Flood Insurance Reform Effort Underway on Hill
Political Insider
Congress continues its effort to pass a long-term extension of the National Flood Insurance Program (NFIP). The program, which has been operating on short-term extensions since 2008, maps and manages the nation’s floodplains and provides insurance for residential and commercial properties located in those areas.
Although not intended to be taxpayer funded, the NFIP has $18.2 billion in outstanding debt, largely due to the 2005 hurricane season. The challenge facing lawmakers is to reform the program in such a way that it is financially viable and still affordable to those who need it.
On March 11, a House subcommittee held a hearing on a draft reform bill. The proposed legislation would reauthorize the program for five years and increase coverage limits, which have not kept pace with inflation, for the first time since 1994. It would institute 20 percent annual premium increases and provide optional business interruption coverage. For properties newly mapped into a floodplain, it would incrementally phase in premiums—50 percent the first year and 20 percent annually thereafter until the full risk rate is met.
NAA/NMHC submitted a letter for the record largely supporting the measure but encouraging lawmakers to retain subsidized rates for apartment communities. The draft bill would phase out subsidies for residential units that aren’t a “primary residence.” We noted that apartments are, indeed, the primary residences of their occupants and thus should continue to receive subsidized premiums comparable to other residential properties. Absent such subsidies, their premiums could increase up to 150 percent, which could aggravate the nation’s affordable housing shortage. The issue has not been taken up in the Senate.
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