PIA National Vice President of Government Relations, Jon Gentile
The House Financial Services Committee voted to pass a five-year reauthorization of the National Flood Insurance Program (NFIP) to the full House. The bill — if it gets through the House and passes the Senate — will authorize the NFIP through September 30, 2024.
All eyes are now on what the full House will do since the NFIP is still on life support and will expire on September 30, 2019. The extension it is currently on is the 12th short term extension since 2017.
PIA National vice president of government relations Jon Gentile says this is a compromise between the committee chair Rep. Maxine Waters of California and Ranking Member Patrick McHenry — a Republican from North Carolina.
“After nearly two years of seemingly never-ending short-term extensions, PIA National thanks Chairwoman Waters and Ranking Member McHenry for working together in a bipartisan way to pass this common-sense legislation out of the Financial Services Committee,” Gentile said. “Their leadership has ended the treatment of the NFIP as a political hot potato, which has been unfair and even dangerous for the millions of NFIP policyholders, as well as those who have been impacted by flooding events.”
By the way, the committee’s vote was 59 to 0.
Waters is pleased with the vote and the compromise. “Flooding is a humbling and equalizing force,” she noted. “In the wake of the many catastrophic natural disasters we experienced just in the last three years, we’ve seen the best of America during the worst of times, with everyone putting aside their differences, to come together to help one another in a time of need. Now it’s time for Congress to do the same thing.”
Here is what the bill contains:
• A continuous coverage provision to allow borrowers who dumped NFIP insurance for private insurance to return to the NFIP without penalty
• The NFIP will be able to offer umbrella policies for commercial properties, multifamily properties and agricultural properties
• The NFIP will also be required to make coverage available to co-op and condo owners
• A loan fund will be set up to help states with mitigation efforts to relocate homes or elevate them
• That fund will also help high-income homeowners
• It also expands flood mapping to all areas of the country
• It requires the Federal Emergency Management Agency (FEMA) to update its mapping technology and $500 million a year will be provided for the update
• An annual independent actuarial study of the NFIP will be done to analyze the NFIP’s financial status
• The minimum loan amount to trigger mandatory flood insurance purchase requirement will go from $5,000 to $25,000
• The bill will let monthly payments to be made instead of annual payments for flood insurance
“This bipartisan bill includes many of the priorities PIA National has been advocating for,” Gentile said. “It preserves the critical role of the independent agent; provides continuous coverage protections to policyholders who leave the NFIP to purchase a private flood policy and return to the program; makes critical investments in mitigation; and increases funds for mapping.”
Even more importantly, the bill will continue the gradual implementation of actuarily sound rates.
“PIA supports this bill,” Gentile said and a statement from PIA National pointed out the association will oppose any amendments that will negatively affect the ability of agents to earn fair compensation “for the expertise they provide to consumers to identify and purchase appropriate flood coverage through the NFIP.”
The National Association of Homebuilders (NAHB) and the National Association of Realtors (NAR) like the deal. NAR President John Smaby said, “This legislation addresses many critical NAR priorities, including long-term reauthorization, strengthening mapping and mitigation, and facilitating a more robust private insurance market.”
The NFIP has 5.1 million policies in effect and 256,850 of them are in the nonresidential category. That leads to what the bill doesn’t do and that is address the huge debt the NFIP owes to the federal government and the taxpayers.
It is $20.5 billion.
Waters would like to see it forgiven but can’t get much support for the idea. She said the NFIP pays $400 million every year in interest payments to the Treasury. That is — she said — “a debt it can never repay.”
Gentile and PIA National get the last word and said it is a very good bill. “I think the Waters-McHenry bill is the best chance that we’ve have for a long-time reauthorization in a long time and I would encourage the Senate to work off of this bill, assuming it passes committee and assuming it passes the House without any poison pill amendments,” Gentile concluded.
Source links: PIA National — link 1, link 2, Insurance Journal, DS News, Business Insurance