Editor's note: This story has been updated with additional comments.
Legislation that supporters say would open the Flood insurance market to more private insurers passed the U.S. House of Representatives today on a vote of 419-0.
The Flood Insurance Market Parity and Modernization Act, H.R. 2901, which requires private Flood insurance to be treated the same as federal Flood insurance for homeowners with federally backed mortgages who are required to buy coverage, now heads to the U.S. Senate.
The measure was sponsored by Reps. Dennis Ross (R-Fla) and Patrick Murphy (D-Fla).
Supporters say the bill will foster more competition in the Flood insurance market, and provides an alternative for 5 million property owners who rely on the U.S. government’s National Flood Insurance Program (NFIP), which is $23 billion in debt.
The insurance industry is pleased with today's vote.
“This critical legislation provides clarity to lenders that they may accept private Flood insurance solutions from private insurers and eligible surplus lines insurers to fulfill mandatory purchase requirements for mortgages,” the Kansas City, Mo.-based National Association of Professional Surplus Lines Offices said in a statement.
Passage of this legislation in the Senate is now the group’s No. 1 priority, it said.
“The Flood Insurance Market Parity and Modernization Act will be a great benefit to consumers so that they have more choices when it comes to flood insurance, said Robert Hartwig, president of the New York City-based Insurance Information Institute. “Now insurers can compete with the NFIP on a more-equal footing, increasing consumer options while at the same time protecting taxpayers.”
“Enactment of this bill will give consumers more choices when it comes to Flood insurance. It will also help encourage development of a private Flood insurance market to complement the NFIP,” said Tom Santos, vice president for federal affairs for the Washington, D.C.-based American Insurance Association. “The overwhelming bipartisan vote by the House creates additional momentum as the bill moves to the Senate.”
The Alexandria, Va.-based Independent Insurance Agents and Brokers of America said it “supports a long-term extension of the current NFIP and believes that the private market has a limited role to play as a complement, not a replacement, to the NFIP.”
“This bill strikes the appropriate balance of private market involvement with the current program,” said Charles Symington, senior vice president for external and government affairs at IIABA.
The National Association of Professional Insurance Agents, also based in Alexandria, Va., said in a statement that it opposes the immediate privatization of the NFIP, but that it supports “sensible solutions for encouraging the growth of the private Flood insurance market with measures like H.R. 2901.”
“In addition, PIA supports the long-term reauthorization of the NFIP when it comes up for renewal in 2017. Encouraging the private Flood insurance market is a good first step that we hope to see accomplished this year, understanding that, at present and in the near future, the private market is not a realistic replacement for the NFIP,” the trade association said.
Other groups see this legislation as step toward reforming federal government involvement in disaster situations.
“The NFIP remains more than $20 billion in debt to U.S. taxpayers and has been on the nonpartisan Government Accountability Office’s list of high-risk federal programs since 2006. Prospects to shrink the program’s $1.1 trillion of total property exposure rely on the emergence of private-sector solutions,” said R.J. Lehmann, a senior fellow at the Washington, D.C.-based conservative and libertarian think tank, the R Street Institute.
The Washington, D.C.-based SmarterSafer.org, which describes itself as a national coalition of taxpayer advocates, environmental groups, insurance interests, housing organizations and mitigation advocates, agreed.
“Our nation’s disaster policies urgently need reform, and this bill is an excellent step in the right direction. More competition in the Flood insurance marketplace will give consumers access to better coverage and lower rates. For too long, outdated regulations have forced consumers to rely on the NFIP, saddling the program with a $23 billion debt load,” the organization said.
Sens. Dean Heller (R-Nev.) and Jon Tester (D-Mont.) have introduced the Senate companion to H.R. 2901, called S. 1679. There is no clear timeline on when the Senate will consider the measure, NAPSLO said.