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Draft of Bill to Renew NFIP Released

Legislation would renew the National Flood Insurance Program (NFIP) for five years.
May 31, 2017

Rep. Sean Duffy (R-Wis.) has put forward a discussion draft of legislation to renew the National Flood Insurance Program (NFIP) for five years, lower the cap on annual rate increases to 15 percent from 18 percent, subsidize policies for homeowners who are below 150 percent of the state poverty level or 60 percent of the state’s median income, and allow for the creation of a private market to sell policies. Subsidies, however, would not apply to policies sold on the private market.

The NFIP, which is set to expire on Sept. 30, has $24.6 billion in debt, but the discussion draft does not address this debt. Duffy said, “We are focused on addressing the $1.5 billion shortfall of the NFIP. Right now, the program is taking in about $3.5 billion but spends about $5 billion.”

The reauthorization plan also would change the flood mapping process, requiring localities to submit their own alternatives to the program’s maps, subject to federal certification, and allow the use of more precise risk-assessment tools to determine premiums. Furthermore, it would create an appeals process for local governments or homeowners to challenge federal flood maps.

The draft bill would lower the Write-Your-Own (WYO) reimbursement percentage which is used by carriers to pay administrative expenses as well as agent commissions, among other things. PIA National opposes any effort to lower the current 30.9 percent cap. “A cut to the reimbursement rate for Write Your Own insurance companies would likely trickle down to independent agents who sell this very complicated and vital line of insurance,” said Jon Gentile, vice president of government relations of PIA National. “Any proposal to reauthorize the NFIP that would impede agents’ active engagement in selling flood insurance should be rejected.”

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