Flood insurance reform deal adds momentum to House bill
WASHINGTON — House Financial Services Committee leaders and two top real estate trade groups have cut a deal on a bill to reform the National Flood Insurance Program, which will add momentum to the legislation.
The National Association of Home Builders and National Association of Realtors were worried that a bill approved last month by the panel would put the brakes on new construction in flood-prone areas. Under the bill, federal flood insurance policies could not be sold to buyers of newly built homes in high-risk flood areas after Jan. 1, 2021, if private flood insurance is available. Homebuyers would pay a 10% surcharge if private policies are not available.
But the deal reached by the committee and the two groups strikes those provisions, effectively maintaining the status quo for new construction in flood-prone areas.
“NAHB commends House Financial Services chairman Jeb Hensarling and Housing subcommittee chair Sean Duffy for their leadership in working with us to produce a bill that will preserve rate affordability, shore up the NFIP and address the concerns of the housing community,” said Granger MacDonald, a homebuilder and developer from Kerrville, Tex., who chairs the National Association of Home Builders.
House lawmakers are under pressure to act because the National Flood Insurance Program is set to expire Sept. 30, and are hoping to pass their bill through the full chamber soon. Senate Banking Committee leaders introduced their bill earlier this week but are not as far along in the process.
The deal with the two industry groups, who hold significant sway over members of both political parties, will likely speed the legislation forward.
“I’m pleased that we have reached an agreement with the Realtors and Home Builders that gains their full support for the legislative package that provides a long-term reauthorization of the NFIP," Rep. Sean Duffy, R-Wis., the author of the bill, said in a press release Thursday.
The deal also addresses premiums on flood policies where the rate escalates on an annual basis toward the full actuarial rate.
The current annual premium increase is 5%. The original bill would have raised it to 8%. Under the compromise, premiums will rise at a 6.5% annual rate.
"The changes to the 21st Century Flood Reform Act will help give certainty to homeowners who have brought their property to code and have done their part to protect it against flood risk,” said William Brown, the president of the National Association of Realtors. “It’s a fair and reasonable approach that recognizes the need for accessible, affordable flood insurance, while taking us one step closer towards reauthorization.”