House Appoints NFIP Conferees

WASHINGTON–The House moved yesterday to put reauthorization and reform of the National Flood Insurance Program to the top of the congressional agenda.

By a voice vote it approved the appointment of members to the conference that will have to reconcile its version of an NFIP bill with that of the Senate.

But, several insurance trade groups, in memos that were viewed by NU Online, late yesterday advised their members that the Senate is unlikely to seek a conference.

“There is no indication that the Senate will name conferees any time soon, or if they will at all,” one of these memos to members said. “This means there may not be a formal conference, but rather that the House would just take up and pass the Senate version or that the bill goes back and forth between the two chambers,” the memo added.

Interestingly, in appointing its conferees, the House instructed them to push for inclusion in the bill “to the maximum extent possible” the Senate's language on a new premium rate structure for the program.

The issue is important because the current authorization for the program expires Sept. 30, when the current federal fiscal year ends, and Congress will not be in session in August during political conventions and wants to leave as early as possible in the fall to campaign.

Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor this week that he doesn't want to hold a post-election session, if possible.

At the same time, the instructions for conferees did not ask them to insist on the House bill's language, which would expand the flood program by having it offer wind damage protection.

But it did include as conferees Rep. Ron Klein and Rep. Tim Mahoney, both D-Fla., the authors of the House legislation, the Homeowners Defense Act, which was added to the House bill when it was considered last September on the House floor.

The House resolution appointing conferees also specifically added Rep. Gene Taylor, D-Miss., a strong proponent of adding wind coverage to the program, as a conferee on that issue.

He was also added as a conferee on the issue of barring use of anticoncurrent clauses in contracts issued by insurance companies that take part in the NFIP's write-your-own-program.

The Senate, when the bill was considered in May, rejected including wind in the reauthorization legislation by a 73-19 margin.

The Senate bill is S. 2284; the House bill is H.R. 3121.

The Senate language on the issue calls for ending subsidies inherent in the programs for second homes; for commercial properties; those structures which have put in more than one claim for damages from flood in the past; and any home for which prior payments exceeded the fair value of the property.

The provision also calls for ending subsidies for any property which in the future receives payment for a claim that exceeds 50 percent of the fair market value of the property or on which additions or other improvements adds 30 percent or more to the value of the property.

The provision also bars payment of a claim to someone who has let their flood policy lapse “as a result of the deliberate choice of the holder of such policy.”

In general, the insurance industry supports the Senate bill over the House bill. However, the industry is voicing concern over provisions establishing an “ombudsman” within the Federal Emergency Management Agency whose job would be to ensure that the 93 insurers participating in the program do not pass off wind claims they are responsible for as flood damage.

Under the House resolution, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, and Rep. Spencer Bachus, R-Ala., ranking minority member of the panel, will head the House conferees on the bill.