[House Report 115-233]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 115-233
======================================================================
NATIONAL FLOOD INSURANCE PROGRAM ADMINISTRATIVE REFORM ACT OF 2017
_______
July 18, 2017.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 2875]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 2875) to make administrative reforms to the
National Flood Insurance Program to increase fairness and
accuracy and protect the taxpayer from program fraud and abuse,
and for other purposes, having considered the same, report
favorably thereon without amendment and recommend that the bill
do pass.
Purpose and Summary
Introduced by Representative Nydia Velazquez on June 12,
2017, H.R. 2875, the ``National Flood Insurance Program
Administrative Reform Act of 2017,'' makes administrative
reforms to the National Flood Insurance Program to increase
fairness and accuracy and protect the taxpayer from program
fraud and abuse.
Background and Need for Legislation
GENERAL OVERVIEW
Floods are among the most frequently occurring and costly
natural disasters. Most declarations of federal disasters by
the Federal Emergency Management Agency (FEMA) are related to
flooding. Yet despite the frequency and severity of losses that
result from flooding, the private insurance market generally
did not provide insurance for flooding; when it did, insurance
for flood-related damage can be expensive because the
properties most at-risk tend to be highly concentrated
geographically and the potential risk of economic losses is
extremely high.
To supplement the availability of flood insurance in the
private market, Congress, in 1968, created the National Flood
Insurance Program (NFIP), which is administered by FEMA and
provides flood insurance to approximately 5.1 million
policyholders across the country. In exchange for premiums paid
by policyholders, NFIP makes federally backed flood insurance
available to homeowners and other property owners (for example,
businesses, churches, and farmers) in these communities.
Homeowners with mortgages held by federally regulated
lenders on property in participating communities identified by
FEMA to be in Special Flood Hazard Areas are required to
purchase flood insurance (mandatory purchase requirement). NFIP
coverage limits vary by program (regular or emergency) and
property type (for example, residential or nonresidential). In
NFIP's regular program, the maximum coverage limits for
residential policyholders are $250,000 for buildings and
$100,000 for contents. For commercial policyholders (that is,
those with policies for nonresidential properties), the maximum
coverage limit is $500,000 per building and $500,000 for
contents owned by the building owner. There is additional
coverage for contents owned by the tenants.
Residents and business owners in over 22,000 participating
communities across the United States and its territories are
able to buy NFIP flood insurance policies through insurance
agents and companies that participate as third-party
administrators in the ``Write Your Own'' (WYO) program. The WYO
program allows private insurance carriers to issue and service
government underwritten and taxpayer backed NFIP policies with
no private financial liability from the insurer. Insurance
companies that participate in the WYO program receive an
expense allowance for policies they write and the claims they
process. In addition, their agents earn a commission for the
policies they sell. The federal government, however, retains
responsibility for managing the risk and paying claims, as well
as covering any litigation costs should a WYO insurer be sued
in court.
Property owners can purchase flood insurance through the
NFIP only if their communities participate in the NFIP. To
participate in the NFIP, a community must agree to abide by
certain statutory provisions intended to mitigate the risk of
flooding, such as building codes that require new structures
built in floodplains (high-risk areas) to be protected against
flooding or to be elevated above the 100-year floodplain.
As of June 5, 2017, the NFIP has an outstanding debt of
$24.6 billion borrowed from taxpayers, with roughly $1.1
billion available cash-on-hand and $5.825 billion remaining of
its total temporary $30.425 billion Treasury borrowing
authority. The NFIP's debt results primarily from its borrowing
to pay claims relating to the Gulf Coast hurricanes in 2005 and
Superstorm Sandy in October 2012. This borrowing stems from a
structural imbalance in how the NFIP measures and prices for
risk, resulting in only 46 percent of premium dollars collected
in 2016 being available for the payments of claims. With such a
low portion of premiums available to pay claims, the pressure
on the NFIP to borrow from taxpayers increases. The NFIP's
structural budget crisis has required periodic legislation to
increase its borrowing authority, the most recent example of
which occurred in January 2013 when Congress increased the
NFIP's borrowing authority by $9.7 billion--from $20.725
billion to its current $30.425 billion level.
Superstorm Sandy, which made landfall in October 2012,
resulted in $65 billion in damage and destroyed or damaged
650,000 residential homes. Following the destruction, FEMA paid
thousands of flood insurance claims to victims but, reports
began to surface that many claims might have been severely
underpaid due to the submission of false engineering reports.
By 2015, there were both constituent and media reports that
described ``dozens of cases'' where original drafts of
engineering reports were either revised or deleted in order to
understate the extent to which the policyholder suffered
insured losses, thus lowering payments to flood insurance
claimants. Policyholders alleged that these practices were
widespread. As a result of these practices, insurance companies
made lower payments than they otherwise should have, causing
many homeowners to be unable to rebuild their homes.
Superstorm Sandy resulted in 144,000 claims received by
FEMA, through the Write Your Own companies, paying
approximately $8.4 billion to policyholders. Because of the
concerns regarding certain alleged fraudulent practices, FEMA
established a task force in February 2015 to expeditiously
resolve litigation from the claims involving Superstorm Sandy
and offer all policyholders, who believe they may have been
underpaid, the opportunity to have their claims reviewed. As of
March 2017, FEMA paid out an additional $350 million to
policyholders on those claims resulting from the Superstorm
Sandy claims event.
H.R. 2875 is a culmination of the lessons learned from
FEMA, stakeholders, and policymakers during the claims paying
process responding to Superstorm Sandy. According to the
Department of Homeland Security's Inspector General,
FEMA does not provide adequate oversight of the WYO
[Write Your Own] program under NFIP. Specifically, FEMA
is not using the results from its Financial Control
Plan reviews to make program improvements; is not
performing adequate oversight of the SALAE [Special
Allocated Loss Adjustment Expenses] reimbursement
process; and does not have controls to provide proper
oversight of the appeals process. These conditions
exist because FEMA does not have adequate guidance,
resources, or internal controls. As a result of this
inadequate oversight, FEMA is unable to ensure that WYO
companies are properly implementing NFIP and is unable
to identify systemic problems in the program.
Furthermore, without adequate internal controls in
place, FEMA's NFIP funds may be at risk for fraud,
waste, abuse or mismanagement.
H.R. 2875 addresses concerns which range from the
inadequacy of mitigation programs, fraudulent statements and
claims, lack of oversight of the taxpayer-funded litigation
practices and costs, the need for a more transparent process
for claims payments and appeals, and better disclosures.
Hearings
The Committee on Financial Services' Subcommittee on
Housing & Insurance held two hearings examining matters
relating to H.R. 2875 on March 9, 2017 and March 16, 2017. The
Committee on Financial Services held a hearing examining
matters relating to H.R. 2875 on June 7, 2017.
Committee Consideration
The Committee on Financial Services met in open session on
June 21, 2017 to consider H.R. 2875. The Committee ordered H.R.
2785 to be reported favorably to the House, without amendment,
by a recorded vote of 58 yeas to 0 nays (Recorded vote no. FC-
64), a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House without amendment. The
motion was agreed to by a recorded vote of 53 yeas to 0 nays
(Recorded vote no. FC-58), a quorum being present.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 2875
will make administrative reforms to the National Flood
Insurance Program to increase fairness and accuracy and protect
the taxpayer from program fraud and abuse.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 18, 2017.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2875, the National
Flood Insurance Program Administrative Reform Act of 2017.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Robert Reese.
Sincerely,
Mark P. Hadley
(For Keith Hall, Director).
Enclosure.
H.R. 2875--National Flood Insurance Program Administrative Reform Act
of 2017
Summary: Under current law, property owners can buy flood
insurance through the National Flood Insurance Program (NFIP).
Property owners who buy insurance through the NFIP pay annual
premiums which are deposited into the National Flood Insurance
Fund (NFIF) and are used to pay flood damage claims submitted
by policyholders. Those premiums and payments are not subject
to annual appropriation.
H.R. 2875 would give NFIP policyholders the option to buy a
higher level of coverage under the Increased Cost of Compliance
(ICC) program, which provides payments to property owners to
undertake flood mitigation activities following a flood claim.
The bill also would direct the Federal Emergency Management
Agency (FEMA) to make several administrative changes to the
NFIP related to claims payment determinations, program
staffing, and related matters.
Assuming appropriation of the necessary amounts, CBO
estimates that implementing H.R. 2875 would cost $11 million
over the 2018-2022 period, mostly for an advisory committee on
flood insurance. Enacting the legislation would affect direct
spending and revenues; therefore, pay-as-you-go procedures
apply. However, because any increase in NFIP collections and
revenues would be offset by increased direct spending, CBO
estimates that the net effect on the deficit would be
negligible.
CBO estimates that enacting H.R. 2875 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2028.
H.R. 2875 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary effect of H.R. 2875 is shown in the following table.
The costs of this legislation fall within budget function 450
(community and regional development).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
----------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2017-2022
----------------------------------------------------------------------------------------------------------------
INCREASES IN SPENDING SUBJECT TO APPROPRIATIONa
Estimated Authorization Level...... 0 3 2 2 2 2 11
Estimated Outlays.................. 0 3 2 2 2 2 11
----------------------------------------------------------------------------------------------------------------
aH.R. 2875 would have an insignificant effect on direct spending and revenues in each year and over the 2017-
2027 period.
Basis of estimate: For this estimate, CBO assumes that H.R.
2875 will be enacted near the end of fiscal year 2017 and that
the necessary amounts will be appropriated each year.
Spending subject to appropriation
H.R. 2875 would establish a flood insurance advisory
committee, which would include members from across the federal
government and the private sector. The committee would be
responsible for reviewing and making recommendations on several
different aspects of the NFIP. Based on information from FEMA
about the resources that would be needed for this committee,
CBO estimates that implementing this provision would cost $10
million over the 2018-2022 period, mostly for salaries,
expenses, and expert advice.
The bill also would direct the Government Accountability
Office to complete two studies on the NFIP. The first would
analyze the policies and practices for adjusting claims for
losses under the NFIP. The second would analyze how the NFIP
handles earth movements that stem from flooding, such as
landslides, when adjusting claims for losses under the program.
Based on the cost of similar studies, CBO estimates that
completing those studies would cost $1 million in 2018.
Direct spending and revenues
CBO estimates that enacting H.R. 2875 would have a
negligible effect on the deficit over the 2018-2027 period.
ICC Coverage. H.R. 2875 would give NFIP policyholders the
option of buying additional ICC coverage, which provides
assistance to help cover the cost of mitigation activities that
will reduce the risk of future flood damage to a building.
Under current law, when a building covered by the NFIP suffers
a flood loss and is declared to be substantially or
repetitively damaged, an ICC insurance policy will provide up
to $30,000 to bring the building into compliance with state or
community floodplain management laws or ordinances. Expected
ICC program spending is covered by premium payments collected
from NFIP policyholders.
Under the bill, policyholders would have the option to buy
up to an additional $30,000 in ICC coverage (making up to
$60,000 of coverage possible for a single property). Property
owners that buy additional ICC coverage would pay a surcharge
for that coverage in an amount determined by FEMA. CBO
estimates that any additional spending by the NFIP for extra
ICC coverage would be offset by the additional collections from
property owners who buy such coverage; thus, the net effect on
direct spending would be negligible.
Pre-Existing Conditions Pilot Program. The bill would
authorize FEMA to create a pilot program through December 31,
2022, that would allow private insurance companies who partner
with FEMA to sell and service NFIP policies (known in the
program as Write Your Own, or WYO, insurance companies) to
inspect properties with NFIP insurance for pre-existing
structural conditions that could result in the denial of an
NFIP claim. Following an inspection the WYO company would
submit a report outlining the presence or absence of any pre-
existing structural conditions to the property owner and FEMA.
Under the pilot program, FEMA could impose a surcharge on
each policy that opts to have an inspection for pre-existing
conditions to account for any administrative costs faced by the
WYO companies to complete those inspections. Because H.R. 2875
gives FEMA discretion to set the surcharge at any rate, CBO
estimates that any additional costs associated with completing
those inspections would be offset by additional NFIP
collections; thus, the net effect on direct spending would be
negligible.
Civil Penalties. H.R. 2875 would bar anyone from making a
false or misleading statement, production, or submission when
adjusting a claim for NFIP coverage. The bill would create a
civil penalty of up to $10,000 per false statement. Civil
penalties are recorded in the budget as revenues. CBO estimates
that such revenues would be insignificant in any year under the
bill. Furthermore, any civil penalties collected under the bill
would be deposited into the NFIF and could be spent without
further appropriation; thus, the net effect on the deficit
would be negligible.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. CBO estimates that enacting the bill would have an
insignificant effect on direct spending and revenues over the
2018-2027 period.
Increase in long-term direct spending and deficits: CBO
estimates that enacting H.R. 2875 would not significantly
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2028.
Intergovernmental and private-sector impact: H.R. 2875
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal costs: Robert Reese; Impact
on state, local, and tribal governments: Rachel Austin; Impact
on the private sector: Logan Smith.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
One advisory committee within the meaning of section 5(b)
of the Federal Advisory Committee Act was created within this
legislation. Pursuant to the Act, the Committee determines that
the functions of the proposed advisory committee are not
presently being performed by an agency or existing advisory
committee. The Committee further determines that such functions
cannot be performed by enlarging the mandate of an existing
advisory committee. The advisory committee created by this
legislation is as follows:
Sec. 14. Federal Flood Insurance Advisory Committee.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 2875 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Duplication of Federal Programs
Pursuant to section 3(c)(5) of rule XIII, the Committee
states that no provision of H.R. 2875 establishes or
reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017),
the Committee states that H.R. 2875 contains no directed
rulemaking.
Section-by-Section Analysis of the Legislation
Sec. 1. Short title
This Act may be cited as the ``National Flood Insurance
Program Administrative Reform Act of 2017''.
Sec. 2. Increased Cost of Compliance coverage
Authorizes the FEMA Administrator to supplement its
existing Increased Cost of Compliance (ICC) program (which is
typically mandatory for many policyholders) coverage of up to
$30,000 with the option of allowing policyholders to purchase
additional enhanced ICC coverage of up to $60,000, as priced
accordingly by NFIP. Like the existing ICC coverage, this
enhanced ICC coverage would be used to comply with local and
State floodplain management requirements by covering the cost
of mitigating a building that has been substantially or
repetitively damaged by floods. Additionally, the allowable
uses of ICC coverage would be expanded to cover certain pre-
disaster mitigation costs for certain at-risk properties
identified by State or local governments.
Sec. 3. Pilot program for properties with pre-existing conditions
Authorizes the FEMA Administrator to create a pilot NFIP
program to authorize Write Your Own (WYO) insurance companies
to inspect pre-existing structural conditions of insured and
pre-insured properties that could result in a denial of a flood
insurance claim. A report covering any such conditions would be
filed with the FEMA Administrator to create a pre-disaster
baseline of the conditions that might affect the resolution of
future NFIP claims. The NFIP is required to conduct a rigorous
study and evaluation and report to Congress no later than
December 31, 2021 prior to the pilot sunset on December 31,
2022.
Sec. 4. Penalties for fraud and false statements in the National Flood
Insurance Program
Requires the FEMA Administrator to prohibit false or
fraudulent statements connected to the preparation, production,
or submission of claims adjustment or engineering reports.
Authorizes the FEMA Administrator to develop penalties for such
violations, including disbarment from participation in the
NFIP.
Sec. 5. Enhanced policyholder appeals process
Codifies the due process protections for policyholders
established after Superstorm Sandy by FEMA for individuals
wishing to appeal a full or partial denial of their NFIP claim
by their insurance company, and require FEMA to provide
policyholders with a written appeal decision that upholds or
overturns the decision of the insurer.
Sec. 6. Deadline for approval of claims
Requires the FEMA Administrator to make final
determinations regarding the approval of a claim for payment or
disapproval of the claim within 90 days of the claim being
made. Authorizes the FEMA Administrator to extend the 90-day
deadline by an additional 15 days when extraordinary
circumstances warrant more time.
Sec. 7. Litigation process oversight and reform
Provides the FEMA Administrator with additional authorities
and responsibilities for overseeing litigation conducted by WYO
insurance companies acting on behalf of the NFIP. Requires the
FEMA Administrator to ensure WYO litigation expenses are
reasonable, appropriate, and cost-effective, with the authority
to deny any expenses that are contrary to those terms. Gives
the FEMA Administrator the authority to direct litigation
strategy as necessary.
Sec. 8. Prohibition on hiring disbarred attorneys
Prohibits the FEMA Administrator from hiring any attorney
in connection with the program who has been suspended or
disbarred.
Sec. 9. Underpayment of claims by Write Your Own (WYO) companies
Requires the FEMA Administrator to align penalties for WYO
insurance companies that knowingly underpay claims for losses
covered to be commensurate with the NFIP's penalties applicable
to overpayment of such claims.
Sec. 10. Use of technical assistance reports
Requires the FEMA Administrator to restrict the use of
outside technical reports by WYO insurance companies and the
NFIP direct servicing agents as part of specific NFIP claims
investigations only to such reports that are final and are
prepared in compliance with applicable state and federal laws
regarding professional licensure and conduct. Defines
``technical assistance report'' to mean reports created for the
purpose of furnishing technical assistance to an insurance
claims adjuster assigned by NFIP, including those by engineers,
surveyors, salvors, architects, and certified public
accountants.
Sec. 11. Improved disclosure requirement for standard flood insurance
policies
Requires the FEMA Administrator to create a coverage
disclosure sheet for policyholders, which outlines the coverage
afforded by the NFIP's standard flood insurance policy,
including a description of the type of loss that would be
covered, a summary of costs associated with the policy, clear
communications of the policy's full flood risk determinations.
Requires the disclosure to include an acknowledgement of the
disclosure by the policyholder and the insurer selling the
policy on behalf of the NFIP.
Sec. 12. Reserve Fund amounts
Authorizes FEMA to transfer money from the Reserve Fund
into the NFIP for the purposes of paying future claims.
Sec. 13. Sufficient staffing for Office of Flood Insurance Advocate
Requires the FEMA Administrator to ensure the Office of the
Flood Insurance Advocate has sufficient staffing within 180
days after enactment.
Sec. 14. Federal Flood Insurance Advisory Committee
Creates a new Technical Insurance Advisory Council
consisting of federal, state, and local experts to review the
NFIP's insurance practices and propose new standards to FEMA.
Sec. 15. Interagency guidance on compliance
Twelve months after enactment and every two years
thereafter, requires that federal banking agencies update the
document entitled ``Interagency Questions and Answers Regarding
Flood Insurance,'' which address many flood insurance
compliance questions in order to understand any conflicts with
FEMA requirements or other industry practices and limitations.
Sec. 16. GAO study of claims adjustment practices
Requires the Comptroller General of the United States to
conduct a study assessing the policies and practices for
adjustment of claims for losses under the NFIP to determine
whether the current system impacts the quality of the claims
and adversely impacts policyholders.
Sec. 17. GAO study of flood insurance coverage treatment of earth
movement
Requires the Comptroller General of the United States to
conduct a study assessing the treatment of ``earth movement and
subsidence caused by flooding'' on the NFIP and policyholders.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
NATIONAL FLOOD INSURANCE ACT OF 1968
* * * * * * *
TITLE XIII--NATIONAL FLOOD INSURANCE
* * * * * * *
CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM
basic authority
Sec. 1304. (a) To carry out the purposes of this title, the
Administrator of the Federal Emergency Management Agency is
authorized to establish and carry out a national flood
insurance program which will enable interested persons to
purchase insurance against loss resulting from physical damage
to or loss of real property or personal property related
thereto arising from any flood occurring in the United States.
(b) Additional Coverage for Compliance With Land Use and
Control Measures.--
(1) Authority; eligible properties.--The national
flood insurance program established pursuant to
subsection (a) shall enable the purchase of insurance
to cover the cost of implementing measures that are
consistent with land use and control measures
established by the community under section 1361 for--
[(1)] (A) properties that are repetitive
loss structures;
[(2)] (B) properties that are substantially
damaged structures;
[(3)] (C) properties that have sustained
flood damage on multiple occasions, if the
Administrator determines that it is cost-
effective and in the best interests of the
National Flood Insurance [Fund to require
compliance with the land use and control
measures.] Fund to require the implementation
of such measures;
[(4)] (D) properties for which an offer of
mitigation assistance is made under--
[(A)] (i) section 1366 (Flood
Mitigation Assistance Program);
[(B)] (ii) the Hazard Mitigation
Grant Program authorized under section
404 of the Robert T. Stafford Disaster
Assistance and Emergency Relief Act (42
U.S.C. 5170c);
[(C)] (iii) the Predisaster Hazard
Mitigation Program under section 203 of
the Robert T. Stafford Disaster
Assistance and Emergency Relief Act (42
U.S.C. 5133); and
[(D)] (iv) any programs authorized or
for which funds are appropriated to
address any unmet needs or for which
supplemental funds are made
available[.];
(E) properties that have been identified by
the Administrator, or by a community in
accordance with such requirements as the
Administrator shall establish, as at a high
risk of future flood damage; and
(F) properties that are located within an
area identified pursuant to section
1361(e)(1)(A) (42 U.S.C. 4102(e)(1)(A)) by a
covered community (as such term is defined in
paragraph (3) of such section 1361(e)).
[The Administrator shall impose a surcharge on each insured of
not more than $75 per policy to provide cost of compliance
coverage in accordance with the provisions of this subsection.]
(2) Coverage amount.--
(A) Primary coverage.--Each policy for flood
insurance coverage made available under this
title shall provide coverage under this
subsection having an aggregate liability for
any single property of $30,000.
(B) Enhanced coverage.--The Administrator
shall make additional coverage available under
this subsection, in excess of the limit
specified in subparagraph (A), having an
aggregate liability for any single property of
up to $60,000.
(3) Surcharge for coverage.--
(A) Primary coverage.--The Administrator
shall impose a surcharge on each insured of
such amount per policy as the Administrator
determines is appropriate to provide cost of
compliance coverage in accordance with
paragraph (2)(A).
(B) Enhanced coverage.--For each flood policy
for flood insurance coverage under this title
under which additional cost of compliance
coverage is provided pursuant to paragraph
(2)(B), the Administrator shall impose a
surcharge, in addition to the surcharge under
subparagraph (A) of this paragraph, in such
amount as the Administrator determines is
appropriate for the amount of such coverage
provided.
(4) Use of certain materials.--The Administrator
shall require that any measures implemented using
amounts made available from coverage provided pursuant
to this subsection be carried out using materials,
identified by the Administrator, that minimize the
impact of flooding on the usability of the covered
property and reduce the duration that flooding renders
the property unusable or uninhabitable.
(5) Continued flood insurance requirement.--The
Administrator may require, as a condition of providing
cost of compliance coverage under this subsection for a
property, that the owner of the property enter into
such binding agreements as the Administrator considers
necessary to ensure that the owner of the property (and
any subsequent owners) will maintain flood insurance
coverage under this title for the property in such
amount, and at all times during a period having such
duration, as the Administrator considers appropriate to
carry out the purposes of this subsection.
(c) In carrying out the flood insurance program the
Administrator shall, to the maxmium extent practicable,
encourage and arrange for--
(1) appropriate financial participation and risk
sharing in the program by insurance companies and other
insurers, and
(2) other appropriate participation on other than a
risk-sharing basis, by insurance companies and other
insurers, insurance agents and brokers, and insurance
adjustment organizations, in accordance with the
provisions of chapter II.
* * * * * * *
national flood insurance fund
Sec. 1310. (a) To carry out the flood insurance program
authorized by this title, the Administrator shall establish in
the Treasury of the United States a National Flood Insurance
Fund (hereinafter referred to as the ``fund'') which shall be
an account separate from any other accounts or funds available
to the Administrator and shall be available as described in
subsection (f), without fiscal year limitation (except as
otherwise provided in this section)--
(1) for making such payments as may, from time to
time, be required under section 1334;
(2) to pay reinsurance claims under the excess loss
reinsurance coverage provided under section 1335;
(3) to repay to the Secretary of the Treasury such
sums as may be borrowed from him (together with
interest) in accordance with the authority provided in
section 1309;
(4) to the extent approved in appropriations Acts, to
pay any administrative expenses of the flood insurance
and floodplain management programs (including the costs
of mapping activities under section 1360);
(5) for the purposes specified in subsection (d)
under the conditions provided therein;
(6) for carrying out the program under section
1315(b);
(7) for transfers to the National Flood Mitigation
Fund, but only to the extent provided in section
1367(b)(1); and
(8) for carrying out section 1363(f).
(b) The fund shall be credited with--
(1) such funds borrowed in accordance with the
authority provided in section 1309 as may from time to
time be deposited in the fund;
(2) premiums, fees, or other charges which may be
paid or collected in connection with the excess loss
reinsurance coverage provided under section 1335;
(3) such amounts as may be advanced to the fund from
appropriations in order to maintain the fund in an
operative condition adequate to meet its liabilities;
(4) interest which may be earned on investments of
the fund pursuant to subsection (c);
(5) such sums as are required to be paid to the
Administrator under section 1308(d); and
(6) receipts from any other operations under this
title (including premiums under the conditions
specified in subsection (d), and salvage proceeds, if
any, resulting from reinsurance coverage).
(c) If, after--
(1) all outstanding obligations of the fund have been
liquidated, and
(2) any outstanding amounts which may have been
advanced to the fund from appropriations authorized
under section 1376(a)(2)(B) have been credited to the
appropriation from which advanced, with interest
accrued at the rate, prescribed under section 15(e) of
the Federal Flood Insurance Act of 1956, as in effect
immediately prior to the enactment of this title,
the Administrator determines that the moneys of the fund are in
excess of current needs, he may request the investment of such
amounts as he deems advisable by the Secretary of the Treasury
in obligations issued or guaranteed by the United States.
(d) In the event the Administrator makes a determination in
accordance with the provisions of section 1340 that operation
of the flood insurance program, in whole or in part, should be
carried out through the facilities of the Federal Government,
the fund shall be available for all purposes incident thereto,
including--
(1) cost incurred in the adjustment and payment of
any claims for losses, and
(2) payment of applicable operating costs set forth
in the schedules prescribed under section 1311,
for so long as the program is so carried out, and in such event
any premiums paid shall be deposited by the Administrator to
the credit of the fund.
(e) An annual business-type budget for the fund shall be
prepared, transmitted to the Congress, considered, and enacted
in the manner prescribed by sections 9103 and 9104 of title 31,
United States Code, for wholly-owned Government corporations.
(f) The Fund shall be available, with respect to any fiscal
year beginning on or after October 1, 1981, only to the extent
approved in appropriation Acts; except that the fund shall be
available for the purpose described in subsection (d)(1)
without such approval.
(g) Crediting of Reserve Fund Amounts.--Funds collected
pursuant to section 1310A may be credited to the Fund under
this section to be available for the purpose described in
subsection (d)(1).
* * * * * * *
operating costs and allowances
Sec. 1311. (a) The Administrator shall from time to time
negotiate with appropriate representatives of the insurance
industry for the purpose of establishing--
(1) a current schedule of operating costs applicable
both to risk-sharing insurance companies and other
insurers and to insurance companies and other insurers,
insurance agents and brokers, and insurance adjustment
organizations participating on other than a risk-
sharing basis, and
(2) a current schedule of operating allowances
applicable to risk-sharing insurance companies and
other insurers,
which may be payable in accordance with the provisions of
chapter II, and such schedules shall from time to time be
prescribed in regulations.
(b) For purposes of subsection (a)--
(1) the term ``operating costs'' shall (without
limiting such term) include--
(A) expense reimbursements covering the
direct, actual and necessary expenses incurred
in connection with selling and servicing flood
insurance coverage;
(B) reasonable compensation payable for
selling and servicing flood insurance coverage,
or commissions or service fees paid to
producers;
(C) loss adjustment expenses; and
(D) other direct, actual, and necessary
expenses which the Administrator finds are
incurred in connection with selling or
servicing flood insurance coverage; and
(2) the term ``operating allowances'' shall (without
limiting such term) include amounts for profit and
contingencies which the Administrator finds reasonable
and necessary to carry out the purposes of this title.
(c) Pilot Program for Investigation of Preexisting Structural
Conditions.--
(1) Voluntary program.--The Administrator shall carry
out a pilot program under this subsection to provide
for companies participating in the Write Your Own
program (as such term is defined in section 1370(a) (42
U.S.C. 4121(a))) to investigate preexisting structural
conditions of insured properties and potentially
insured properties that could result in the denial of a
claim under a policy for flood insurance coverage under
this title in the event of a flood loss to such
property. Participation in the pilot program shall be
voluntary on the part of Write Your Own companies.
(2) Investigation of properties.--Under the pilot
program under this subsection, a Write Your Own company
participating in the program shall--
(A) provide in policies for flood insurance
coverage under this title covered by the
program that, upon the request of the
policyholder, the company shall provide for--
(i) an investigation of the property
covered by such policy, using common
methods, to determine whether
preexisting structural conditions are
present that could result in the denial
of a claim under such policy for flood
losses; and
(ii) if such investigation is not
determinative, an on-site inspection of
the property to determine whether such
preexisting structural conditions are
present;
(B) upon completion of an investigation or
inspection pursuant to subparagraph (A) that
determines that such a preexisting structural
condition is present or absent, submit a report
to the policyholder and Administrator
describing the condition; and
(C) impose a surcharge on each policy
described in subparagraph (A) in such amount
that the Administrator determines is
appropriate to cover the costs of
investigations and inspections performed
pursuant to such policies and reimburse Write
Your Own companies participating in the program
under this subsection for such costs.
(3) Interim report.--Not later than December 31,
2021, the Administrator shall submit a report to the
Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate describing the
operation of the pilot program to that date.
(4) Sunset.--The Administrator may not provide any
policy for flood insurance described in paragraph
(2)(A) after December 31, 2022.
(5) Final report.--Not later than March 31, 2023, the
Administrator shall submit a final report regarding the
pilot program under this section to the Committee on
Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of
the Senate. The report shall include any findings and
recommendations of the Administrator regarding the
pilot program.
payment of claims
Sec. 1312. (a) In General.--[The Administrator] Subject to
other provisions of this section, the Administrator is
authorized to prescribe regulations establishing the general
method or methods by which proved and approved claims for
losses may be adjusted and paid for any damage to or loss of
property which is covered by flood insurance made available
under the provisions of this title.
(b) Minimum Annual Deductible.--
(1) Pre-firm properties.--For any structure which is
covered by flood insurance under this title, and on
which construction or substantial improvement occurred
on or before December 31, 1974, or before the effective
date of an initial flood insurance rate map published
by the Administrator under section 1360 for the area in
which such structure is located, the minimum annual
deductible for damage to such structure shall be--
(A) $1,500, if the flood insurance coverage
for such structure covers loss of, or physical
damage to, such structure in an amount equal to
or less than $100,000; and
(B) $2,000, if the flood insurance coverage
for such structure covers loss of, or physical
damage to, such structure in an amount greater
than $100,000.
(2) Post-firm properties.--For any structure which is
covered by flood insurance under this title, and on
which construction or substantial improvement occurred
after December 31, 1974, or after the effective date of
an initial flood insurance rate map published by the
Administrator under section 1360 for the area in which
such structure is located, the minimum annual
deductible for damage to such structure shall be--
(A) $1,000, if the flood insurance coverage
for such structure covers loss of, or physical
damage to, such structure in an amount equal to
or less than $100,000; and
(B) $1,250, if the flood insurance coverage
for such structure covers loss of, or physical
damage to, such structure in an amount greater
than $100,000.
(c) Payment of Claims to Condominium Owners.--The
Administrator may not deny payment for any damage to or loss of
property which is covered by flood insurance to condominium
owners who purchased such flood insurance separate and apart
from the flood insurance purchased by the condominium
association in which such owner is a member, based solely, or
in any part, on the flood insurance coverage of the condominium
association or others on the overall property owned by the
condominium association.
(d) Deadline for Approval of Claims.--
(1) In general.--The Administrator shall provide
that, in the case of any claim for damage to or loss of
property under flood insurance coverage made available
under this title, a final determination regarding
approval of a claim for payment or disapproval of the
claim be made, and notification of such determination
be provided to the insured making such claim, not later
than the expiration of the 90-day period (as such
period may be extended pursuant to paragraph (2))
beginning upon the day on which such claim was made.
Payment of approved claims shall be made as soon as
possible after such approval.
(2) Extension of deadline.--The Administrator shall
provide that the period referred to in paragraph (1)
may be extended by a single additional period of 15
days in cases where extraordinary circumstances are
demonstrated. The Administrator shall, by regulation,
establish criteria for demonstrating such extraordinary
circumstances and for determining to which claims such
extraordinary circumstances apply.
(e) Use of Technical Assistance Reports.--When adjusting
claims for any damage to or loss of property which is covered
by flood insurance made available under this title, the
Administrator may rely upon technical assistance reports, as
such term is defined in section 1312A, only if such reports are
final and are prepared in compliance with applicable State and
Federal laws regarding professional licensure and conduct.
SEC. 1312A. DISCLOSURE OF TECHNICAL ASSISTANCE REPORTS.
(a) In General.--Notwithstanding section 552a of title 5,
United States Code, upon request by a policyholder, the
Administrator shall provide a true, complete, and unredacted
copy of any technical assistance report that the Administrator
relied upon in adjusting and paying for any damage to or loss
of property insured by the policyholder and covered by flood
insurance made available under this title. Such disclosures
shall be in addition to any other right of disclosure otherwise
made available pursuant such section 552a or any other
provision of law.
(b) Direct Disclosure by Write Your Own Companies and Direct
Servicing Agents.--A Write Your Own company or direct servicing
agent in possession of a technical assistance report subject to
disclosure under subsection (a) may disclose such technical
assistance report without further review or approval by the
Administrator.
(c) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Policyholder.--The term ``policyholder'' means a
person or persons shown as an insured on the
declarations page of a policy for flood insurance
coverage sold pursuant to this title.
(2) Technical assistance report.--The term
``technical assistance report'' means a report created
for the purpose of furnishing technical assistance to
an insurance claims adjuster assigned by the National
Flood Insurance Program, including by engineers,
surveyors, salvors, architects, and certified public
accounts.
* * * * * * *
CHAPTER II--ORGANIZATION AND ADMINISTRATION OF THE FLOOD INSURANCE
PROGRAM
* * * * * * *
Part C--Provisions of General Applicability
services by insurance industry
Sec. 1345. (a) In administering the flood insurance program
under this chapter, the Administrator is authorized to enter
into any contracts, agreements, or other appropriate
arrangements which may, from time to time, be necessary for the
purpose of utilizing, on such terms and conditions as may be
agreed upon, the facilities and services of any insurance
companies or other insurers, insurance agents and brokers, or
insurance adjustment organizations; and such contracts,
agreements, or arrangements may include provision for payment
of applicable operating costs and allowances for such
facilities and services as set forth in the schedules
prescribed under section 1311.
(b) Any such contracts, agreements, or other arrangements may
be entered into without regard to the provisions of section
3709 of the Revised Statutes (41 U.S.C. 5) or any other
provisions of law requiring competitive bidding and without
regard to the provisions of the Federal Advisory Committee Act
(5 U.S.C. App.).
(c) The Administrator of the Federal Emergency Management
Agency shall hold any agent or broker selling or undertaking to
sell flood insurance under this title harmless from any
judgment for damages against such agent or broker as a result
of any court action by a policyholder or applicant arising out
of an error or omission on the part of the Federal Emergency
Management Agency, and shall provide any such agent or broker
with indemnification, including court costs and reasonable
attorney fees, arising out of and caused by an error or
omission on the part of the Federal Emergency Management Agency
and its contractors. The Administrator of the Federal Emergency
Management Agency may not hold harmless or indemnify an agent
or broker for his or her error or omission.
(d) FEMA Authority on Transfer of Policies.--Notwithstanding
any other provision of this title, the Administrator may, at
the discretion of the Administrator, refuse to accept the
transfer of the administration of policies for coverage under
the flood insurance program under this title that are written
and administered by any insurance company or other insurer, or
any insurance agent or broker.
(e) Risk Transfer.--The Administrator may secure reinsurance
of coverage provided by the flood insurance program from the
private reinsurance and capital markets at rates and on terms
determined by the Administrator to be reasonable and
appropriate, in an amount sufficient to maintain the ability of
the program to pay claims.
(f) Underpayment of Claims by WYO Companies.--The
Administrator shall establish penalties for companies
participating in the Write Your Own program knowingly
underpaying claims for losses covered by flood insurance made
available under this title, which penalties shall be
commensurate, with respect to the amount of the penalty, to the
penalties applicable to overpayment of such claims by a similar
amount by such companies.
* * * * * * *
SEC. 1349. PENALTIES FOR FRAUD AND FALSE STATEMENTS IN THE NATIONAL
FLOOD INSURANCE PROGRAM.
(a) Prohibited Acts.--A person shall not knowingly make a
false or misleading statement, production, or submission in
connection with the proving or adjusting of a claim for flood
insurance coverage made available under this Act. Such
prohibited acts include--
(1) knowingly forging an engineering report, claims
adjustment report or technical assistance report used
to support a claim determination;
(2) knowingly making any materially false,
fictitious, or fraudulent statement or representation
in an engineering report, claims adjustment report, or
technical assistance report to support a claim
determination;
(3) knowingly submitting a materially false,
fictitious, or fraudulent claim.
(b) Civil Enforcement.--The Attorney General may bring a
civil action for such relief as may be appropriate whenever it
appears that any person has violated or is about to violate any
provision of this section. Such action may be brought in an
appropriate United States district court.
(c) Referral to Attorney General.--The Administrator shall
expeditiously refer to the Attorney General for appropriate
action any evidence developed in the performance of functions
under this Act that may warrant consideration for criminal or
civil prosecution.
(d) Penalties.--
(1) Civil monetary penalty.--Any person who violates
subsection (a) shall be subject to a civil penalty of
not more than $10,000 for each violation, which shall
be deposited into the National Flood Insurance Fund
established under section 1310 (42 U.S.C. 4017).
(2) Suspension and debarment.--Any person who
violates subsection (a) shall not be eligible, for a
period of not less than 2 years and not to exceed 5
years, to--
(A) receive flood insurance coverage pursuant
to this title; or
(B) provide services in connection with the
selling, servicing, or handling of claims for
flood insurance policies provided pursuant to
this title.
(3) Other penalties.--The penalties provided for in
this subsection shall be in addition to any other civil
or criminal penalty available under law.
SEC. 1350. APPROVAL OF DECISIONS RELATING TO FLOOD INSURANCE COVERAGE.
(a) In General.--The Administrator shall establish an appeals
process to enable holders of a flood insurance policy provided
under this title to appeal the decisions of their insurer, with
respect to the disallowance, in whole or in part, of any claims
for proved and approved losses covered by flood insurance. Such
appeals shall be limited to the claim or portion of the claim
disallowed by the insurer.
(b) Appeal Decision.--Upon a decision in an appeal under
subsection (a), the Administrator shall provide the
policyholder with a written appeal decision. The appeal
decision shall explain the Administrator's determination to
uphold or overturn the decision of the flood insurer. The
Administrator may direct the flood insurer to take action
necessary to resolve the appeal, to include re-inspection, re-
adjustment, or payment, as appropriate.
(c) Rules of Construction.--This section shall not be
construed as--
(1) making the Federal Emergency Management Agency or
the Administrator a party to the flood insurance
contract; or
(2) creating any action or remedy not otherwise
provided by this title.
SEC. 1351. OVERSIGHT OF LITIGATION.
(a) Oversight.--The Administrator shall monitor and oversee
litigation conducted by Write Your Own companies arising under
contracts for flood insurance sold pursuant to this title, to
ensure that--
(1) litigation expenses are reasonable, appropriate,
and cost-effective; and
(2) Write Your Own companies comply with guidance and
procedures established by the Administrator regarding
the conduct of litigation.
(b) Denial of Reimbursement for Expenses.--The Administrator
may deny reimbursement for litigation expenses that are
determined to be unreasonable, excessive, contrary to guidance
issued by the Administrator, or outside the scope of any
arrangement entered into with a Write Your Own company.
(c) Litigation Strategy.--The Administrator may direct
litigation strategy for claims arising under a contract for
flood insurance sold by a Write Your Own company.
(d) Substitution.--If at any time, the Administrator
determines there is a conflict of interest between the Write
Your Own company and the National Flood Insurance Program, or
it is in the best interest of the United States, the
Administrator may promptly take any necessary action to be
substituted for the WYO company in any action arising out of
any claim arising under a contract for flood insurance sold by
a Write Your Own company.
SEC. 1352. PROHIBITION ON HIRING DISBARRED ATTORNEYS.
The Administrator may not at any time newly employ in
connection with the flood insurance program under this title
any attorney who has been suspended or disbarred by any court,
bar, or Federal or State agency to which the individual was
previously admitted to practice.
* * * * * * *
CHAPTER IV--APPROPRIATIONS AND MISCELLANEOUS PROVISIONS
definitions
Sec. 1370. (a) As used in this title--
(1) the term ``flood'' shall have such meaning as may
be prescribed in regulations of the Administrator, and
may include inundation from rising waters or from the
overflow of streams, rivers, or other bodies of water,
or from tidal surges, abnormally high tidal water,
tidal waves, tsunamis, hurricanes, or other severe
storms or deluge;
(2) the terms ``United States'' (when used in a
geographic sense) and ``State'' includes the several
States, the District of Columbia, the territories and
possessions, the Commonwealth of Puerto Rico, and the
Trust Territory of the Pacific Islands;
(3) the terms ``insurance company'', ``other
insurer'' and ``insurance agent or broker'' include any
organization or person that is authorized to engage in
the business of insurance under the laws of any State,
subject to the reporting requirements of the Securities
Exchange Act of 1934 pursuant to section 13(a) or 15(d)
of such Act (15 U.S.C. 78m(a) and 78o(d)), or
authorized by the Administrator to assume reinsurance
on risks insured by the flood insurance program;
(4) the term ``insurance adjustment organization''
includes any organizations and persons engaged in the
business of adjusting loss claims arising under
insurance policies issued by any insurance company or
other insurer;
(5) the term ``person'' includes any individual or
group of individuals, corporation, partnership,
association, or any other organized group of persons,
including State and local governments and agencies
thereof;
(6) the term ``Administrator'' means the
Administrator of the Federal Emergency Management
Agency;
(7) the term ``repetitive loss structure'' means a
structure covered by a contract for flood insurance
that--
(A) has incurred flood-related damage on 2
occasions, in which the cost of repair, on the
average, equaled or exceeded 25 percent of the
value of the structure at the time of each such
flood event; and
(B) at the time of the second incidence of
flood-related damage, the contract for flood
insurance contains increased cost of compliance
coverage.
(8) the term ``Federal agency lender'' means a
Federal agency that makes direct loans secured by
improved real estate or a mobile home, to the extent
such agency acts in such capacity;
(9) the term ``Federal entity for lending
regulation'' means the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance
Corporation, the Comptroller of the Currency, the
National Credit Union Administration, and the Farm
Credit Administration, and with respect to a particular
regulated lending institution means the entity
primarily responsible for the supervision of the
institution;
(10) the term ``improved real estate'' means real
estate upon which a building is located;
(11) the term ``lender'' means a regulated lending
institution or Federal agency lender;
(12) the term ``natural and beneficial floodplain
functions'' means--
(A) the functions associated with the natural
or relatively undisturbed floodplain that (i)
moderate flooding, retain flood waters, reduce
erosion and sedimentation, and mitigate the
effect of waves and storm surge from storms,
and (ii) reduce flood related damage; and
(B) ancillary beneficial functions, including
maintenance of water quality and recharge of
ground water, that reduce flood related damage;
(13) the term ``regulated lending institution'' means
any bank, savings and loan association, credit union,
farm credit bank, Federal land bank association,
production credit association, or similar institution
subject to the supervision of a Federal entity for
lending regulation;
(14) the term ``servicer'' means the person
responsible for receiving any scheduled periodic
payments from a borrower pursuant to the terms of a
loan, including amounts for taxes, insurance premiums,
and other charges with respect to the property securing
the loan, and making the payments of principal and
interest and such other payments with respect to the
amounts received from the borrower as may be required
pursuant to the terms of the loan; [and]
(15) the term ``substantially damaged structure''
means a structure covered by a contract for flood
insurance that has incurred damage for which the cost
of repair exceeds an amount specified in any regulation
promulgated by the Administrator, or by a community
ordinance, whichever is lower[.];
(16) the term ``Write Your Own Program'' means the
program under which the Federal Emergency Management
Agency enters into a standard arrangement with private
property insurance companies to sell contracts for
flood insurance coverage under this title under their
own business lines of insurance, and to adjust and pay
claims arising under such contracts; and
(17) the term ``Write Your Own company'' means a
private property insurance company that participates in
the Write Your Own Program.
(b) The term ``flood'' shall also include inundation from
mudslides which are proximately caused by accumulations of
water on or under the ground; and all of the provisions of this
title shall apply with respect to such mudslides in the same
manner and to the same extent as with respect to floods
described in subsection (a)(1), subject to and in accordance
with such regulations, modifying the provisions of this title
(including the provisions relating to land management and use)
to the extent necessary to insure that they can be effectively
so applied, as the Administrator may prescribe to achieve (with
respect to such mudslides) the purposes of this title and the
objectives of the program.
(c) The term ``flood'' shall also include the collapse or
subsidence of land along the shore of a lake or other body of
water as a result of erosion or undermining caused by waves or
currents of water exceeding anticipated cyclical levels, and
all of the provisions of this title shall apply with respect to
such collapse or subsidence in the same manner and to the same
extent as with respect to floods described in subsection
(a)(1), subject to and in accordance with such regulations,
modifying the provisions of this title (including the
provisions relating to land management and use) to the extent
necessary to insure that they can be effectively so applied, as
the Administrator may prescribe to achieve (with respect to
such collapse or subsidence) the purposes of this title and the
objectives of the program.
* * * * * * *
----------
SECTION 205 OF THE BUNNING-BLUMENAUER-BEREUTER FLOOD INSURANCE REFORM
ACT OF 2004
[SEC. 205. APPEAL OF DECISIONS RELATING TO FLOOD INSURANCE COVERAGE.
[Not later than 6 months after the date of enactment of this
Act, the Director shall, by regulation, establish an appeals
process through which holders of a flood insurance policy may
appeal the decisions, with respect to claims, proofs of loss,
and loss estimates relating to such flood insurance policy,
of--
[(1) any insurance agent or adjuster, or insurance
company; or
[(2) any employee or contractor of the Federal
Emergency Management Agency.]
----------
BIGGERT-WATERS FLOOD INSURANCE REFORM ACT OF 2012
* * * * * * *
DIVISION F--MISCELLANEOUS
* * * * * * *
TITLE II--FLOOD INSURANCE
Subtitle A--Flood Insurance Reform and Modernization
* * * * * * *
SEC. 100202. DEFINITIONS.
(a) In General.--In this subtitle, the following definitions
shall apply:
(1) 100-YEAR FLOODPLAIN.--The term ``100-year
floodplain'' means that area which is subject to
inundation from a flood having a 1-percent chance of
being equaled or exceeded in any given year.
(2) 500-YEAR FLOODPLAIN.--The term ``500-year
floodplain'' means that area which is subject to
inundation from a flood having a 0.2-percent chance of
being equaled or exceeded in any given year.
(3) Administrator.--The term ``Administrator'' means
the Administrator of the Federal Emergency Management
Agency.
(4) National flood insurance program.--The term
``National Flood Insurance Program'' means the program
established under the National Flood Insurance Act of
1968 (42 U.S.C. 4011 et seq.).
[(5) Write your own.--The term ``Write Your Own''
means the cooperative undertaking between the insurance
industry and the Federal Insurance Administration which
allows participating property and casualty insurance
companies to write and service standard flood insurance
policies.]
(5) Write your own.--The terms ``Write Your Own
Program'' and ``Write Your Own company'' have the
meanings given such terms in section 1370(a) of the
National Flood Insurance Act of 1968 (42 U.S.C.
4121(a)).
(b) Common Terminology.--Except as otherwise provided in this
subtitle, any terms used in this subtitle shall have the
meaning given to such terms under section 1370 of the National
Flood Insurance Act of 1968 (42 U.S.C. 4121).
* * * * * * *
SEC. 100234. POLICY DISCLOSURES.
(a) In General.--Notwithstanding any other provision of law,
in addition to any other disclosures that may be required, each
policy under the National Flood Insurance Program shall state
all conditions, exclusions, and other limitations pertaining to
coverage under the subject policy, regardless of the underlying
insurance product, in plain English, in boldface type, and in a
font size that is twice the size of the text of the body of the
policy.
(b) Violations.--The Administrator may impose a civil penalty
of not more than $50,000 on any person that fails to comply
with subsection (a).
(c) Disclosure of Coverage.--
(1) Disclosure sheet.--Each policy under the National
Flood Insurance Program shall include a disclosure
sheet that sets forth, in plain language--
(A) the definition of the term ``flood'' for
purposes of coverage under the policy;
(B) a description of what type of flood
forces are necessary so that losses from an
event are covered under the policy, including
overflow of inland or tidal waves, unusual and
rapid accumulation or runoff of a surface any
source, and mudflow;
(C) a statement of the types and
characteristics of losses that are not covered
under the policy;
(D) a summary of total cost and amount of
insurance coverage, and any other information
relating to such coverage required to be
disclosed under section 1308(l) of the National
Flood Insurance Act of 1968 (42 U.S.C.
4015(l));
(E) a statement that the disclosure sheet
provides general information about the
policyholder's standard flood insurance policy;
(F) a statement that the standard flood
insurance policy, together with the
application, endorsements, and declarations
page, make up the official contract and are
controlling in the event that there is any
difference between the information on the
disclosure sheet and the information in the
policy; and
(G) a statement that if the policyholder has
any questions regarding information in the
disclosure sheet or policy he or she should
contact the entity selling the policy on behalf
of the Program, together with contact
information sufficient to allow the
policyholder to contact such entity.
(2) Acknowledgment sheet.--Each policy under the
National Flood Insurance Program shall include an
acknowledgment sheet that sets forth, in plain
language--
(A) a statement of whether or not there is a
basement in the property to be covered by the
policy;
(B) a statement of whether or not the policy
provides coverage for the contents of the
property covered by the policy;
(C) a statement that the standard flood
insurance policy, together with the
application, endorsements, and declarations
page, make up the official contract and are
controlling in the event that there is any
difference between the information on the
acknowledgment sheet and the information in the
policy; and
(D) a statement that if the policyholder has
any questions regarding information in the
acknowledgment sheet or policy he or she should
contact the entity selling the policy on behalf
of the Program, together with contact
information sufficient to allow the
policyholder to contact such entity.
(3) Required signatures.--Notwithstanding section
1306(c) of the National Flood Insurance Act of 1968 (42
U.S.C. 4013(c)), a policy for flood insurance coverage
under the National Flood Insurance Program may not take
effect unless the disclosure sheet required under
paragraph (1) and the acknowledgment sheet required
under paragraph (2), with respect to the policy, are
signed and dated by the policyholder and the seller of
the policy who is acting on behalf of the Program.
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HOMEOWNER FLOOD INSURANCE AFFORDABILITY ACT OF 2014
* * * * * * *
SEC. 24. DESIGNATION OF FLOOD INSURANCE ADVOCATE.
(a) In General.--The Administrator shall designate a Flood
Insurance Advocate to advocate for the fair treatment of policy
holders under the National Flood Insurance Program and property
owners in the mapping of flood hazards, the identification of
risks from flood, and the implementation of measures to
minimize the risk of flood.
(b) Duties and Responsibilities.--The duties and
responsibilities of the Flood Insurance Advocate designated
under subsection (a) shall be to--
(1) educate property owners and policyholders under
the National Flood Insurance Program on--
(A) individual flood risks;
(B) flood mitigation;
(C) measures to reduce flood insurance rates
through effective mitigation;
(D) the flood insurance rate map review and
amendment process; and
(E) any changes in the flood insurance
program as a result of any newly enacted laws
(including this Act);
(2) assist policy holders under the National Flood
Insurance Program and property owners to understand the
procedural requirements related to appealing
preliminary flood insurance rate maps and implementing
measures to mitigate evolving flood risks;
(3) assist in the development of regional capacity to
respond to individual constituent concerns about flood
insurance rate map amendments and revisions;
(4) coordinate outreach and education with local
officials and community leaders in areas impacted by
proposed flood insurance rate map amendments and
revisions; and
(5) aid potential policy holders under the National
Flood Insurance Program in obtaining and verifying
accurate and reliable flood insurance rate information
when purchasing or renewing a flood insurance policy.
(c) Staff.--The Administrator shall ensure that the Flood
Insurance Advocate has sufficient staff to carry out all of the
duties and responsibilities of the Advocate under this section.
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