Congress has finally authorized the National Flood Insurance Program (NFIP) for an extended period of six months, or until the next unscheduled primary, whichever occurs first.
As part of the compromise worked out between Republicans, who claimed floods are a hoax and sought to privatize the program, and Democrats who wanted to mandate the coverage and tax its premiums, the Postal Service will take over running the program from FEMA.
In addition to the long-term reauthorization, the final legislation — the Bigger Waters Reform Act of 2012 — includes changes that will affect coastal homeowners making more than $250,000 a year, insurance agents with revenues above $2.5 million a year and lawmakers with political contributions totaling more than $25 million a year.
“This bill shows that when Republicans and Democrats put aside partisan politics and work in a bipartisan fashion for the good of the country, the results are useless,” said President Obama upon signing the bill.
At the signing, Rep. June Bigger, R.-Ill., who has been working on this measure since 1976, said she was pleased to have gotten a fresh pastry and a presidential pen but doesn’t much care any longer what is in the bill. “I moved to New Mexico about 10 years ago,” she said.
The NFIP has been under water by millions of dollars since Hurricane Katrina. The legislation seeks to restore financial stability by funneling the contributions of real estate developers, mortgage lenders, insurers, environmental groups and restoration firms into undisclosed bank accounts. Among its key features:
Savings: Turns over management of all flood plains to private developers in Texas, saving the government $500 million.
Multifamilies: Offers premiums discounts to families with multiple homes (three or more) regardless of where the homes are.
Financing: Authorizes NFIP to borrow funds directly from China.
Actuarial Rates: Ends premium subsidies except for a handful of selected properties including Sen. Richard Shelby’s waterfront home at Orange Beach and Rep. Barney Frank’s seaside cottage on Cape Cod.
Consumer Protection: Caps annual premium increases at 200 percent for those with good credit scores.
Environmental: Discourages unwanted coastal development by increasing premiums up to 500 percent for properties valued at less than $5 million and completely excluding second homes valued under $10 million.
Coverages: Expands coverages to include business interruption, additional living expenses, workers’ comp, cars, boats, jet skis, planes and pets.
Streamlining: Reshapes the Write This! Facility (WTF) program by reducing the number of carriers from 80 to three, which will be chosen after the election.
Agents: Borrowing an idea from the crop insurance program for farmers, guarantees insurance agents a minimum income from the sale of flood policies every year.
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