The House approved legislation today that would require somehomeowners whose houses are valued at more than $600,000 to payactuarially based rates for flood insurance.

Passed by voice vote, the measure (HR 3959) is aimedspecifically at homes that predate the government's flood insurancerate map, or FIRM, and are purchased after the bill is signed intolaw for more than $600,000.

Because they predate the federal flood maps, which took effectin 1974, such properties have enjoyed lower rates for their floodcoverage, which critics have said amounts to a subsidy.

The legislation was sponsored by House Financial ServicesCommittee Chairman Barney Frank, D-Mass., and committee memberScott Garrett, R-N.J., on October 24 and was approved by thecommittee a week later.

In speaking on the House floor prior to the vote on the bill,Rep. Frank noted that it brought together people with strong viewson government spending, like fiscal conservative Rep. Garrett, andthose who are concerned about the environment. The bill, he said,“advances the concerns of both those parties.”

For his part, Rep. Garrett also pointed to the legislation as acompromise between those willing to allow the subsidies to continueand the even more fiscally conservative who had sought toimmediately impose actuarially sound rates on pre-FIRM homes.

HR 3959 was approved under the suspension calendar, which meansit was subject to debate of no more than 40 minutes, could not beamended, and required two-thirds of the vote for passage.Legislation is typically moved on the suspension calendar if it isnot expected to have any opposition, and HR 3959 was approved aftera few minutes of remarks by Reps. Frank and Garrett.

“This bill is a great start to the 2008 flood insurance reformefforts and illustrates congressional commitment to strengthen theNFIP for policyholders and taxpayers across America,” said PaulKangas, director, federal government relations for the Property andCasualty insurers Association of America.

The group, he said, has been a strong supporter of reform of thefederal flood insurance program, “and we believe H.R. 3959 willhelp get us closer to that goal.”

With House approval, the bill will now go to the Senate.

John Prible, assistant vice president for federal governmentaffairs for the Independent Insurance Agents and Brokers ofAmerica, noted the threshold established by the bill as animportant factor for both the National Flood Insurance Program andfor homeowners.

“We recognize that the NFIP's need for financial stability mustbe measured against fairness to the customers we serve,” he said,“which is why we believe it is important that this legislation isaimed at homes valued at over $600,000 and includes a phase-inmechanism,” he said.

Dennis Kelly, a spokesman for the American InsuranceAssociation, said the group “has always supported this legislation,and the phasing in of actuarial pricing for all NFIP policies.”