The House Subcommittee on Housing, Community Development, and Insurance held a hearing on May 25 to address the reauthorization and reform of the National Flood Insurance Program (NFIP). Funding for the program is set to expire on Sept. 30 if reauthorization is not passed by Congress. (Hearing Webcast and Committee Memorandum)
- Since the last major reauthorization expired at the end of fiscal 2017, there have been 19 short-term NFIP extensions and several brief lapses, according to the committee’s memo.
- Five draft bills were released in conjunction with the hearing, including two from House Financial Services Committee Chair Maxine Waters (D-CA). Her first bill would reauthorize the program for five years, renew flood risk mapping and mitigation funds, and offer discounted rates to lower-income households. Water’s second bill would cancel the indebtedness of the NFIP.
The Roundtable View
- The Roundtable supports a long-term reauthorization of the NFIP with appropriate reforms that create long-term stability for policyholders, improved accuracy of flood maps, improved mitigation, enhanced affordability, and the acceptance of non-NFIP policies for commercial properties. (Roundtable website)
- Under the current NFIP, commercial property flood insurance limits are very low – $500,000 per building and $500,000 for its contents. Lenders typically require this base NFIP coverage, and commercial owners must purchase Supplemental Excess Flood Insurance for coverage above the NFIP limits.
- The Roundtable and its coalition partners support NFIP reauthorization with the inclusion of provisions that permit a voluntary "commercial exemption" for mandatory NFIP coverage if commercial property owners currently maintain adequate flood coverage.
- Given the low coverage amounts provided to commercial properties, it is important to permit larger commercial loans to be exempt from the mandatory NFIP purchase requirements.
Congress will face the possibility of yet another NFIP funding extension before September 30 if policymakers cannot agree on reforming the program through legislation.
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