Flood Reform Update: House Committee Releases Draft Principles

This week, Republican leadership in the U.S. House of Representatives Financial Services Committee took the first step in addressing reauthorization of the NFIP, which is set to expire on Sept. 30, 2017.

Blaine Luetkemeyer (R-Missouri), Subcommittee on Insurance and Housing Chairman, circulated a set of draft principles that could be used as a roadmap for the program’s reauthorization. Jeb Hensarling (R-Texas), Full Committee Chairman, also supports the principles, which touch on a range of issues impacting overall flood program reform and take productive steps toward enhancing marketplace stability, increasing program transparency and bolstering overall soundness of the NFIP.

The Big “I” believes the principles are a reasonable starting point for next year’s debate concerning the extension and reform of the NFIP. Although the principles do not suggest a specific number of years, they call for reauthorization and warn against the market uncertainty that could surface if the program lapses. The Big “I” supports many items in the document, including increasing the use of reinsurance and capital market alternatives to the NFIP; passing the “Flood Insurance Market Parity and Modernization Act”; updating the mapping process; and creating greater flexibility for mitigation assistance.

While the Big “I” supports many of the proposed ideas, the association has some concerns with a proposal that aims to phase out a number of policyholders from the NFIP. The specific proposal states, “Phase out over time NFIP coverage for those residential and commercial structures over the maximum allowable coverage limits in replacement cost value.”

As reauthorization discussions continue, the Big “I” will work to ensure that flood insurance is available and affordable to consumers across the country. It is important to note that the principles are currently in draft form, which means they’re still a work in progress. The Big “I” will continue to work with the committee to gain clarity on the issues listed in their document, and also provide input regarding how to improve the principles that will guide the NFIP reauthorization debate next year.

In the context of broader program reform, the Big “I” will also continue urging Congress to remember the important role independent insurance agents and brokers play in the selling and servicing flood insurance polices.

Jen McPhillips is Big “I” vice president of federal government affairs.