Despite strong support in the Senate last week for legislation reauthorizing and reforming the National Flood Insurance Program, it remains unclear how–and how promptly–Congress will move to reconcile the Senate bill with a far different House version.
The vote was 92-6 in favor of S. 2284, the Flood Insurance Reform and Modernization Act of 2008, which extends the program–otherwise set to expire on Sept. 30–until 2013. The reform act also contains a provision to pay off the $17.5 billion debt that was run up in settling 2005 claims from Hurricanes Katrina and Rita.
A spokesperson for Rep. Barney Frank, D-Mass., said no decision has been made yet on how the House will proceed in the wake of the Senate's decision to reject a House provision adding wind coverage. Rep. Frank, chair of the House Financial Services Committee, was co-sponsor of a House floor amendment last September that resulted in adding wind to the House version.
"It is unclear what will happen," said Steven Adamske, chief spokesperson for the House Committee. "The Senate just acted."
Joel Wood, senior vice president for government affairs at the Council of Insurance Agents and Brokers, said it wouldn't be too difficult to reconcile the House and Senate bills minus wind cover. "The strength of the [Senate] vote against wind coverage combined with a presidential veto threat makes any 'compromise' on wind virtually impossible to envision."
An amendment that would have added wind was rejected by a 73-19 vote.
Mr. Wood also noted that language in the Senate bill authorizing forgiveness of NFIP's $17.5 billion debt raises the question of whether Democrats will demand an offset, calling that a potential bill killer.
In a provision opposed by the industry, S. 2284 also establishes an "ombudsman" within the Federal Emergency Management Agency. The ombudsman's job will be to ensure that the 93 insurers who participate in the Write-Your-Own claims don't make the flood program pay for wind claims the insurers should pay for. The House bill does not include such a provision.
Senators who voted against the bill included both senators from Arkansas and Louisiana, as well as senators from Florida and Oklahoma.
The Senate bill also:
o Requires people protected by dams or levees to buy flood insurance after flood plain mapping is completed.
o Allows FEMA to raise rates by 15 percent annually, up from 10 percent, and increases minimum deductibles.
o Gradually ends subsidies now available to some second homes, commercial properties and properties that experience repeated losses.
o Requires FEMA to adjust rates to accurately reflect risk upon completion of flood insurance rate maps.
Another amendment, also engineered by Sen. Dodd, D-Conn., chair of the Senate Banking Committee, establishes a bipartisan commission composed of disparate interests to examine risks and recommend possible solutions for Americans living in natural disaster-prone areas.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.