Washington–Revised flood insurance reform legislation, includinglanguage allowing a gradual increase in rates for vacation homecoverage, is set for action Wednesday by the House FinancialServices Committee.

Included in the bill is a provision that gives the FederalEmergency Management Agency, which administers the National FloodInsurance Program, the authority to increase the annual limitationon rate increases from 10 percent to 15 percent annually.

A person familiar with the drafting process, who asked foranonymity, said that provision is designed to reduce the subsidythe program provides to consumers and deal more realistically withthe debt burden imposed by recent catastrophes on the NFIP.

Meanwhile, the Senate Banking Committee has held hearings onways the NFIP should be shored up, and its members appear set topropose a measure with more teeth in it than the latest Housebill.

For example, members of the Senate panel said at the hearingthat debt service on the huge loans that “twin sister” HurricanesKatrina and Rita forced the agency to absorb, combined with annuallosses, would be far too great for the current premium structure toabsorb.

How the reform issue will play out is unclear, but the Housebill will have insurance industry support. The IndependentInsurance Agents and Brokers of America said yesterday–after thebill had been circulated amongst committee members and industrylobbyists–that it “strongly supports the bill.”

Charles Symington, IIABA senior vice president for governmentaffairs and federal relations, said his group is also thankful thecommittee leadership–Reps. Mike Oxley, R-Ohio, chairman, and BarneyFrank, D-Mass., ranking minority member–is seeking prompt action toraise the NFIP borrowing authority to $25 billion.

That additional money is needed so that companies and agents canpromptly process claims on behalf of the NFIP.

However, before taking action on the portion of the billincreasing borrowing authority to $25 billion, Congress must firstmove on legislation that has passed the House but is awaitingaction in the Senate raising the borrowing authority to $21.2billion.

The House version of that legislation would increase theborrowing authority of the besieged program to $20.8 billion from$18.5 billion. Senate action on a companion bill raising the limitto $21.2 billion has been held up over other unrelated issues. Whenthat passes, a conference committee will bring the two measuresinto agreement.

Besides calling for a phase-in of “actuarial rates” fornonresidential properties and nonprimary residences, the bipartisanHouse bill to be acted on Wednesday by the committee retainslanguage in an earlier bill calling for a federal study of whenhomeowners should be required to buy flood insurance.

The new House bill also provides $100 million annually for2007-2012 for flood mapping. The new bill also extends the life ofa mitigation pilot program by two years, from 2009 to 2011.