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 On a vote of 72-22, the Democratic-led Senate sent the measure,
earlier approved by the Republican-led House of Representatives, to
President Barack Obama to sign into law.
With homeowners and businesses facing premium hikes of up to 10-fold
or more, the measure would limit annual increases of any individual
policy under the National Flood Insurance Program to no more than 18
percent.
The bill also instructs the Federal Emergency Management Agency to
have "an affordability target" that would seek to limit the cost of
a flood insurance policy to 1 percent of a home's or business's
total coverage amount.
The legislation was drafted in response to the Biggert-Waters Flood
Insurance Reform Act of 2012, which was designed to allow premiums
to rise to reflect the true risk of living in high-flood areas.
That law was passed to address a $24 billion deficit in the NFIP.
The federal flood insurance program serves about 5 million people
and has had mounting losses, largely from Hurricane Katrina in New
Orleans in 2005.
Shortly after enactment of the 2012 law, Superstorm Sandy hammered
much of the U.S. Northeastern coast, generating another wave of
insurance claims.
That law did not stipulate that rates would soar by 10 times or
more, but that is what happened to the surprise of lawmakers and
consternation of homeowners and small businesses.
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Such rate hikes, they warned, could force many homeowners and
businesses to sell their properties, which in turn could lower real
estate values and damage the U.S. economy.
With so much at stake, normally warring Democrats and Republicans in
Congress came together to craft a solution.
Backers of the bill include realtors, banks and homebuilders. A
number of conservative groups opposed it, largely because of the
continuation, although at a reduced level, of federally subsidized
insurance rates.
The nonpartisan Congressional Budget Office said the new law would
pay for itself with the help of annual assessments to NFIP's reserve
fund — $25 a year for primary homeowners and $250 a year for
businesses and vacation homeowners.
(Reporting by Thomas Ferraro; editing by David Gregorio)
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