Congress and Industry Eye Flood Insurance Reforms
The Housing and Insurance Subcommittee held two hearings this month on the future of the National Flood Insurance Program (NFIP) and ways to expand affordability and coverage options. Administered by FEMA, the program is facing financial challenges due to several catastrophic weather events, including Hurricanes Katrina and Sandy. Apartment owners with federally regulated and insured mortgages on properties in high risk areas are required by law to purchase flood insurance. Created in 1968, the NFIP was established to provide flood insurance coverage to at-risk property owners in absence of any real private sector participation and to reduce taxpayer liabilities for disaster assistance.
The first hearing was held on Jan. 12 and provided a lively discussion about the current structure and role of the program nationwide. NAA/NMHC submitted detailed comments for the hearing, expressing support for the program and encouraging lawmakers to reauthorize it well before its expiration in September 2017. We also provided insight on steps that could be taken to mitigate flood risk and help restore the program’s financial solvency.
The second hearing, held on Jan. 13, was more targeted in scope. Discussions centered on ways to lessen the exposure of taxpayers to liabilities of the program, including fostering a landscape that would allow for more private coverage options through legislation like the “Flood Insurance Market Parity and Modernization Act.” This legislation would expand coverage options for at-risk property owners by clarifying that flood insurance offered by private carriers outside of the NFIP meets the mandatory purchase requirements that are in place today.
NAA/NMHC expressed support for the legislation as a way to increase market competition, drive down premiums and make coverage more affordable for multifamily firms. The legislation is expected to be considered by the full House Financial Services Committee in the near future.
Provided by NMHC as part of the NAA/NMHC Joint Legislative Program