A.M. in the Morning!: Multiple-peril add-on to NFIP vote is today

Bill draws Bush veto threat

Posted on Thu, Sep. 27, 2007
By MARIA RECIO
SUN HERALD WASHINGTON BUREAU

WASHINGTON -- On the eve of today's House vote, a bill that would expand the federal flood-insurance program to include wind damage drew a Bush administration veto threat.

The bill, championed by Rep. Gene Taylor, D-Bay St. Louis, is highly anticipated on the Gulf Coast where many residents are still battling insurers over storm damage done by Hurricane Katrina two years ago. Taylor, who settled his suit over the loss of his home, said the bill would resolve the disputes over the causes of damage - wind or water - that have been at the center of many lawsuits.

Despite the veto threat, Taylor was upbeat Wednesday night. "Things are falling in place," he said.

Though the administration and insurers oppose the bill, Taylor said the American Bankers Association, the National Association of Home Builders and the National Association of Realtors support it.

"I'm disappointed in what we got from the White House Office of Management and Budget," said Taylor. He cited President Bush's meeting in Bay St. Louis with state and local officials on the Katrina anniversary "where every person at that table said we need all-perils insurance."

Taylor's bill to cover multiple perils of water and wind in the National Flood Insurance Program was attached to legislation approved by the House Financial Services Committee in July reforming and revamping the program.

Although the bill has strong support in the House, in a release the OMB issued a statement of administration policy opposing the wind provision.

"The administration strongly opposes H.R. 3121 in its current form," said the OMB statement. "If the final bill presented to the president includes provisions to expand the NFIP to include coverage for windstorm damage, his senior advisers will recommend that he veto the bill.

"The administration strongly opposes the expansion of H.R. 3121 to provide coverage for new risks, as this bill does for windstorm damage. Shifting liabilities for windstorm damage from the private sector to the NFIP would be fiscally irresponsible," it said.

Brian Martin, Taylor's policy director responsible for insurance, reacted to the OMB argument that the private sector would be displaced by saying, "What country are they (OMB) in? Half the Texas coast, all of Mississippi, Florida, South Carolina and the mid-Atlantic states are all in state wind pools."

"There is no private market," he said.

The Bush administration objects to expanding responsibilities to the insurance program, which is part of FEMA, because the program had to borrow $17.5 billion more than it took in because of Katrina claims.

Presidential veto threats can sway some lawmakers before a vote but House Financial Services Committee spokesman Steven Adamske said Chairman Barney Frank, D-Mass., and others would argue for the legislation. "We're going to actively work for passage of the bill," said Adamske.

House Speaker Nancy Pelosi, D-Calif., has made the bill a signature issue for the Democratic majority and highlighted the issue in trips to the Gulf Coast region.

The House Rules Committee considered amendments Wednesday and approved 13 amendments the House will consider today.

WEB

Flood Insurance Reform and Modernization Act of 2007

Here are the key features of H.R. 3121:

• Increases the amount FEMA can raise policy rates in any given year from 10 to 15 percent.

• Extends multiple-peril policies for wind damage where local governments agree to adopt and enforce building codes and standards designed to minimize wind damage.

• Allows any community participating in the flood insurance program to opt into the multiple-peril option. The multiple-peril residential-policy limit is $500,000 for the structure and $150,000 for contents. Nonresidential properties could be covered to $1 million for structure and $750,000 for contents, plus business interruption. Increases the maximum coverage limits for flood insurance policies. New coverage limits would be $335,000 for residences, $135,000 for residential contents, and $670,000 for businesses and churches.

• Phases in actuarial rates for vacation homes and nonresidential properties beginning Jan. 1, 2011. Proposed amendments to H.R. 3121

The House Rules Committee has made the following 13 amendments:

1. Rep. Barney Frank, D-Mass.: Manager's Amendment. The manager's amendment does the following: (1) requires that homes insured by wind/water policies comply with existing model building codes from the International Code Council pursuant to request from the National Association of Home Builders; (2) requires that specific technologies be used for mapping floodplains (such as geospatial technologies); (3) adds a professional mapping association to the Mapping Advisory Council; (4) prohibits FEMA from enforcing a penalties assessed against individual condo owners where the condo complex is underinsured regarding flood coverage; (5) directs FEMA to develop a plan to verify that the recipients of Homeowner Assistance Grants in Mississippi and Road Home Grants in Louisiana, funded by HUD Community Development Block Grants, maintain flood insurance on their properties as required as a condition of the grants; and (6) codifies recommendations in a recently released GAO report (GAO 07-1078) with respect to the National Flood Insurance Program's payments to insurance companies for their administrative costs without requiring the companies to report their costs or to comply with the existing audit requirements. (10 minutes)

2. Reps. Dennis Cardoza, D-Calif./Ross (Ark.)/Reyes (Texas): This amendment says that people forced to purchase flood insurance as a result of the new map who have lived in an area where the levees were previously certified, and have now been decertified, will receive a grace period of 5 years in which they will be entitled to a 50 percent reduction in their flood insurance premium while the levees are being recertified. (10 minutes)

3. Rep. Kathy Castor, D- Fla.: This amendment commissions a study by the GAO to examine the effect of the new multi-peril policy on state insurance programs. (10 minutes)

4. Rep. Castor, D-Fla.: This amendment clarifies some of the priorities for wind risk criteria generation. (10 minutes)

5. Reps. Earl Blumenauer D-Ore., or Peter Welch , D-Vt. or Wayne Gilchrest, R-Md.: This amendment would require FEMA, when updating and maintaining flood maps, to take into consideration the impacts of global warming, the potential future impacts of global climate change-related weather events, and use the best available climate science in assessing flood and storm risks. (10 minutes)

6. Reps. Patrick Murphy, D-Pa., /Michael Arcuri, D-N.Y.: This amendment would create the position of National Flood Insurance Advocate in FEMA, which would: (1) transmit a comprehensive report to Congress about the major problems facing the Flood Insurance Program; and (2) report to Congress about the feasibility and effectiveness of establishing an Office of the Flood Insurance Advocate, headed by the National Flood Insurance Advocate, to assist insureds in resolving problems with FEMA. (10 minutes)

7. Rep. Gene Taylor, D-Miss. This amendment allows multiple-peril and flood-insurance coverage of apartment buildings up to the total of the number of dwelling units times the maximum coverage limit per residential unit. (10 minutes)

8. Rep. Gene Taylor, D-Miss: This amendment prohibits a company that sells and services flood-insurance policies from including language in its own windstorm policies that would exclude coverage of wind damage solely because flooding also contributed to the damage. The amendment also requires the contract between an insurance company and NFIP to state that the company has a fiduciary responsibility to federal taxpayers and will act in the best interests of NFIP. (10 minutes)

9. Rep. Jerry Costello, D-Ill.: This amendment provides that no changes in flood-insurance status can go into effect until the remapping process is completed for the entire district of the Corps of Engineers affected by that map. (10 minutes)

10. Rep. Gene Green, D-Texas: This amendment provides a five-year phase-in of flood insurance premiums for low-income homeowners or renters whose primary residence is placed within a flood plain through an updating of the flood insurance program maps if the value of the home does not exceed 75 percent of the state median home value. (10 minutes)

11. Rep. Marion Berry D-Ark. : This amendment authorizes the director of FEMA to include a note on flood insurance rate maps identifying 100-year and 500-year certified levees and encouraging property owners to evaluate their risk of flooding. The amendment also clarifies that the note shall not be considered a legal requirement of participation in the national flood-insurance program. (10 minutes)

12. Rep. Tim Walz, D-Minn.: This amendment adds to the flood map modernization provisions of H.R. 3121 a requirement that FEMA map areas in the 100-year floodplain that would flood if not for a "levee, dam, or other man-made structure." (10 minutes)

13. Reps. Pete Stark, D-Calif. and Dan Burton R-Ind.: This amendment requires written notification by first-class mail to each property owner affected by a proposed change in flood elevations, prior to the 90-day appeal period. Notification would include an explanation of the appeal process and contact information for responsible officials.

HOUSE FINANCIAL SERVICES COMMITTEE
Presidential veto threats can sway some lawmakers before a vote but House Financial Services Committee spokesman Steven Adamske said Chairman Barney Frank, D-Mass., and others would argue for the legislation. "We're going to actively work for passage of the bill," said Adamske.

House Speaker Nancy Pelosi, D-Calif., has made the bill a signature issue for the Democratic majority and highlighted the issue in trips to the Gulf Coast region.

The House Rules Committee considered amendments Wednesday and approved 13 amendments the House will consider today.