With Deadline Approaching, Flood Insurance Bill Clears U.S. House

WASHINGTON — Congress made progress Tuesday toward reauthorizing the National Flood Insurance Program, which is set to expire on Dec. 8.

House lawmakers approved a bill that would extend the program for five years, through 2022. It passed 237-189, with 222 Republicans and 15 Democrats backing the measure. The reauthorization process will next turn to the Senate.

The Federal Emergency Management Agency oversees the flood insurance program, which has about 5 million policies in effect and has borrowed billions of dollars from the U.S. Treasury to help cover claims.

A Congressional Budget Office report from September said the program owed the Treasury about $24 billion. Congress has since passed legislation to cancel $16 billion of the NFIP’s debt.

“It is a bankrupt program,” Rep. Jeb Hensarling, a Texas Republican said on the House floor Tuesday. “It incents and subsidizes people to actually live in harm’s way.” Hensarling chairs the Financial Services Committee, which led the effort to craft the bill.

He highlighted parts of the legislation he said would open up the flood insurance market to private insurers, as well as provisions focused on properties that have flooded repeatedly.

“If we’re going to make this program sustainable, we cannot have 1 percent of the properties causing 25 percent of the losses,” he added.

Some of Hensarling’s GOP colleagues criticized the legislation.

“The fundamental premise of the bill is flawed,” said Rep. Garret Graves, a Louisiana Republican. Graves acknowledged problems with the flood insurance program, but said the legislation would penalize people in his state by raising insurance costs.

Development and land-use decisions in other parts of the U.S., Graves said, affect the amount of water that flows into Louisiana. “You can’t charge people for things over which they have no control,” he added. Graves was among 14 Republicans who voted against the legislation.

Laura Lightbody, who directs The Pew Charitable Trusts’ flood-prepared communities initiative, wrote Tuesday that the bill addresses some of the NFIP’s problems, but that it has shortcomings as well.

On the upside, Lightbody wrote, it would create requirements for property sellers to disclose flood history and risk and for the first time it would enable the federal government to deny coverage to some of the riskiest and costliest properties when it comes to flood hazards.

But Pew is urging the Senate to include more extensive mitigation components in its bill. Lightbody points to legislation introduced this year that would provide low-interest loans for projects like elevating structures and buying out property in flood-prone areas.

If interest payments on the money the flood insurance program owes Treasury were frozen, it would free up about $400 million annually that could be used for mitigation, or put in reserve, according to Caitlin Berni, vice president of policy and communications for Greater New Orleans, Inc., a regional economic development organization in southeast Louisiana that closely tracks flood insurance issues.

“Having a scenario where we just do these short-term extensions,” she said, “is a bit nerve wracking.” Berni added that it’s unclear how a lapse in authorization would affect the program’s operations, if it were to occur at the same time as a major flood.

When it comes to expanding the role of private insurers, Berni suggested it would be important to proceed carefully. The private flood insurance market remains nascent. And there’s a risk that private insurers could cherry-pick the lowest risk customers, leaving the government to insure those who are most exposed to flooding hazards.

Jacob Terrell, associate legislative director for telecommunications and technology for the National Association of Counties, said the group is pleased with some parts of the House bill—like those that would require FEMA to provide certain information about flood risks to property owners and to share details about flood insurance claims filed for properties.

But he said NACo has held off endorsing the House legislation because the group does not believe it does enough to tackle the flood insurance program’s debt.

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