WASHINGTON — The House passed a bill Thursday to make it easier for homeowners to obtain private flood insurance policies not provided directly through the National Flood Insurance Program. But moments later, the Senate declined to move the bill.

The House bill, which passed 264-155 with Republican and Democratic votes, aims to remove barriers that supporters of the legislation say make it harder for private insurance carriers to cover losses in flood-prone areas. It was introduced by Reps. Dennis Ross, R-Fla., and Kathy Castor, D-Fla.

“The recent major flood events across the country have provided a much-needed sense of urgency to our efforts to provide consumers with private sector flood insurance options,” Ross said in a press release. “Currently, many homeowners in Florida and across the country face unaffordable flood insurance premiums and a lack of coverage options, largely due to federal regulatory barriers that give the National Flood Insurance Program a harmful monopoly over the marketplace.”

Flooding from Hurricane Irma
“The recent major flood events across the country have provided a much-needed sense of urgency to our efforts to provide consumers with private sector flood insurance options,” said Rep. Dennis Ross, R-Fla. Bloomberg News

The private flood insurance bill was attached to broader legislation that also would reauthorize expiring Federal Aviation Administration programs. Yet later in the day, the Senate passed an FAA reauthorization bill without the flood insurance provision included.

The two Republican Louisiana senators, John Kennedy and Bill Cassidy, said they opposed adding the flood insurance fill to the FAA bill, rather than including it in a comprehensive flood insurance reform package.

"This would be a disservice to millions of families across the U.S., especially those families still recovering from the recent hurricanes," the two senators said in a joint statement. "We need Congress to act on a long-term reauthorization of the NFIP that will provide these families with affordable insurance and peace of mind.”

Still, supporters of opening up the private insurance market said homeowners in flood-prone areas need more coverage options, not less.

The Mortgage Bankers Association has lauded the effort. In a letter supporting the Ross-Castor bill, the group said, "This will increase flood insurance options for consumers, thereby providing more competition and coverage options to families and businesses."

On the House floor, Financial Services Committee Chairman Jeb Hensarling said the NFIP’s hold on the market restricts homeowners’ coverage options.

“Wouldn't it be wonderful that for every time you saw a life insurance commercial or an auto insurance commercial, you saw something about flood insurance to help educate the American people about the need for this basic insurance policy?” he said. “We could see the savings occur as people rolled this into their homeowners' policy.”

The Ross-Castor bill was also passed by the House last year. But it died in the Senate due to concerns about the adequacy of the private insurance coverage.

Those concerns have not gone away, according to some observers.

"If these provisions were ever to be enacted, they are likely to cause a disruption in the availability of mortgage credit to flood-zone areas, community blight, and losses at Fannie Mae and Freddie Mac, at a time when their capital is non-existent," said Anne Canfield, executive director of the Consumer Mortgage Coalition.

Canfield’s coalition is concerned that homeowners would elect high-deductible flood insurance flood policies. And these policies would provide inadequate funds to repair flood-damaged properties.

"The CMC believes the National Flood Insurance Program needs to be completely reengineered and also believes that there is a significant and positive role that private flood insurance can play in a restructured program. The provisions in this bill, however, are poorly structured and ill-advised," she said.

Others said moving the bill now is misguided in light of a more immediate need to strengthen the NFIP in light of the damage suffered in the recent storms.

“I will oppose any and all efforts to break apart the debate on substantive reforms to the NFIP from the reauthorization debate we should so desperately be having,” said Rep. Maxine Waters, D-Calif., ranking member of the Financial Services Committee, in the House floor debate Wednesday.

Waters said she does not oppose the substance of the Ross-Castor bill, and in fact voted for it in the last Congress, “but moving this bill, at this time, while ignoring all the other policy responses needed for the flood insurance program and the ongoing natural disasters in our country, is simply irresponsible.”

However, the SmarterSafer Coalition — which represents insurance companies, environmental groups, Realtors, taxpayer advocates and others — also supports the Ross-Castor bill.

“We want to see the Ross-Castor bill passed. We want people to have more access to flood insurance. So whatever the vehicle may be we want that vehicle to move forward and become law,” said Joshua Saks, legislative director of the National Wildlife Federation, which is a member of the SmarterSafer Coalition.

Saks pointed out how large numbers of residents affected by the recent hurricanes suffered damage to their homes without having had flood insurance. "We need to fix this problem," he said.

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