House Panel Calls Second NFIP Meeting; Extension Bill Prepared
A House panel will conduct a second hearing on the National Flood Insurance Program April 1, and mark up draft legislation April 6, according to officials briefed on the plan.
The April 1 hearing by the Subcommittee on Insurance, Housing and Community Opportunity of the House Financial Services Committee will include the delayed testimony of Craig Fugate, administrator of the Federal Emergency Management Agency.
Fugate was scheduled to testify before the panel March 11, in addition to industry officials, but was forced to delay his testimony because of the emergency created by the earthquake and resulting tsunami that hit Japan.
He is expected to testify that under current conditions, the NFIP cannot pay off its current debt of $17.5 billion and will be forced to borrow money if a significant hurricane or other flood event occurs.
He will say FEMA is having trouble managing its finances because under current subsidized rate policies, 1.5 billion in premium revenue is foregone annually.
As a result, he is expected to say, the NFIP is exploring fiscal soundness by analyzing inherent program subsidies and examining potential methods to further reduce the loss of life and property.
The draft bill the agency will use as the basis for markup of legislation extending calls for a five-year reauthorization of the program.
The legislation also moves toward eliminating rate subsidies, indexing the maximum limits, providing for additional living expense and business interruption coverages and a method to address mapping issues.
Fugate will say that as Congress looks to reform the program, it must look at the NFIP holistically rather than piecemeal.
He is expected to say that changing one facet impacts other aspects of the reform process.
He is also expected to say that appropriate NFIP reform will: include a multi-year reauthorization of the NFIP to provide program stability; address short term issues; consider expert judgment and best practices; establish the long term program direction; and incorporate incremental reforms necessary to achieve that target state.