Prospects for passage of NFIP reform legislation, including a 5 year reauthorization, are better than they have been in many years.   The present situation is that the Flood Insurance Reauthorization and Reform Act (HR 1309) passed the House on July 12th.   The Senate Banking Committee reported its bill out of committee on September 8th and the measure is awaiting Senate floor consideration.   Because the report has not yet been filed for that bill, it does not yet have a bill number.

Current versions of the bill differ from the 2007-2008 NFIP reform bill. The Senate bill no longer includes forgiveness of the NFIP's $17.75 billion debt to the U.S. Treasury.   House rules requiring debt forgiveness to be offset by other budget reductions were the primary reason for lack of final action in 2008. Although the on-going debt will apparently remain a problem for the NFIP, FEMA has just negotiated a favorable interest rate of $.5% on the debt.

There are both similarities and differences between the Senate and House versions of the NFIP reform bill:

• Both bills reauthorize the NFIP for 5 years.  
• The House bill would allow annual premium increases up to 20% while the Senate bill would allow increases up to 15%.
• Both bills phase-in actuarial rates for non-residential properties, second homes and severe repetitive loss properties, but the House would do so over 5 years while the Senate would do so over 4 years.  
• The House bill would increase coverage limits and index them to inflation as well as provide for optional additional coverages while the Senate bill would not.  
• Both bills would require a catastrophe reserve fund, but the Senate bill would also require inclusion of catastrophic losses in calculation of premium rates.  
• Both bills would re-establish a Technical Mapping Advisory Council, although with somewhat different responsibilities and tasks.  
• The Senate bill authorizes the NFIP's mapping program while the House bill does not. (The mapping program has never had an authorized program and spending level.)
• The Senate bill calls for mandatory purchase of flood insurance in residual risk areas behind levees, while the House bill does not and also removes any requirement to map residual risk areas.  
• The Senate bill increases compliance violation penalties for lenders while the House bill does not.    
• The House bill requires that the FEMA Direct policy program handle no more than 10% of the overall policy count while the Senate bill has no comparable provision.

Whether or not the Senate takes up the Flood Insurance Reform and Modernization Act this fall seems to depend on availability of time on the Senate floor.   There were many amendments filed but not considered when the Banking committee acted on the bill.   Many of those could be offered as floor amendments. Concerns within the insurance industry have developed over the limitation on policies in the direct program and this could also lead to floor amendments.   So, while prospects are better than they have been for some time, there are still many questions surrounding the path forward for flood insurance reauthorization and reform.