A Congressional bill that would reform and extend the National Flood Insurance Program (NFIP) won unanimous approval from the U.S. House Financial Services Committee.
"We strongly support the Flood Insurance Reform Act and are pleased that important amendments were adopted by the committee today," Ben McKay, senior vice president of federal government relations for the Property Casualty Insurers Association of America (PCI), said in a statement.
Proposed changes to flood insurance program
The bill would extend the program for five years, phase in more accurate, risk-based pricing, address issues about mapping, and introduce coverage improvements for consumers.
The committee approved amendments that would clarify statutory maximums for buildings and require the Federal Emergency Management Agency (FEMA) to report to Congress on ways to redistribute some of the agency-administered policies to private insurers. PCI says the so-called depopulation amendment is needed because the government-administered program grew by 800 percent in 2010.
"We urge House leaders to consider additional language that will prevent the federal government from soon becoming the largest policy writer and servicing entity for flood insurance," McKay said.
Federally-backed flood insurance could be at risk
The troubled insurance program has operated under a series of short-term extensions in the last three years and will expire Sept. 30 without Congressional action. In 2010, the program lapsed four times, which created uncertainty in the housing market because real estate closings in flood-prone areas hinge on property owners securing flood insurance.
The Government Accountability Office has listed the program, now $17.75 billion in debt, as high-risk since 2006. The program was last reformed in 2004 and has been criticized for under-pricing policies and encouraging development in flood-prone areas.
The American Insurance Association (AIA) praised passage of the bill and urged quick passage by the full House and the Senate.
"Given the current flooding taking place on the Mississippi River, it is especially critical to get a long-term extension of the program in place so that this debate can move beyond Congress and residents in flood-prone areas can have the stability in the program they so desperately need to insure their homes and businesses," AIA President and CEO Leigh Ann Pusey said in a statement.