[Congressional Record (Bound Edition), Volume 159 (2013), Part 3]
[House]
[Pages 3374-3376]
[From the U.S. 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 3375]]

  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.
  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

[[Page 3376]]

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.

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