Mortgage

House passes long-term reauthorization of National Flood Insurance Program

Bill to reduce direct spending by $187 million

Less than a month before the program was set to expire, the House of Representatives voted Tuesday and passed (237-189) the 21st Century Flood Reform Act, which will reform and reauthorize the National Flood Insurance Program.

The 21st Century Flood Reform Act, H.R. 2874, would reauthorize the NFIP for five years, introduce private market competition, and provide programmatic reforms to help policyholders, according to the House Financial Services Committee.

At the beginning of September, President Donald Trump signed a three-month extension to the National Flood Insurance Program in order to give Congress more time to come up with a long-term financial solution for the program.

The NFIP was established in 1968, and authorization for the program, which is administered by Federal Emergency Management Agency, was set to expire on Sept. 30, 2017. The extension moved the expiration date to Dec. 8, 2017.

According to FEMA’s website, “The National Flood Insurance Program aims to reduce the impact of flooding on private and public structures. It does so by providing affordable insurance to property owners and by encouraging communities to adopt and enforce floodplain management regulations.”

While the devastating destruction of recent hurricanes has pushed the need to reform the NFIP to the surface, flood insurance, whether it’s private or the national flood insurance program, has struggled to gain a lot of attention over the years.

The program was extremely in debt, and according to a report from the Congressional Budget Office, it had an expected one-year shortfall of $1.4 billion.

This new bill, which is sponsored by Rep. Sean Duffy, R-Wis., is expected to reduce direct spending by $187 million, according to the CBO.

Notably, the CBO said that it estimated the changes made by this legislation would increase collections from NFIP policyholders but would reduce the number of property owners who purchase insurance through the NFIP.

On net, the CBO estimated that the changes made by H.R. 2874 would reduce direct spending on net by $187 million over the 2018-2027 period. Meanwhile, enacting H.R. 2874 would increase revenues by about $4 million over the 2018-2027 period, the CBO stated.

Ranking Member of the Committee on Financial Services Rep. Maxine Waters, D-Calif., stood in opposition of the bill though, saying that the legislation will make flood insurance more expensive, less available, and less fair for consumers.

“At the outset, let me just say that I appreciate the time and effort that Chairman Hensarling and Mr. Duffy spent responding to my calls for bipartisanship,” said Waters. “We sat down multiple times to discuss areas where we could find compromise and a path forward. Although our discussions were ultimately not successful, and I strongly oppose this bill, I continue to believe that flood insurance really can be a bipartisan issue.”

From here, the bill moves on to the Senate, and if it passes through Senate, it will move to the president’s desk to be signed. 

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