The 21st Century Flood Reform Act
The National Flood Insurance Program (NFIP) aims to reduce the impact of flooding on both private and public structures. This federally subsidized program provides affordable insurance to property owners. The NFIP also works with communities to adopt and enforce floodplain management regulations. This floodplain management helps reduce costs and help mitigate loss. To date, the NFIP insures over 5 million properties.
As it stands now, this program is slated to expire in its current form on September 30, 2017. This expiration could potentially result in a severe shortage of affordable flood insurance, with catastrophic effects in certain areas of the country which are at higher risks for flooding. Therefore, lawmakers on both sides of the aisle are aware of the importance of reaching an agreement on permanent flood insurance reform before the program is allowed to expire.
The 21st Century Flood Reform Act aims to strengthen and reauthorize the National Flood Insurance Program for future years. Main goals of the legislation are to protect taxpayers, as well as homeowners, keeping the program sustainable long-term.
Significant Changes to the Bill
On July 20, 2017 the House Financial Services Committee affirmed their commitment to retain policy “grandfathering.” Policy grandfathering is a concept which protects homeowners from dramatic rate increases whenever new flood maps are put into place. In addition, the most recent draft of the bill will limit any proposed increases to fees and premiums facing policyholders.
Next Steps to Flood Insurance Reform
Other items addressed in this Bill include increasing efforts to increase consumer choice through private market development. In addition, certain refinements to how FEMA conducts and distributes flood maps are also of concern. In order to have a proper long-lasting flood insurance reform bill, all aspects of the current flood insurance marketplace must be addressed.
Other Reform Efforts
In addition to the 21st Century Flood Reform Act, several other bills are also up for consideration in both the House and Senate. Many of these bills address similar concerns, and it is likely that reforms and amendments will merge into comprehensive reform legislation. Here are a few other bills which also address flood insurance reform:
Stakeholders from the real estate industry, insurance industry, mortgage industry and others are all following this important reform effort as it continues to evolve. We will continue to update you as the flood insurance reform efforts continue through the legislative process.