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The
plan by Washington-based SmarterSafer.org calls for the National
Flood Insurance Program (NFIP), to use cutting-edge technology
that would more precisely determine flood-prone areas, and to
price flood insurance premiums in accordance with those specific
risks.
Other measures would include greater involvement by private
insurers in the flood insurance market and offering incentives
for communities to enhance and restore natural buffers against
floods, such as wetlands and forests.
The proposal is among the first in a year that could usher in
sweeping changes to the flood insurance program, whose
authorization is set to expire in September. The program,
operated by the Federal Emergency Management Agency (FEMA), is
$24.6 billion in debt to the U.S. Treasury Department, a FEMA
spokeswoman said. Most of the debt covered claims from Hurricane
Katrina in 2005 and Superstorm Sandy in 2012.
It is unclear which lawmakers may take up the issue as
Washington adjusts to a new presidential administration, or how
much of the SmarterSafer.org plan would be adopted. However,
there is bipartisan support to modernize the insurance program
and U.S. Senate and House lawmakers held several hearings last
year about possible ways to do it.
The flood insurance program has been a political football in
Washington for years, mainly because of the debt, which the
government has said is impossible for the program to repay.
The program was temporarily extended 17 times between 2008 and
2012 and lapsed four times during the same period, a pattern
that can create uncertainty in real estate markets, some U.S.
lawmakers have said.
Federal law requires that homes in flood-risk areas have flood
insurance before a mortgage can be completed. The federal
program remains the only flood insurance available to the vast
majority of Americans, although a small market for private flood
insurance is now sprouting in some flood-prone states, such as
Florida.
A 2012 law ultimately extended the program to September.
Another law in 2014 allowed FEMA to buy private reinsurance to
cover the program if claims surge, among other measures. Last
September, FEMA obtained more than $1 billion in reinsurance for
2017 from 25 reinsurers.
The push to further modernize the program has rallied support
from diverse groups. SmarterSafer.org, for example, is composed
of more than 30 organizations ranging from insurers to
environmental groups. Members include units of insurers Chubb
Ltd and Swiss Re AG, Reinsurance Association of America,
National Taxpayers Union, Union of Concerned Scientists and
National Wildlife Federation.
(Reporting by Suzanne Barlyn; Editing by Andrew Hay)
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