NTU urges all Representatives to vote “YES” on H.R. 2901, the “Flood Insurance Market Parity and Modernization Act.” This bipartisan legislation, which passed out of the House Financial Services Committee unanimously, would increase consumer choice in the flood insurance marketplace and reduce risk to taxpayers.
The National Flood Insurance Program (NFIP), labeled “High Risk” in a 2015 Government Accountability Office report, is $23 billion in debt and unable to repay this debt or fund payouts in the event of future natural catastrophes. Without risk-based actuarial pricing and other important reforms, it’s unlikely the NFIP will achieve fiscal sustainability. Instead, it creates a moral hazard – subsidizing homeowners to live and build in flood-prone, often ecologically sensitive areas, and discouraging mitigation efforts.
Unfortunately, the Biggert-Waters reforms of 2012, which would have markedly improved the outlook of the program, have been rolled back in the ensuing years and taxpayers are still on the hook for billions of dollars — essentially responsible for the residential choices of others.
Private flood insurance could provide a practical alternative to the perpetually insolvent NFIP. This would reduce risk for taxpayers and increase choice for consumers who can pick the insurance vehicle that best suits their needs.
H.R. 2901 is an important first step toward this goal. Codifying the federal definition of “acceptable” flood insurance coverage for loan purposes to include any policy overseen by state regulators would put privately issued insurance on the same legal footing as federal flood insurance, removing a critical barrier to entry for the development of a private marketplace.
Roll call votes on H.R. 2901 will be included in our annual Rating of Congress and a “YES” vote will be considered the pro-taxpayer position.
If you have any questions, please contact NTU Federal Affairs Manager Nan Swift at (703) 683-5700