Congress Clears Additional Flood Insurance Claims
The Congress on Nov. 18 approved H.R. 4133, legislation that would allow the National Flood Insurance Program (NFIP) to borrow up to $8.5 billion a year from the Treasury. President Bush is expected to sign the measure into law shortly.
The increased borrowing authority was urgently needed to replenish depleted federal coffers as the record number of flood insurance claims from Hurricane Katrina and other recent natural disasters is estimated to exceed $23 billion, according to the Federal Emergency Management Agency (FEMA).
In the aftermath of Katrina, Congress approved legislation in September to raise FEMA’s borrowing authority from $1.5 billion to $3.5 billion. However, the agency reports it has halted insurance payments to Gulf Coast victims because it has already spent $3.5 billion on claims. FEMA owes an additional $20 billion to thousands of policy holders.
While debating measures in the House last week to raise the borrowing authority and institute other changes to shore up the program, legislative language was inserted to change the current 100-year flood plain standard to a 500-year flood plain standard. This would have greatly expanded the program's reach by requiring millions of additional property owners to purchase flood insurance.
NAHB successfully lobbied in support of an amendment offered by Rep. Gary Miller (R-Calif.), adopted on a 34-31 vote, that instead called on the Government Accountability Office to study whether flood insurance coverage should be mandatory for home and business owners situated in areas considered at moderate risk for flooding.
NAHB also fought off similar efforts in the Senate to secure a 500-year flood plain standard. Sen. Elizabeth Dole (R-N.C), supported by the North Carolina Home Builders Association, instituted a parliamentary maneuver to stop movement on the bill and secure a compromise supported by NAHB that would allow an additional $18.5 billion in borrowing authority absent the negative 500-year flood plain reforms.
Under current law, only homes in certain high-risk areas must purchase flood insurance.
Both the House and Senate are expected to hold hearings and mark up flood insurance legislation early next year. Many believe in the aftermath of Katrina that the program is broken and in need of reform.
Established in 1968, the NFIP offers affordable flood insurance to home owners and businesses in flood plains and other low-lying areas that otherwise might not be able to obtain such coverage.
More than 20,000 communities nationwide participate in the NFIP, and the program currently covers approximately 4.5 million policyholders.
To read this legislation, click here and enter the bill number, 4133, in the box at the upper left.
For more information, e-mail Greg Brown at NAHB, or call him at 800-368-5242, ext. 8421.