Last week, the House Committee on Financial Services approved several property insurance reform bills which will now move to the floor of the full House of Representatives for consideration:

• H.R. 2555: "Homeowners' Defense Act" (Klein, D-FL) would provide for a federal reinsurance and loan guarantee program to help stabilize insurance rates for states that implement mitigation and building code programs and meet stringent credit-risk requirements. Without stable funding alternatives, states must maintain artificially inflated rates to hedge against risk in an increasingly volatile global reinsurance market.

 

• H.R. 5114: "Flood Insurance Reform Priorities Act" (Waters, D-CA) would:
  • Extend authority for the National Flood Insurance Program (NFIP) for a full 5 years, a step that would end the current month-to-month approach that has resulted in 7 extensions since September of 2008. Unless re-extended, NFIP authority will expire on May 31.
  • Increase the maximum coverage limits which have not been updated since 1994.
  • Reform and ensure continuation of a program which is now $20 billion in debt, including phasing-in actuarial rates over a 5-year timeframe for older properties which have been paying less than the market rate. For the commercial properties and non-primary residences, the phase-in would begin 3 years after enactment. The phase-in for primary residences would begin once a property is sold. The bill also extends a pilot program to mitigate properties with severe repetitive losses.

 

• H.R. 1264: "Multiple Peril Insurance Act" (Taylor, D-MS; Scalise, R-LA) would offer property owners windstorm coverage under the NFIP. According to the Congressional Budget Office, the bill would collect sufficient premiums to offset the claim payments and not contribute to the federal budget.

 

While NAR has been urging Congress to enact a forward-looking national policy which would reduce the cost to taxpayers of post-disaster federal assistance, NAR did communicate its strong concern with proposed reforms to the NFIP, especially the move to impose "actuarial" rates on older properties, at a hearing held prior to the bill's mark-up. This issue will also be a talking point for the thousands of REALTORS® who will be traveling to Washington, D.C., next week for their mid-year meetings with their members of Congress.

Read the full testimony