Reid strikes deal with GOP senator on flood insurance reform

Senate Majority Leader Harry Reid (D-Nev.) and Sen. David Vitter (R-La.) on Wednesday struck a deal on the National Flood Insurance Program (NFIP), which expires at the end of the month.

Under the deal, Reid committed to allow a five-year NFIP reform bill to come to the floor during the June work period and Vitter agreed to drop his demand that a five-year bill be considered as an amendment to the Food and Drug Administration user fee bill that is on the floor this week.

Reid also announced that the Senate would take up a 60-day extension of the flood insurance program before leaving town this week. 

Reid and Sen. Tom Coburn (R-Okla.) had been unable to find an agreement on amendments to a seven-month NFIP bill. Reid said on the floor that an issue that Coburn cares about will be addressed in the short-term extension. 

Coburn has been pushing for lower subsidies for owners of vacation homes in flood-prone areas. An aide said the short-term extension will deal with that matter.

The House last week passed a 30-day extension of the flood program with some policy riders that required the government to assess whether NFIP can be privatized. 

The House would need to pass a new bill to keep NFIP, the only U.S. flood insurance provider, in business, if the Senate passes a 60-day bill.

Realtors have been warning that any expiration of NFIP would hurt the fledgling recovery in the housing market. Home sales in flood zones cannot proceed without NFIP underwriting.

Realtors and insurance companies that offer NFIP protection, often as a package of home insurance, have urged a long-term extension in a major lobbying campaign this month. 

Reid noted the effect on the housing market when he announced the Senate would take up a five-year bill.

“We can’t have these short-term extensions that don’t allow people to do what they need to do,” he said. “Forty-thousand homes a day go through a process where they have to have flood insurance.”

Vitter said the agreement avoids a lapse that would “put a hiccup in the economy for no good reason.” 

Reid and Vitter said that Banking Committee Chairman Tim Johnson (D-S.D.) and ranking member Richard Shelby (R-Ala.) have been able to pare down the list of floor amendments to the bill to limit the amount of floor time it would take up next month. 

Both the Banking Committee-passed version of the five-year bill and companion House version would allow NFIP to charge higher premiums, and can be counted as reducing the budget deficit.

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