Flood Insurance Reform and Modernization Act Passes Senate Committee

Earlier today (September 8) the Senate Committee on Banking and Urban Affairs passed “Flood Insurance Reform and Modernization Act,” its version of a bill to extend the authorization of the fiscally-nonviable National Flood Insurance Program (NFIP) until September 2016 and add a measure to pay down its nearly $18 billion debt through a series of annual rate increases for policyholders.  The NFIP is set to expire at the end of the month unless Congress acts.  The bill now goes to the full Senate, although there is yet no schedule for the full Senate consideration. 

The Senate bill differs somewhat from a similar measure passed by the House on July 12, H.R. 1309, the Flood Insurance Reform Act of 2011.  For example, the House version would attempt to reach actuarially sound flood insurance rates by allowing rates rise at a rate up to 20 percent a year. The Senate bill caps the maximum rate at 18 percent.  The Senate version would forgive the NFIP's current debt, which the House bill does not.

Assuming that the Senate passes its legislation, the House and the Senate will have to come to a compromise soon to renew the program by September's end.  U.S. Representative Judy Biggert (R-IL), Chair of the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, and sponsor of the House bill, has been quoted as saying, "The House and Senate versions of this bill include far more areas of agreement than disagreement, and I’m confident that we can work out a compromise."