WASHINGTON — Representatives Judy Biggert (R-Ill.) and Barney Frank (D-Mass.) introduced the Flood Insurance Reform and Modernization Act (H.R. 1682) last week.

The bill aims to reform the National Flood Insurance Program and ensure its continued viability by increasing accountability, eliminating unnecessary Federal subsidies, and updating the flood insurance program. “The 2005 Gulf Coast hurricanes showed the nation how important the National Flood Insurance Program is to the average homeowner,” Biggert, ranking member of the House Financial Services Subcommittee on Housing and Community Opportunity, said. “We must act to strengthen and pull the program into the 21st Century and before the next major disaster hits. The program needs to provide a financial safeguard for homeowners while protecting the interests of taxpayers. This bill strikes the right balance.”

To make the program more actuarially sound, the NFIP phases out subsidized rates on vacation homes and second homes. Under this bill, small business owners will be eligible to purchase business interruption coverage in order to meet payroll and other obligations in the event of flooding. And, for the first time since 1994, the bill updates maximum insurance coverage limits for residential and nonresidential properties.

Additionally, the NFIP borrowing authority would be increased to ensure that all outstanding claims and Federal obligations are paid. The bill increases the amount FEMA can raise policy rates in any given year from 10% to 15%. And, to help ensure that homeowners who should have flood insurance do, the bill increases the fines on lenders who do not enforce the mandatory flood insurance policy when it is required.

Co-sponsors to the legislation include Earl Blumenauer (D-Ore.), Gary Miller (R-Calif.), Gene Taylor (D-Miss.), Richard Baker (R-La.), Doris Matsui (D-Calif.), JoAnn Davis (R-Va.), Maxine Waters (D-Calif.) and Ginny Brown-Waite (R-Fla.).

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