[Congressional Record Volume 159, Number 35 (Tuesday, March 12, 2013)]
[House]
[Pages H1339-H1341]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STUDIES OF VOLUNTARY COMMUNITY-BASED FLOOD INSURANCE OPTIONS
Mr. LUETKEMEYER. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 1035) to require a study of voluntary community-based
flood insurance options and how such options could be incorporated into
the national flood insurance program, and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1035
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. STUDIES OF VOLUNTARY COMMUNITY-BASED FLOOD
INSURANCE OPTIONS.
(a) Study.--
(1) Study required.--The Administrator of the Federal
Emergency Management Agency shall conduct a study to assess
options, methods, and strategies for making available
voluntary community-based flood insurance policies through
the National Flood Insurance Program.
(2) Considerations.--The study conducted under paragraph
(1) shall--
(A) take into consideration and analyze how voluntary
community-based flood insurance policies--
(i) would affect communities having varying economic bases,
geographic locations, flood hazard characteristics or
classifications, and flood management approaches; and
(ii) could satisfy the applicable requirements under
section 102 of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4012a); and
(B) evaluate the advisability of making available voluntary
community-based flood insurance policies to communities,
subdivisions of communities, and areas of residual risk.
(3) Consultation.--In conducting the study required under
paragraph (1), the Administrator may consult with the
Comptroller General of the United States, as the
Administrator determines is appropriate.
(b) Report by the Administrator.--
(1) Report required.--Not later than 18 months after the
date of enactment of this Act, the Administrator shall submit
to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the
House of Representatives a report that contains the results
and conclusions of the study conducted under subsection (a).
(2) Contents.--The report submitted under paragraph (1)
shall include recommendations for--
(A) the best manner to incorporate voluntary community-
based flood insurance policies into the National Flood
Insurance Program; and
(B) a strategy to implement voluntary community-based flood
insurance policies that would encourage communities to
undertake flood mitigation activities, including the
construction, reconstruction, or improvement of levees, dams,
or other flood control structures.
(c) Report by Comptroller General.--Not later than 6 months
after the date on which the Administrator submits the report
required under subsection (b), the Comptroller General of the
United States shall--
(1) review the report submitted by the Administrator; and
(2) submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report that contains--
(A) an analysis of the report submitted by the
Administrator;
(B) any comments or recommendations of the Comptroller
General relating to the report submitted by the
Administrator; and
(C) any other recommendations of the Comptroller General
relating to community-based flood insurance policies.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Missouri (Mr. Luetkemeyer) and the gentlewoman from Wisconsin (Ms.
Moore) each will control 20 minutes.
The Chair recognizes the gentleman from Missouri.
General Leave
Mr. LUETKEMEYER. Mr. Speaker, I ask unanimous consent that all
Members have 5 legislative days within which to revise and extend their
remarks and submit extraneous materials for the Record on H.R. 1035.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
There was no objection.
Mr. LUETKEMEYER. Mr. Speaker, I yield myself such time as I may
consume.
I rise today in support of H.R. 1035, legislation introduced by my
Financial Services Committee colleague, Congresswoman Gwen Moore, and
chairman emeritus, Spencer Bachus.
H.R. 1035 would require the Federal Emergency Management Agency, the
agency which administers the National Flood Insurance Program, or NFIP,
to conduct a study on the advantages and disadvantages of providing
voluntary community-based flood insurance through the NFIP and report
its recommendations for implementation to Congress within 18 months.
Additionally, H.R. 1035 requires the Government Accountability Office
to analyze FEMA's report and submit its comments or recommendations to
Congress within 6 months.
[[Page H1340]]
Community-based flood insurance is an insurance technique where a
risk assessment is made for all the buildings in the community, and
then premiums to cover that risk are paid collectively by that
community, rather than the current practice of assessing each building
individually and having each individual owner pay a premium.
This innovative tool may represent a new and better way for some
communities at risk of flooding to take the necessary steps to protect
their citizens. In fact, FEMA has stated in congressional testimony
that voluntary community-based flood insurance could help NFIP better
account for the full cost of flood risk, as well as provide incentives
to encourage communities to implement greater flood mitigation
measures.
Thus, we think that it is appropriate to commission this study of the
community-based flood insurance concept so that FEMA can understand how
it could be put to its greatest benefit.
Congresswoman Moore's community-based flood insurance study provision
was originally included as part of H.R. 1309, the Flood Insurance
Reform Act of 2011, the bipartisan, long-term NFIP reauthorization that
passed the House with over 400 votes in 2011. It was also included as
part of the long-term NFIP reauthorization efforts that passed the
House three other times in different bills in 2012.
An identical bill passed as a stand-alone on September 10, 2012, by a
vote of 346-11, so I think you can see that we've had this issue before
us many times. It's always been supported. I urge the support for H.R.
1035.
I reserve the balance of my time.
Ms. MOORE. Mr. Speaker, I yield myself such time as I may consume.
I would love to express my appreciation to my original cosponsors of
this bill, chair emeritus, House Financial Service Committee
Representative Spencer Bachus, for his support, and my other cosponsor
and friend on the committee, Representative Hinojosa.
I believe that a community-based flood insurance option may
eventually provide a cost-saving option for communities within the
larger framework of the overall National Flood Insurance Program. The
potential for savings and community empowerment certainly merits a
study.
Now, as Mr. Luetkemeyer has indicated, this bipartisan bill has
passed in various forms, the latest being in the 112th Congress, as
H.R. 6186 last September, 364-11, so this is nothing new; and I would
submit that we should support it here today.
This approach has merit because its potential lower rates are due to
the streamlined underwriting, increased participation, the critical
mass of citizens that are involved, and incentives for the community to
mitigate future flood risk. There's also an option of providing lower-
income households the use of vouchers to purchase flood insurance as
part of the group.
An analogy for the concept applied is group or employee health
insurance coverage versus individual coverage. We all understand that
group coverage is less expensive than individual coverage due to many
advantages of economies of scale.
Now, in this case, a community, rather than an individual, would be
the policyholder. This brings me to another very important potential
benefit of this approach, the increased incentives for communities to
take preemptive action to mitigate future financial threats from floods
in the community. Whereas an individual flood insurance holder has no
incentive, nor means to build stronger levees or dikes, a community
policyholder would have the means and incentives to take those kinds of
precautions.
In theory, the homeowner would pay insurance, like a utility bill, on
a monthly or quarterly basis, which also makes it easy to administer.
This bill only asks FEMA to examine the costs and benefits of using
this approach on an ongoing basis as an option for communities.
We need to continue to seek creative, market-based solutions to
problems; and this study is the first good step toward new tools to
strengthen the National Flood Insurance Program.
Seeing no other Democratic Members wishing to speak, I urge my
colleagues to support H.R. 1035; I yield back the balance of my time.
{time} 1720
Mr. LUETKEMEYER. I want to again congratulate and thank the
gentlelady from Wisconsin for her hard work on this issue. I know that
it's something near and dear to her heart, and I think it's absolutely
something that is a good way to approach this issue from the standpoint
of let's get a study done to see if this is a viable option. If it is,
it can be a really beneficial tool to a lot of our communities that are
in some difficult positions because of the flood situations they may be
in.
With that, Mr. Speaker, I yield back the balance of my time.
Mrs. JACKSON LEE. Mr. Speaker, I rise in support of H.R. 1035, a bill
``To require a study of voluntary community-based flood insurance
option and how such options could be incorporated into the national
flood insurance program, and for other purposes.''
More specifically, this bill directs FEMA to study options, methods,
and strategies for making voluntary community-based flood insurance
policies available through the National Flood Insurance Program.
Moreover, this study would include a strategy to implement options that
would encourage communities to undertake flood mitigation activities.
Flooding is the most common and costly natural disaster in the United
States. 90 percent of all presidential-declared U.S. natural disasters
involve flooding. Flooding occurs in all 50 states and chronically
impacts many communities, including my constituents in the 18th
district of Texas.
In Houston, there are a number of areas which are frequently flooded
from excessive rainwater in bayous. These areas include the Buffalo
Bayou, the Greens Bayou, and the Halls Bayou. These areas, and others
across this nation, could greatly benefit greatly from this study.
In 1968, the U.S. Congress established the National Flood Insurance
Program, NFIP, to address the nation's flood hazard exposure and
challenges inherent in financing and managing flood risks in the
private sector.
The program has played a central role in U.S. flood risk management
policy; that is, the prevention and recovery from flooding disasters.
Under the NFIP, the federal government (1) identifies areas of flood
risk; (2) encourages communities to implement measures to mitigate
against the risk of flood loss; and (3) provides financial assistance,
through contracts of insurance, to help individuals and small
businesses recover rapidly from flood disasters.
Until 1986, the NFIP was financially self-supporting from policy
premium revenue and fees that covered all expenses and claim payments.
However, because of its below-market insurance rates and catastrophic
hurricane-related floods in recent years, the NFIP has accrued a
substantial debt that as of September 30, 2011, stands at $17.75
billion. Under current law, the funds borrowed from the U.S. Treasury
must be repaid with interest.
Because the NFIP cannot charge risk-based premiums for all of its
policies, hold loss reserve funds to offset unusually catastrophic
losses, or purchase reinsurance, the program faces a constant risk of
financial insolvency.
The NFIP currently covers approximately 5.6 million households and
businesses across the country for a total of $1.25 trillion in
exposure.
The National Flood Insurance Program, NFIP, was established in
response to increasing Federal Government spending for disaster relief.
Standard homeowners insurance does not cover flooding and therefore
offers no protection from floods associated with hurricanes, tropical
storms, heavy rains and other conditions. The NFIP mandates that
federally regulated or insured lenders require flood insurance on
properties that are located in areas that have a high risk of flooding.
Unlike private insurance programs, the NFIP is not actuarially sound;
it is not designed to ensure that its premiums will cover the average
claims and expenses expected over the long run. By law, some NFIP
policyholders receive insurance at rates that are subsidized. Such
subsidies are mainly granted to property owners whose properties were
built before their communities joined the program and are intended to
encourage communities to participate in the program and thus mitigate
potential losses.
[[Page H1341]]
H.R. 1035 would study the means by which communities can enhance
their own ability to recover from flooding. Giving communities the
opportunity to effectively become the policyholder of a flood insurance
program, rather than individual property owners, renters, or
businesses, would potentially yield several benefits.
The study produced by H.R. 1035 would explore the policy of
community-based flood insurance to find ways to incentivize communities
to mitigate future flood losses, as well as to provide them with a
greater role in determining flood risk assessment, mapping, and
insurance pricing.
Furthermore, the study would allow communities to implement mandatory
flood insurance purchase requirements tailored to a community's
individual needs.
Moreover, the study would reveal the extent to which community-based
flood insurance may produce economies of scale for a community,
streamlined underwriting, as well as reduced administrative costs for
the insurer.
Community-based flood insurance programs have the potential for the
development of synergies between local communities and the National
Flood Insurance Program.
For these reasons, I urge my colleagues to support the H.R. 1035,
which directs FEMA to study how to improve our national system of
disaster insurance with respect to community-based flood insurance.
This bill is a timely response to recent flooding disasters wrought by
Hurricane Sandy, as well as sensible way to address future floods that
occur in communities across our country.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Missouri (Mr. Luetkemeyer) that the House suspend the
rules and pass the bill, H.R. 1035.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. LUETKEMEYER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this motion will be postponed.
____________________