Sen. Shelby Expresses Optimism in Congress for a Long-Term NFIP Authorization

Shelby spoke as signs emerged that the House plans to act on legislation reauthorizing the NFIP by mid-July, and that Sen. Shelby and the staff of Sen. Tim Johnson, D-S.D., committee chairman, are working to develop companion legislation that they hope can be reported out by the committee sometime before Congress starts its August recess.

A host of witnesses testified, including representatives of the home building industry, a trade group that wants Congress to address catastrophic issues in a comprehensive way, and a state group representing flood plain managers.

"Although the flood program expires in a few months, I am confident that the committee can successfully work together to, once again, pass bipartisan legislation," Shelby says.

He adds that the severity of this year's weather "highlights the need" for the NFIP to be reauthorized and "placed on a sustainable path."

Shelby also noted that Congress has been unable to pass a long-term reauthorization of the flood program for six years.

"The short-term extensions have kept the program alive, but have prevented the implementation of important reforms," he says. "This has made it difficult for communities in high-risk flood zones to plan for the future."

Shelby adds that he hopes the extension includes reforms to make NFIP actuarially sound.

Orice Williams Brown, director of the GAO's Office of Financial Markets and Community Investment, says congressional action is needed to increase the financial stability of NFIP and limit taxpayer exposure.

She says the program is faced with competing goals, which include charging premium rates that fully reflect risks; limiting costs to taxpayers before and after a disaster; encouraging broad participation in the program; and encouraging private markets to provide flood insurance.

The costs of these trade-offs could be mitigated by providing assistance only to those who need it, limiting post-disaster assistance for flooding, and phasing in premium rates that fully reflect risks, Brown says.

"Increasing mitigation efforts to reduce the probability and severity of flood damage would also reduce flood claims in the long term but would have significant up-front costs that might require federal assistance," she adds.