WASHINGTON–Reforms to the National Flood Insurance Program will be a priority on the Senate Banking Committee agenda as lawmakers return to Washington later this month.

The National Flood Insurance Program was the subject of a number of Senate Banking Committee hearings during the fall, in which the then-Acting Administrator and Director of Mitigation for the Federal Emergency Management Agency David Maurstad weathered the criticism of lawmakers for the NFIP's financial problems and the slow implementation of previously passed reforms.

The Senate version of the NFIP reform bill will be introduced by Sen. Richard Shelby, R-Ala, chairman of the Senate Banking Committee, and is expected to include many of the changes made to the program in the House legislation in addition to other changes.

The House version of the bill, known as H.R. 4973 or the Flood Insurance Reform and Modernization Act, was passed by the House Financial Services Committee in March and is awaiting a vote on the House floor.

Sponsoring the House bill are Rep. Richard Baker, R-La., who chairs a key Financial Services subcommittee, and Rep. Barney Frank, D-Mass., the ranking Democrat on the Financial Services Committee.

The reforms to the NFIP are designed to bring more consumers into the system while gradually reducing the subsidies for properties built before national flood maps were developed.

Under the House bill, property owners will be charged actuarially sound rates for non-primary residences, such as second homes and vacation properties.

Andrew Gray, a spokesman for Sen. Shelby, declined to comment on the substance of the Senate bill, which currently is being drafted by staff and has yet to be completed. However, he said the bill would likely be introduced and taken up by the committee in the last week of April, when lawmakers return from recess, or in early May.

Among the potential targets for cuts in the flood insurance program are the administrative costs to the program, including the reimbursement to insurers under the Write-your-own program in which insurers sell flood coverage under their names and are reimbursed for the expenses of administering those policies and claims.

In hearings last fall, the Senate committee was told that roughly half of the NFIP's $2 billion in annual premium revenue is spent on administrative expenses. With that burden, Sen. Shelby concluded it is unlikely the NFIP would ever be able to repay the $24 billion it has borrowed to cover losses in the wake of Hurricane Katrina.

Although the proposed reforms could reduce their reimbursement from the program, insurance groups are focusing more on the potential benefits of reform legislation.

“Obviously there are good and bad changes that could be made,” said Scott Duncan, a spokesman for the Property Casualty Insurers Association of America. “We're just happy that they're looking at it in a comprehensive way after last season's hurricanes.”

Special Reports /

Congress Returning To Flood Bill Work

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