House passes bipartisan reform to encourage private flood insurance

Here's how this plays into the larger effort to reform the National Flood Insurance Program

Outside of the broader debate to reform the National Flood Insurance Program, the House voted 264-155 on Thursday to pass legislation that includes a bipartisan act that encourages the creation of private flood insurance markets.  

The bipartisan Flood Insurance Market Parity and Modernization Act, sponsored by Reps. Dennis Ross, R-Fla., and Kathy Castor, D-Fla., “repeals government roadblocks to lower flood insurance rates by clarifying how non-government flood insurance policies can satisfy the federal flood insurance mandate for properties that are located in high-risk areas.”

In a statement, Ross said the legislation is especially important considering recent events.

“The recent major flood events across the country have provided a much-needed sense of urgency to our efforts to provide consumers with private sector flood insurance options,” Ross said. “Currently, many homeowners in Florida and across the country face unaffordable flood insurance premiums and a lack of coverage options, largely due to federal regulatory barriers that give the National Flood Insurance Program a harmful monopoly over the marketplace.”

Ross explained that this new legislation will greatly benefit consumers in flood-prone areas because it will remove these unnecessary barriers and allow more private flood insurers to enter the market, leading to increased competition and more affordable, comprehensive policies.

The Flood Insurance Market Parity and Modernization Act gained bipartisan support in the House before. In fact, unlike this time around, it unanimously passed the House last year by a vote of 419-0, and the Financial Services Committee approved the bill this year by a vote of 58-0.

 “I am not sure you can get that kind of vote tally for a Mother's Day resolution. It is bipartisan. It is the very definition of bipartisan,” said Rep. Jeb Hensarling, R-Texas, chairman of the Financial Services Committee.

The complete unity seen in the House previously, though, was lost this time around, with the vote coming in at 264-155.

Ranking Member of the Committee on Financial Services Maxine Waters, D-Calif., explained the discourse, saying, “This is the first time in this Congress that we are debating a flood insurance policy change on the House floor. However, this is not a policy change that would address the resilience of the flood insurance program, help families to recover or improve our country’s response to natural disasters.”

Waters added: “No, the Republican response to the catastrophic storms of these last two months is to muscle through the expansion of private flood insurance, which has long been sought by the insurance industry. Now, let me be clear. I don’t oppose this policy. I voted for it last Congress and I voted for it when we marked it up in Committee this year.”

However, Waters stated that moving this bill, at this time, while ignoring all the other policy responses needed for the flood insurance program and the ongoing natural disasters in our country, is simply irresponsible.

One of the larger issues that Waters is referring to is the looming expiration date of the National Flood Insurance Program.

Earlier this month, President Donald Trump signed a three-month extension to the National Flood Insurance Program, giving Congress more time to come up with a long-term financial solution for the program.

With this new extension, the program will expire on Dec. 8, 2017.

Flood insurance, whether it’s private or the national flood insurance program, has struggled to gain a lot of attention over the years.

But the devastating destruction of Hurricane Harvey and Hurricane Irma pushed the urgency for a solution to the program to the surface. Ross, who sponsored the bill, strongly disagreed with Waters, urging the House that this bill needed to be passed.

“It would be irresponsible to delay passage of this bipartisan reform any longer. If our Senate colleagues are serious about improving the flood protections available to homeowners and reducing the suffering caused by major floods, then they must act quickly to pass this legislation,” said Ross.

Outside of this private flood insurance act, there is a broader effort underway to fix the NFIP. One of the main bills in the running to fix the program is the 21st Century Flood Reform Act of 2017, H.R. 2874, sponsored by Rep. Sean Duffy, R-Wis.

According to the Congressional Budget Office, a nonpartisan analysis for the U.S. Congress, the bill would reduce direct spending by $187 million.

This is welcomed new given that the current program has an expected one-year shortfall of $1.4 billion.

“As people begin to rebuild after these hurricanes, they need better options for flood insurance, particularly with the NFIP $30 billion in debt, facing another bailout, and facing an uncertain future. Now we need to take care of that,” said Hensarling. “That is why I have proposed, along with Chairman Duffy, a 5-year, long-term reauthorization. We are currently operating under a temporary 90-day authorization. But as we do, let's work on something that we can all agree on.”

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