Bipartisan Legislation for Flood Insurance Reform and Modernization is Introduced
|March 27, 2007|
Washington, DC - Today, Reps. Judy Biggert (R-IL) and Barney Frank (D-MA) introduced a href="http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.1682:" target="_blank">H.R. 1682, the Flood Insurance Reform and Modernization Act of 2007. Then new legislation is intended to reform the National Flood Insurance Program (NFIP) and ensure its continued viability by increasing accountability was introduced by Representatives Judy Biggert and Farney Frank,. eliminating unnecessary Federal subsidies, and updating the flood insurance program to meet the needs of the 21st century. The bipartisan bill is also sponsored by Reps. Earl Blumenauer (D-OR), Gary Miller (R-CA), Gene Taylor (D-MS), Richard Baker (R-LA), Doris Matsui (D-CA), JoAnn Davis (R-VA), Maxine Waters (D-CA) and Ginny Brown-Waite (R-FL).
“Congress must act now to modernize this important safety net for homeowners,” said Rep. Biggert, Ranking Member of the House Financial Services Subcommittee on Housing and Community Opportunity. “The 2005 Gulf Coast hurricanes showed the nation how important the National Flood Insurance Program is to the average homeowner. We must act to strengthen and pull the program into the 21st Century and before the next major disaster hits. The program needs to provide a financial safeguard for homeowners while protecting the interests of taxpayers. This bill strikes the right balance.”
The Flood Insurance Reform and Modernization Act of 2007 will address a number of weaknesses in the NFIP that were exposed by the unprecedented 2005 hurricane season. In an effort to make the program more actuarially sound, the NFIP phases out subsidized rates on vacation homes and second homes. Under this bill, small business owners will be eligible to purchase business interruption coverage in order to meet payroll and other obligations in the event of flooding. And, for the first time since 1994, the bill updates maximum insurance coverage limits for residential and nonresidential properties.
“The National Flood Insurance Program is vital to flood-prone communities, but it has not always functioned as intended,” said Rep. Blumenauer. “With global warming putting more and more people at risk for flooding, this legislation builds on progress made in the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004 to make the program more fiscally sound and to ensure that homeowners in low-lying areas can take steps to reduce their vulnerability.”
Under the NFIP, which is administered by the Federal Emergency Management Agency (FEMA), flood insurance that could not be purchased in the private marketplace is made available to homeowners, renters and business owners in more than 20,000 communities across the country. This bill requires greater accountability and financial responsibility at the NFIP. FEMA is required to report to Congress on the financial status of the NFIP and conduct a thorough review of the nation’s flood maps. The bill makes the updating and modernization of flood maps an ongoing process, and calls for greater disclosures to consumers about flood insurance.
The NFIP borrowing authority is increased to ensure that all outstanding claims and Federal obligations are paid. The bill increases the amount FEMA can raise policy rates in any given year from 10% to 15%. And, in order to help ensure that those homeowners who should have flood insurance do have flood insurance, the bill increases the fines on lenders who do not enforce the mandatory flood insurance policy purchase requirement for those who live in a floodplain and hold a federally-backed mortgage.
“This bill has been very carefully drafted and has passed out of the House before,” said Rep. Barney Frank, Chairman of the House Committee on Financial Services. “It gives members an unusual chance to respond to the concerns of those who are pressing to reduce government expenditures and those who want to enhance environmental protection.”