View this article online: https://www.insurancejournal.com/news/national/2011/10/19/220575.htm
Two senators are pressing to remove a federal requirement that homeowners and businesses near levees and dams purchase flood insurance.
Senators Thad Cochran (R-Miss.) and Mark Pryor (D-Ark.) have launched an effort to convince their colleagues to overturn a provision in Senate legislation that would require federal flood insurance coverage in areas already protected by levees, dams or other flood control structures.
Cochran and Pryor are circulating a bipartisan letter to the Senate Banking Committee that asks for reconsideration of a section of the Senate bill to reauthorize the National Flood Insurance Program (NFIP) that would expand required insurance coverage to “areas of residual risk” that are located behind levees, near dams or other flood control structures.
Cochran and Pryor contend that the provision would impose financial and economic hardships in protected areas that have only a 1 in 500 chance of flooding in a given year based on actuarial analysis. The argue that the bill would not require the same insurance purchase requirement on properties without levee protection, which they said have a 1 in 101 chance of flooding.
“The National Flood Insurance Program must be reformed, and I believe the Senate Banking Committee has done yeoman’s work on crafting bipartisan reform legislation,” said Cochran. “I do, however, have grave concerns about some of the provisions in the bill, particularly ones that create new flood insurance coverage mandates on families and businesses that are already protected by strong levees and dams. The blanket approach taken in the current bill should be changed in order to ensure fair treatment for those protected properties.”
“Families and business owners in Arkansas understand the importance of sound flood protection, which is why they pay levee taxes,” Pryor said. “In addition to expensive out-of-pocket insurance costs, this requirement will scare off new economic development opportunities. I am hopeful my colleagues will take a fresh look at this requirement and decide not put this enormous burden on our communities.”
Section 107 of the Senate bill would require certain homeowners and businesses protected by flood control structures to purchase flood insurance policies. The bill gives the administrator of the Federal Emergency Management Agency the discretion to impose the requirement and, in turn, correlating land-use restrictions.
There is no schedule set for Senate consideration of the NFIP reauthorization bill approved by the Banking Committee. The House has passed its own flood insurance bill.
The NFIP program is currently operating on the latest in a series of short-term extensions, which will continue its authorization through Nov. 18.