The Senate Monday night cleared for floor action legislationthat could delay implementation of most flood insurance premiumrate hikes for customers of the National Flood Insurance Program.The hikes were imposed by a 2012 bill for up to four years.

The Senate brought the bill to the floor through rarely usedemergency procedures by an overwhelming 86-13 vote. Floor actioncould begin as early as Wednesday, industry officials said.

The legislation has prompted animated responses from bothsupporters and opponents.

For example, in a letter to the Senate leadership in advance ofthe vote, Brad Thaler, NAFCU vice president of legislative affairs,said that failure to pass this legislation could mean that premiumswill continue to skyrocket for many Americans struggling in theseuncertain times. Moreover, Thaler said, the new premiums “could beunaffordable to many, dropping home values in a tenuouseconomy.”

Thaler said NAFCU officials are already hearing reports from ourmember credit unions that “these impacts are beginning tomaterialize, indicating that action on this matter must be made assoon as possible.”

An insurance industry lobbyist cautioned that “this was a verystrong vote” to clear the bill for floor action under acceleratedprocedures that required the support of every member of the Senate.“It would seem certain that they have the votes to go all the waywith this one,” the industry lobbyist said.

Given the strong vote on the motion to proceed, opponents of thelegislation said they hope the House will significantly modify thelegislation so that it imposes caps on annual increases

Sen. Bill Nelson (D-Fla.) alluded to that problem for thelegislation in a statement supporting clearing the bill for Senateaction.

“The problem is going to be down at the other end of thathallway,” Nelson said on the Senate floor, referencing the House,according to a transcript. “Because the speaker of the House hasalready said that he doesn't like it, but what he's going to findout that he doesn't like is a lot of the members of the House ofRepresentatives whose constituents are facing tenfold increases intheir flood insurance.”

The bill is S. 1926, the Homeowner Flood Insurance AffordabilityAct of 2014 and National Association of Registered Agents andBrokers Reform Act of 2014. The bill would prevent flood insurancerate increases until the Federal Emergency Management Agency'smapping methods are certified as technically sound and anaffordability study is completed. The bill would keep inplace phase-out of subsidized flood insurance premiums for vacationhomes and homes that have a history of repeated flooding.

There are a number of amendments, including one aimed atfacilitating sale of private insurance. The amendment would clarifythat any private flood insurance policy accepted by a State shallsatisfy the mandatory purchase requirement under the Flood DisasterProtection Act of 1973.

It is aimed at responding to the concerns of commenters,including mortgage servicers, mortgage companies and the NationalAssociation of Insurance Commissioners, to a proposal by federalbanking regulators, including the NCUA, which seeks to make iteasier for mortgage servicers to accept private insurance. The bankregulators proposed the regulation because it is mandated under aprovision of the 2012 law.

Other amendments deal with consumer protection issues, such asforce-placed insurance, or deal with regional interests. Nineamendments have been proposed so far, but no agreement has so farbeen reached as to which ones will be cleared for floor action.

Indeed, the White House immediately joined the battle last nightby voicing opposition to it and calling for more modest changes inthe 2012 law that the bill seeks to amend.

Indeed, the White House immediately joined the battle Mondaynight by voicing opposition to it and calling for more modestchanges in the 2012 law that the bill seeks to amend. However, theWhite House statement did not include a veto threat.

That prompted Sen. Mary Landrieu (D-La.) to immediately fireback in a statement issued Tuesday morning.

“The Administration's short-sighted, misguided and irresponsibleStatement of Administration Policy threatens the very foundation ofthe NFIP and will only saddle taxpayers with higher costs whendisasters strike,” Landrieu said.

“How this Administration thinks it can 'ensure that economicallydistressed policyholders are not unduly burdened' before itcompletes the Affordability Study or certifies that its maps areaccurate and reliable is completely mind-boggling,” she said. “Thatis exactly the kind of backward and upside thinking that got usinto this mess in the first place.”

The insurance industry opposes the legislation because it iscertain to add the ballooning deficit of the NFIP—now $24billion—and cast a shadow on winning congressional support forother legislative priorities; for example, reauthorization of theTerrorism Risk Insurance Act, which runs out at the end of thisyear.

Jimi Grande, senior vice president of federal and politicalaffairs for the National Association of Mutual Insurance Companies,said, “Through the amendment process, the Senate can move from itscurrent plan to simply wipe away the much needed reforms ofBiggert-Waters to a more balanced and targeted approach.”

Grande said that pushing back the move to risk-based premiumsfor flood insurance “doesn't reduce the cost of flood insurance; itforces every taxpayer to subsidize those homeowners facing real andserious risks from flooding.”

Lawrence Mirel, a partner in the Washington office Nelson Levinede Luca & Hamilton, said, “It is certainly understandable thatproperty owners become alarmed at the prospect of sharp increasesin the cost of flood insurance, and that their electedrepresentatives respond to their concerns.”

But, he said, someone has to pay for the risk of flood, and ifnot those who own the property at risk, it will be the taxpayers.“By slowing down the B-W reforms, Congress will ensure thattaxpayers will continue to subsidize property owners at risk offlooding,” Mirel said. “Major rethinking and restructuring of theprogram is needed if it is to survive.”

There are also practical problems, because the 84 Write-Your-Owninsurance companies that administer the program spent most of lastyear revising their software to reflect the rate hikes, whichbecame effective in October.

“The vendor community doesn't like the bill because it willcreate massive IT changes and significant additional costs,” saidan industry lobbyist. “Plus, it would cause more confusion andpotential accusations of unequal treatment. There is alsoconcern that FEMA [the Federal Emergency Management Agency, whichadministers the program] will take a long time to digest the billand provide direction to the WYOs.”

The Senate put the bill on the fast track in response to strongopposition by both consumers affected by the cost of thelegislation, the Biggert-Waters Act of 2012, anddevelopment-related business interests. They feared it would retardthe nascent recovery of a housing market severely hurt by the2008-2010 economic downturn, and could lead to a new surge inforeclosures.

That's because the 2012 bill exposed political deals on floodinsurance subsidies dating back to the 1970s. The bill mandatedphase-in of actuarial rates on flood insurance rates over fouryears.

States from Hawaii to Vermont will be impacted by the 2012law.

According to the Tampa Tribune, only 20% of floodpolicies nationwide will see rates go up as part of B-W. But,Florida – and especially the Tampa Bay area – will be hit harderthan most parts of the nation.

That's because homes built before communities entered the floodprogram and drew up floodplain maps in the early 1970s havereceived artificially low rates for decades; the federal governmentis eliminating those subsidies, the Tribune said.

The Tribune also said that Pinellas County has thehighest number of those older properties in the country, estimatedat more than 50,000, including condos and businesses, whileHillsborough has nearly 22,000 single-family homes alone beingaffected.