WASHINGTON--Legislation calling for the phase-in of actuarialrates for flood insurance on higher-priced homes built before theNational Flood Insurance Program went into effect was passedunanimously today by the House Financial Services Committee.

The bill would require any purchaser of a primary residentialhome costing $600,000 or higher built before the flood program wentinto effect to pay phased-in actuarial flood insurance prices usingthe same phase-in structure as that of nonresidential andnonprimary home purchasers.

Currently, NFIP home insurance rates are subsidized and belowwhat they would be if they were actuarially sound and competitivelypriced based on the true risk exposure.

The bill, H.R. 3959, was sponsored by Rep. Scott Garrett,R-N.J., and Rep. Barney Frank, D-Mass., chairman of the panel.

It calls for the phase-in to take effect in 2011, ifadopted.

According to its sponsors, it would have the effect of notsubjecting current homeowners of homes purchased before the NFIPwent into effect to unanticipated or unplanned increases in floodinsurance premiums.

Justin Roth, a senior director of federal affairs at theNational Association of Mutual Insurance Companies, called thelegislation "a positive step in the rightdirection."

He said the move is similar to phasing in all second homes toactuarial rates, and it "helps move the program in the rightdirection in which homeowners are paying risk-based pricing,instead of having all taxpayers subsidize their coverage."

Charles Symington, senior vice president for government affairsat the Independent Insurance Agents and Brokers of America, saidthe bill is consistent with the trade group's views on how to makethe program more solvent and equitable.

"We hope the full House will consider this legislation soon andthat both the House and Senate will consider including it in theirbroader Flood Insurance Reform and Modernization legislation," headded.