House reaches deal on flood insurance overhaul

The House is expected to vote within days on a bill renewing the federal flood insurance program after Republican leaders struck a deal over planned rate increases.

The House Rules Committee held a hearing late Monday afternoon on an updated bill to extend and overhaul the National Flood Insurance Program (NFIP). The Rules panel is the last stop for legislation before the House floor, meaning the new NFIP renewal bill could get a vote within days.

Lawmakers have been negotiating over fixes to the NFIP for several months, with the program facing a December deadline for its renewal. Republicans have sought to downsize the federal program, which has ballooning debt, in hopes of fostering a private market for flood insurance.

{mosads}Democrats have been open to more flood insurance privatization but have also pushed back on some GOP efforts to reduce the program’s cost and raise premiums.

The House Financial Services Committee passed several NFIP overhaul bills with bipartisan support last summer, before the recent hurricanes exploded the program’s debt from $25 billion to more than $35 billion. But conservative lawmakers and GOP members from coastal states opposed a plan to raise premium caps for NFIP policies to $18,000. 

GOP leaders struck a deal this week to lower fee hikes for homes that suffer repeated flooding, according to Politico. 

House Financial Services Committee Chairman Jeb Hensarling (R-Texas), who last week announced he wouldn’t seek reelection in 2018, had sought a steeper increase to the NFIP premium caps and the rates for repeatedly flooding homes. 

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

But coastal Republicans, led by House Majority Whip Steve Scalise (La.), said those increase were too high for them to support.

Hensarling and Scalise reportedly hashed out a deal that would maintain the premium increases after a five-year delay, while lowering rate hikes for repeatedly flooding homes. The bill reauthorizes the NFIP for five years. Democrats had sought a reauthorization of 10 years.

The full NFIP reauthorization package also includes several changes intended to fix the program’s financial issues and shift more policies to private insurers. Those include measures to update federal flood mapping procedures, increase penalties for residents of flood zones without insurance and allow private policies to satisfy the federal flood insurance mandate.

The House will also vote on authorizing the NFIP to assist states with localized flood insurance programs and customizable flood insurance policies that satisfy federal standards.

Lawmakers previously faced a Sept. 30 deadline to reauthorize the NFIP. But efforts to revamp the program ran aground after hurricanes devastated the southeast, Texas and Puerto Rico. Congress extended funding for the flood insurance program through December, leaving the reauthorization unresolved.

A lapse in NFIP funding could have prevented people from rebuilding homes in flood zones; federal law blocks closing a sale in those areas without a flood insurance policy. An unfunded NFIP could have also blocked thousands of Hurricane Harvey victims from resettling in their hometowns, complicating payouts to policyholders.

The massive toll of the hurricanes and the related cost for the NFIP fueled the program’s critics, who want a quicker transition to private flood insurance, and its defenders, who consider the NFIP a critical safeguard for coastal communities. 

The House Financial Services Committee cleared a bill in June that mandates that the NFIP send a percentage of its riskiest policies to private insurers each year. The bill also waives an insurance coverage mandate for commercial buildings and allows state and local governments to submit their own flood maps to the NFIP to replace federal ones.