[Congressional Record Volume 153, Number 148 (Tuesday, October 2, 2007)]
[Extensions of Remarks]
[Pages E2044-E2045]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          FLOOD INSURANCE REFORM AND MODERNIZATION ACT OF 2007

                                 ______
                                 

                               speech of

                       HON. SHELLEY MOORE CAPITO

                            of west virginia

                    in the house of representatives

                      Thursday, September 27, 2007

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 3121) to 
     restore the financial solvency of the national flood 
     insurance program and to provide for such program to make 
     available multiperil coverage for damage resulting from 
     windstorms and floods, and for other purposes:

  Mrs. CAPITO. Mr. Chairman, floods are amongst the most frequent and 
costly national

[[Page E2045]]

disasters in terms of human hardship and economic loss. In fact, 75 
percent of Federal disaster declarations are related to flooding.
  Before I discuss the merits of the legislation, I would like to talk 
briefly about the process that is being considered. We are debating a 
huge expansion of an already struggling existing Federal program, and 
yet we have not been able to have our amendments out on the floor to 
have an open and frank discussion about this.
  I would like to accept the chairman's offer to continue to work on 
the amendments that were not allowed to be offered, and I hope that we 
can see democracy being served by letting everybody's voice be heard.
  In 1968, Congress established the National Flood Insurance Program, 
NFIP. The program is a partnership between the Federal Government and 
participating communities. If a community adopts and enforces a 
floodplain management ordinance to reduce future flood risk to new 
construction, the Federal Government will make flood insurance 
available to that community. Today, NFIP is the largest single-line 
property insurer in the Nation, serving nearly 20,000 communities and 
providing flood insurance coverage for 5.4 million consumers.
  Mr. Chairman, recent events have underscored the need to reform and 
modernize certain aspects of the program. While the NFIP is designed to 
be actuarially sound, it does not collect sufficient premiums to build 
up reserves for unexpected disasters. Due to the claims resulting from 
Hurricanes Katrina and Rita, the NFIP was forced to borrow $7.6 billion 
from the Treasury, an amount it estimates it will never be able to 
repay. Consequently, NFIP sits on the GAO's High-Risk Programs list, 
which recommends increased congressional oversight. Additionally, the 
2005 storms shed light on the problem of outdated flood maps, resulting 
in many homeowners in the gulf region being unaware that their homes 
were located in floodplains.
  To address these and other concerns in 2006, the House overwhelmingly 
passed flood insurance reform legislation. Earlier this year, Chairman 
Frank and Representative Judy Biggert introduced legislation identical 
to that bipartisan bill. That bill includes many reforms, including the 
phasing in of actuarial rates, but unfortunately, the flood insurance 
bill that the majority chose to move out of the Financial Services 
Committee was amended to incorporate legislation offered by the 
gentleman from Mississippi (Mr. Taylor) which expands the NFIP to 
include coverage for wind events.
  Mr. Chairman, no Member of this House was more personally affected by 
the 2005 hurricanes than Congressman Taylor. I do not, and no one 
questions his sincerity or his commitment to assisting those who have 
lost everything they owned in these storms. While I share his concern 
over the rising costs and outright unavailability of homeowners' wind 
coverage in some areas, I have three principal objections to linking 
wind insurance to the reform of the National Flood Insurance Program.

  First, expanding the program increases liabilities for taxpayers 
while decreasing options for customers or consumers. Properties located 
along the eastern seaboard and gulf coast represent $19 trillion of 
insured value. Shifting the risk on even a portion of these properties 
to the troubled NFIP could expose taxpayers to massive losses. The fact 
is that insurance will choose not to engage a competitor that does not 
pay taxes, has subsidized borrowing costs, and is not required to build 
a reserve surplus and is protected from most lawsuits, State regulation 
and enforcement.
  Second, adding wind coverage to the NFIP will exacerbate the 
program's well-documented administrative problems. Both the Department 
of Homeland Security and GAO have criticized the NFIP for being 
understaffed, not having adequate flood maps and not collecting 
sufficient information on wind payments when claims were submitted for 
flood damage. Expanding the portfolio further before much-needed 
reforms are in place is premature.
  Third, no consensus yet exists about the necessity or desirability of 
creating a Federal wind insurance program. In testimony before our 
committee, representatives of flood management groups, the insurance 
industry, environmental organizations, Treasury and FEMA all expressed 
agreement that a comprehensive study of the proposed wind insurance 
mandate should first be commissioned to provide Congress with a better 
understanding of the possible implications this expansion could have 
for consumers, NFIP and the market.
  Mr. Chairman, we must not let the desire to meet every perceived 
problem with a new Government program drive us towards premature 
actions that yield unwanted consequences. The NFIP's mission should not 
be expanded, exposing taxpayers to massive new risks, until reforms are 
in place and adequate study has been conducted.
  In addition to the above reservations, I have serious concerns with 
the effect the addition of wind coverage will have on communities that 
are now relying on NFIP. This program is already financially unstable, 
yet we are about to add $19 trillion of risk. Despite this fiscal 
instability, States like West Virginia, that I represent, will still 
rely on the program to provide assistance in the case of serious 
flooding. Thankfully, there have not been major problems this year, but 
since I was elected to Congress in 2000, there have been nine federally 
declared flooding disasters in West Virginia. In 2001 alone, FEMA 
provided $17 million in assistance to my State, and between 2004 and 
2006 the National Flood Insurance Program received and paid more than 
$30 million in claims from West Virginia flood victims.
  There are serious needs in West Virginia and across the Nation for 
the flood insurance program. We should be modernizing NFIP so it can 
become financially stable, not jeopardizing its existence by exposing 
it--and our taxpayers--to trillions of dollars of liability.

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