FLOOD INSURANCE SUBCOMMITTEE MONOGRAPH
Implementation of known techniques that protect natural functions while also reducing damage, offering a variety of resource-protection incentives, and coordinating more closely with other federal and state resource protection programs; and Gathering and maintenance of needed data, use of it to measure progress towards the goals of the program, and sharing of it with Congress and the NFIP's other stakeholders.78
16. Potential Congressional Reforms As mentioned above, the NFIP depends upon action by the legislative and executive branches to remain operational past the current sunset date of Sept. 30, 2011. As a result of unprecedented loss activity in 2004 and 2005, some members of Congress advanced proposals during that and subsequent legislative sessions, intended to ensure the ongoing viability of the NFIP. The proposed reforms have attempted to address key issues and considerations from the perspectives of a variety of major stakeholder groups, including: Adequacy and Availability of Funds
Increase FEMA’s borrowing authority to pay claims from the 2005 catastrophic hurricanes as well as other ongoing obligations and/or forgive the debt that the NFIP has incurred as a result of these storms. Phase out subsidized rates for flood insurance policies on certain vacation homes, second homes, and non-residential buildings constructed before applicable maps went into effect. Increase annual limitation on premium increases from 10 percent to 20 percent.79 Require that expenses of the program for WYO companies be studied in detail (as discussed in Section 7 above).
Without a change in law, the NFIP might not be able to pay future flood claims promptly. FEMA, WYO companies, and policyholders face uncertainty about the availability of funds for future claims and program expenses. As of the time of publication, Congressional action was uncertain about possible re-authorization of and future substantial borrowing by NFIP and subsequent forgiveness of such borrowing. Adequacy of Coverages
Increase existing flood insurance coverage limits, which have not changed since 1994. Currently they are $250,000/$100,000 (structure/contents) for residential buildings and $500,000/$500,000 for non-residential buildings. Introduce coverage for additional living expenses, business interruption, basements, and replacement cost of contents.
78
Ibid., p. xiii. http://www.gpo.gov/fdsys/pkg/BILLS-112hr1309ih/pdf/BILLS-112hr1309ih.pdf (last visited on June 29, 2011).
79
American Academy of Actuaries
28
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