A U.S. House panel has given its approval to a bill directed at making the government’s flood insurance program financially sound by, in part, increasing rates charged on nonresidential property and vacation homes, according to a Reuters report.
The legislation, approved Thursday in Washington, D.C. by the House Financial Services Committee, would also raise the program’s borrowing authority to $25 billion but require the Federal Emergency Management Agency (FEMA), the agency that runs the program, to inform Congress how it will repay the funds it borrows.
Furthermore, the bill requires a study of more comprehensive reforms that will ensure that Congress takes the most appropriate and effective steps towards making the national flood insurance program more successful in serving consumers.
Property Casualty Insurers Association of America (PCI) President and CEO Ernst Csiszar noted, “PCI strongly urges the full House of Representatives to consider NFIP reform legislation as quickly as possible. The bill is a good first step in a reform process that will give consumers and communities the insurance they need to continue
living and operating in coastal communities across the country.”
The text of the legislation says some 450,000 vacation homes, second homes or commercial properties do not pay high enough rates for flood insurance. The proposed bill says that increasing those rates should bring some $335 million annually in savings for the national flood insurance program. The program was hit with unprecedented claims last year following Hurricane Katrina.
The legislation also would increase maximum coverage limits for flood insurance policies to deal with inflation and the higher cost of housing and require the program director to study and update flood maps.
“PCI looks forward to working with members of both the House and Senate as they consider reforms to the NFIP,” Csiszar added. “The NFIP has been an essential part of the development of coastal communities across the nation, including mitigation efforts to reduce losses, and Congress must ensure that changes to the program improve upon its record of success.”
A spokesperson for the PCI told Insurance Journal on Thursday that the next step is for the full House to take up the legislation. They added that the Senate Banking Committee will be looking at some flood reforms in the near future as well,
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