NU Online News Service, July 13, 11:30 a.m.EDT

WASHINGTON—The U.S. House haspassed legislation to reauthorize the NationalFlood Insurance Program until Sept. 30, 2016.

The final vote on H.R. 1309, the Flood Insurance Reform Act of2011, was 406-22.

The Senate has perhaps five working weeks to complete work onlong-term reauthorization legislation before the current short-termextension runs out Sept. 30. Congress is scheduled to go into itssummer recess Aug. 8, and not return until Sept. 8.

An historic component of the bill is a provision that, for thefirst time since the program was launched in the 1950s, the door isopen for the private market to play a strong role in insuringagainst flood, primarily through reinsurance.

The House considered 25 amendments to the legislation.

A key amendment was one supported by the Property CasualtyInsurers Association of America (PCI) and the Independent InsuranceAgents and Brokers of America (IIABA) that would require theFederal Emergency Management Agency (FEMA) to find Write-Your-Owncompanies to take over 832,000 flood policies formerly underwrittenby State Farm and its 17,000 agents.

The amendment also requires FEMA to reduce the number of flood insurance policies that are directlymanaged by the FEMA to not more than 10 percent of the total numberof flood insurance policies in force, and requires FEMA to refusefuture transfers of policies to the NFIP Direct program.

The amendment passed by voice vote.

The House rejected an amendment by Rep. Candace Miller, R-Mich.,to terminate the NFIP as of Jan. 1 and allow states to forminterstate compacts to provide flood insurance.

Also rejected was an amendment by Miller that would terminatecurrent spending on television and radio advertising used topromote the NFIP in all 50 states.

Another defeated amendment would have directed the GovernmentAccountability Office to study the feasibility of creating a marketfor a so-called "all perils" insurance policy, that is, one thatwould cover wind and water, as well as cover other claims, forexample, defective wall board. The amendment, proposed by Rep.Bobby Scott, D-Va., failed 230-192.

An effort to remove a provision adding business interruption andcost-of-living expenses from the program was also defeated.

The House added a provision requiring the NFIP to create areserve fund that would be used to handle catastrophic losses. Theamendment, sponsored by Rep. Lynn Westmoreland, R-Ga., wasapproved, 241-183.

Regarding privatization efforts, FEMA is explicitly authorizedunder the measure to "carry out initiatives to determine thecapacity of private insurers, reinsurers, and financial markets toassume a portion the flood risk exposure in the United States."

The legislation also directs FEMA to assess the capacity of theprivate reinsurance market by seeking proposals to assume a portionof the program's risk, and to submit a report on such assessmentwithin six months of enactment.

The bill also gives FEMA the power to tear down and rebuildflood-damaged properties with the caveat that such action "must becost-effective."