The Senate passed a measure on Tuesday May 13 to overhaul the National Flood Insurance Program and reauthorize it for five years. The measure (S. 2284) passed by a vote of 92-6. It would forgive a $17.5 billion debt to the Treasury that the program incurred after the 2005 hurricane season. The legislation includes a new requirement that residents in areas behind levees and dams buy flood insurance. The legislation would phase out subsidized rates on vacation homes and allow premiums to increase by as much as 15 percent per year, up from 10 percent. The House passed a similar bill (H.R. 3121) in September. Unlike the House-passed version, the Senate bill would not expand the program to cover damage caused by wind.

The bill also creates an executive branch overseer to police Write Your Own insurers, as well as an expert commission that will report to Congress on ways to address the availability of catastrophe coverage in high-risk areas. The White House raised concerns about requirements that the National Flood Insurance Advocate file reports directly to Congress, without prior review by superior executive branch officials. It also expressed concern about a requirement that FEMA claims adjustors participate in state-sponsored mediation at the request of state insurance commissioners.

Now it’s up to a conference committee to work out the differences between the two bills.  Some of the biggest differences include the addition of wind in the House bill (not included in Senate) and the debt forgiveness in the Senate bill (not in the House).

Senate Passes a Flood Program Bill (National Underwriter 5/13/08)

May 14, 2008