Rep. Blaine Luetkemeyer (R-Mo.) said on Wednesday that he plans to introduce a bill this month reforming a federal flood insurance program.
Luetkemeyer, chairman of the Financial Services subcommittee on insurance, said his bill — the product of almost a year of work — would expand private flood insurance coverage, change rates within the industry and reduce the National Flood Insurance Program’s $23 billion debt.
“So, how do we structure the program in the future so that doesn’t increase and be another burden on all of you to have to take care of down the road?”
The program is due for congressional reauthorization next year, creating an opportunity to make changes to the 50-year-old program.
Most flood insurance policies in the United States are issued through the federal program, which has been solvent for most of its existence.
But Hurricane Katrina in 2005 and Hurricane Sandy in 2012 ate into the fund, leaving it with debt.
The House in April approved a bill to reauthorize the program and allow private flood insurers to cover people who are required to buy flood insurance because of where they live. Members also hope to update the Federal Emergency Management Administration flood maps that dictate who is required to buy the coverage.
But the program’s funding shortfall is at the top of lawmakers’ concerns.
Luetkemeyer said private insurers could help keep the program solvent by taking over some policies that don’t drain its coffers. The rest — the 1 percent of policies that make up 30 percent of its losses — could form some type of new high-risk pool. He also hopes to enact a reinsurance policy to further protect the program.
“That’s what we’re working on, to try and look at ways to structure that, to try to incentivize, number one the private sector to come in and, number two, to have the reinsurance sit there and be the backstop so taxpayers are not on the hook for all of this."