House passes reformed National Flood Insurance Program

The U.S. House of Representatives approved legislation to reauthorize the National Flood Insurance Program for five years, including reforms such as eliminating unnecessary subsidies and facilitating private sector participation in the flood insurance market.

The bill has been reformed to reduce the program's need to borrow from the Treasury and guaranteeing first time homebuyers will be able to obtain flood insurance and therefore qualify for a loan.

Flood insurance is required for mortgages on properties in areas with frequent flooding. According to the Wall Street Journal, lawmakers called for reforms to the program in response to property owners paying below-market rates, including a 20 percent increase in premiums per year on commercial properties, second homes and vacation homes until their premiums reflect the risks of flooding.

Also, the FEMA chief and U.S. comptroller general must conduct studies to figure out a way for flood insurance to become privatized, while ensuring that more than the lowest-risk properties receive coverage, the news source reported.

Insurance, Housing and Community Opportunity Subcommittee Chairman Judy Biggert said, "We worked with members of Congress and stakeholders from every corner of the country to craft this bill, and I'm pleased that its bipartisan passage reflects our collaborative approach." 

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