NU Online News Service, July 9, 11:33 a.m.EDT

WASHINGTON—President Obama late Friday signedlegislation that reauthorizes the National Flood Insurance programuntil Sept. 30, 2017, ending years of political stalemate.

The signing marks the first time since 2004 that a new NFIPreauthorization has gone into effect, and ends a political impasse that began in 2007, when debate openedin the House on legislation that would replace the NFIPreauthorization legislation enacted in 2003.

The program has been extended for short intervals 17 times sinceits authorization first ran out Sept. 30, 2008, according to datacompiled by officials of the House Financial ServicesCommittee.

The program temporarily lost authorization four times, mostly in2011, resulting in postponement of house sale closings incommunities where flood insurance is mandatory for 53 days,according to the FSC and industry officials.

The law, Title II ofH.R. 4348, the Surface Transportation Extension Act of 2012, ispart of a transportation bill.

Key highlights include allowing the Federal Emergency ManagementAgency to raise rates a maximum of 20 percent annually, as comparedto 10 percent annually under the current program.

It also mandates that owners of second homes, properties withrepetitive flood claims and commercial properties will go up 20percent over the next five years, raising them toactuarially-adjusted fees. That will be effective July 1.

The bill reiterates FEMA's authority to buy private reinsuranceto back the program, which is aimed at reducing FEMA's reliance onTreasury loans to fund the program.

The reforms are projected to generate an additional $2.7 billionin new revenues over 10 years, according to the CongressionalBudget Office.

“At long last our government has signed intolaw meaningful NFIP reform,” said Jimi Grande, senior vicepresident of federal and political affairs for the NationalAssociation of Mutual Insurance Companies.

He noted that the core legislation passed the InsuranceSubcommittee of the House Financial Services Committee more than ayear ago, and “ensures that Americans have access to floodinsurance and just as important, that the NFIP will begin to chargeadequate rates.”

Grande says the bill “should place the NFIP on the path to amore sound fiscal footing.”

Tom Litjen, vice president of federal government relations forthe Property Casualty Insurers Association of America adds that thesigning “is a momentous occasion” adding, “This legislation willbring much needed certainty to flood-prone communities and greaterstability for the housing market.”

Robert Rusbuldt, president and chief executive officer of theIndependent Insurance Agents and Brokers of America, commendsPresident Obama and Congress for working together, saying “TheIIABA looks forward to the implementation of the many provisionsthat will help put the program on more solid financialfooting.”

Despite the sigh of relief that long-term certainty has beenachieved, some industry officials are privately voicing concernabout two areas of the bill.

One is removal of a provision that mandates that homeowners wholive behind levees and other flood control structures buy floodinsurance.

The other is the provision raising rates to market level withinfour years on second homes and vacation properties.

The concern is that allowing homeowners and businesses that livein areas behind levees to escape paying into the program willreduce revenues and that those being forced to pay market rates forsecond homes and vacation properties will decide to buy privateinsurance. That move would rob the program of needed revenues, andthrow off the calculations used by the Congressional Budget Officeto project higher revenues through the reforms included in theprogram, the officials said.