A bill meant to reform flood insurance with a shot of private sector innovation unanimously cleared the House Financial Services Committee on Wednesday.
The bill, called the Flood Insurance Market Parity and Modernization Act, would make sure private flood insurance policies satisfy a federal mandate requiring coverage for high-risk homes and properties.
“No customer is going to be forced to buy another product, but at least they’ll have options,” Chairman Jeb Hensarling (R-Texas) said. “And ultimately it’s the options that create the price competition and the innovation and consumer protections."
Most U.S. flood insurance is issued through the NFIP, a federal provider that stayed mostly solvent for decades. Then came Hurricane Katrina and Superstorm Sandy, which saddled NFIP with $23 billion in debt.
Lawmakers on both sides were receptive to the bill, but Democrats withheld full support until certain consumer safeguards were added.
“Our regulators need authority to set necessary requirements on the financial strength of the products from private companies,” said Rep. Maxine Waters (Calif.), the committee’s top Democrat. She praised new language ramping up oversight, along with disclosures about coverage amounts and deductible levels.
The bill also had broad support from homebuilders, insurance companies and fiscal hawks, who said it would reduce spending and taxpayer risk while giving the housing and insurance industries clearer guidance.
If enacted, the bill would be but one step lawmakers say is necessary for flood insurance reform. Others include updating the Federal Emergency Management Administration (FEMA) flood mapping methods and investing more in disaster damage mitigation.
The NFIP is up for reauthorization in 2017, giving lawmakers a window to hone solutions.
“This committee has some serious work next year as it comes up for reauthorization,” Hensarling said. “But we can’t wait to help the people who use flood insurance. We can’t wait to help the taxpayers.”