. 

The legislation will head to the House floor as part of a broader flood insurance reform initiative.

Committee lawmakers have worked on revamping the debt-riddled NFIP since January 2016, weeks after holiday season floods devastated the Midwest and South. The program offers flood policies to residents of flood-prone areas where insurance is required. It runs out of funding on Sept. 30.

{mosads}Lawmakers are using the deadline as a push to cut the NFIP’s $24 billion debt and shift more flood insurance customers to a burgeoning private market. Private flood insurance was largely non-existent when the NFIP was established in 1968, and Republicans are eager to reduce taxpayer exposure to risky homes by easing federal policy holders into private plans.

The committee passed a bill offered by Rep. Blaine Luetkemeyer (R-Mo.) that mandates the NFIP to send a percentage of its riskiest policies over to private insurers each year, waives the insurance coverage mandate for commercial buildings and allows state and local governments to submit their own flood maps to the NFIP to replace federal ones. The bill passed 36 to 24, largely along party lines. 

The Financial Services panel has focused on lowering flood insurance rates, boosting a burgeoning private flood insurance market, modernizing flood zone mapping and encouraging flood mitigation practices for homebuilders and land developers.

Several of the bills cleared the committee with little trouble. The panel unanimously advanced a bill offered by Rep. Nydia Velazquez (D-N.Y.) meant to assist NFIP policyholders to challenge claim denials and crack down on claim fraud. Lawmakers from New York and New Jersey in districts devastated by Superstorm Sandy backed the bill with stories about slighted constituents who never received coverage.  

The committee also cleared an update of a bill sponsored by Reps. Dennis Ross (R-Fla.) and Kathy Castor (D-Fla.) that passed the House last year. The Ross-Castor bill clarifies that certain private policies can satisfy the federal flood insurance mandate, so long as they match certain aspects of NFIP insurance policies.

Lawmakers are still squabbling over pieces of refunding the NFIP. Republicans initially sought a five-year extension, while Democrats sought 10 years and a longer off-ramp for federally insured homeowners to take on higher rates and private policies.