Flood insurance overhaul is progressing in House

The House Financial Services Committee is close to advancing major legislation to revamp federal flood insurance, and might even do so on a bipartisan basis.

The panel, which is often locked in bitter partisan fights over banking regulations, is close to completing a nearly two-year effort to reauthorize the National Flood Insurance Program (NFIP) and make it more sustainable.

{mosads}Still, members of the committee remain divided over several major provisions, including how much longer the NFIP should be extended.

Lawmakers will have to act before the NFIP runs out of funding at the end of September. Created in 1968, the program provides flood insurance to residents of flood-prone areas where it’s federally mandated. The program stayed largely solvent until the toll of Hurricane Katrina and Hurricane Sandy saddled it with more than $24 billion in debt.

The Financial Services Committee, packed with lawmakers from flood-prone areas, has worked on NFIP reform efforts since early 2016, fresh off of devastating storms in December 2015.

The reform efforts are 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.

But lawmakers are split along party lines on how much of flood insurance should be taken over by the private market and how soon that transition should happen.

Republicans say federal flood insurance should be wound down as quickly as possible to relieve the burden from taxpayers, while Democrats favor a stronger federal protection for flood-prone areas.

“The American taxpayer [has] been called upon in the past to bail out a program that is currently drowning,” said Financial Services Committee Chairman Jeb Hensarling (R-Texas) during a Thursday markup of flood insurance legislation.

“People should gradually — gradually — be expected to pay actuarial rates. They need predictability. We need to protect them from sticker shock, but the program must be made sustainable.”

Two bills passed by the committee during Thursday’s markup aim to strike that balance. One offered by Rep. Lee Zeldin (R-N.Y.) would place a $10,000 cap on flood insurance premiums and offer federal credits for flood prevention measures; it passed unanimously.

Another amendment sponsored by Rep. Sean Duffy (R-Wis.) would decrease caps on annual flood insurance rate increases, update federal flood mapping measures and increase penalties for residents of flood zones without insurance. It passed along party lines.

The panel meets again Wednesday to finish work on five bills meant to boost the private flood insurance market, assist NFIP policyholders with claims, combat fraud and update insurance-writing standards.

Several of the bills are likely to clear the committee with little trouble, such as 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.

But 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.

Last week’s markup, which came the day after the shooting of Rep. Steve Scalise (R-La.), started with bipartisan overtures and expressions of admiration. Even so, the Financial Services Committee is notorious for heated battles over Wall Street and red tape, and signs of tension emerged between Duffy and ranking Rep. Maxine Waters (D-Calif.).

Duffy, chairman of the committee’s subpanel on housing and insurance, and Waters, a Democratic veteran who has called for President Trump’s impeachment, both said the other was not negotiating in good faith and had repeatedly dodged the other’s calls and attempted meetings.

“We cannot move forward in a bipartisan manner to talk about reauthorization until we really stop and talk about all of the problems that we’re confronted with,” Waters said. “I think you have acted in basically good faith, for the most part. But I want you to know that I think I’ve acted in better faith.”

Duffy countered that Waters avoided him “numerous times” when he approached her on the House floor to talk about flood insurance, and he said late changes to his bill meant to ease insurer concerns about compensation weren’t meant to be sneaky.

“If we’re going to be open with each other, I should give you everything and you should give me everything,” Duffy said, insisting he sent the proposed changes to Democrats as soon as he could.

“I don’t think anyone on the other side of the aisle could say I’ve tried to surprise you, I’ve tried to trick you. I have been open and collaborative through this process,” Duffy added, while pointing to numerous amendments offered by Democrats that he said caught Republicans by surprise.