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DISASTERS

House acts to overhaul flood insurance program

Congress is trying to right a four-decade-old federal flood insurance program that was nearly sunk by Katrina and other 2005 hurricanes.

The House on Tuesday voted 406-22 to add five years to the life of the National Flood Insurance Program and carry out changes, such as allowing a bump in premiums, to restore solvency to the agency that now owes some $17.8 billion to the federal Treasury.

The flood insurance program, a branch of the Federal Emergency Management Agency, enjoys bipartisan support but has been reeling in recent years both because of the huge costs of Katrina and the inability of Congress to act on needed changes. Since 2006 the Government Accountability Office has identified the flood insurance program as "high-risk" because of inadequate management and insufficient funds.

The bill, which has the support of the Barack Obama White House, now goes to the Senate.

Speaking in support of the legislation, the first long-term extension of the flood insurance program since 2004, were several lawmakers from Mississippi and Missouri River area districts that have been hit hard this year by flooding.

"It's been a very tough spring for North Dakota," said Rep. Rick Berg, R-N.D., who pushed an amendment that would protect homeowners who buy policies at least 30 days before their property is damaged even when FEMA declares that there is a flood in progress.

The legislation would make the program more fiscally sound by phasing in actuarially sound rates for policyholders and increasing the minimum deductible for properties. The flood insurance program would have more flexibility in raising premiums. It reduces some subsidies and removes barriers that have kept private insurers from competing in the market.

The bill also allows communities required to buy flood insurance because of the findings of new mapping to seek a suspension of that requirement for up to five years while they fix their flood protection systems.

The NFIP was founded in 1969 to allay the federal costs from flood disasters, and since then has paid more than $30 billion in claims.

About 20,000 communities across the country participate in the flood insurance program by carrying out floodplain management plans in exchange for federally backed flood insurance for homeowners, renters and businesses. With private insurers unwilling or unable to compete in the market, the federal government handles almost all flood insurance.

The program now has about 5.6 million policies bringing in $3.4 billion a year in premiums. Supporters said the legislation, if enacted, would increase the flood insurance program's income by about $4.2 billion over 10 years. The NFIP said premiums average about $500 a year.

The program was generally self-sustaining before 2005, but with the hurricane disasters of that year Congress increased its borrowing authority three times, from $1.5 billion to $20.8 billion.

Without the reforms in the legislation, said its sponsor, Rep. Judy Biggert, R-Ill., "homeowners and businesses will have limited or no access to flood insurance and Congress will inevitably have to bail out flood disaster victims as it did prior to 1968."

One of the few voices of dissent came from Rep. Candice Miller, R-Mich., who said the flood insurance program was a "boondoggle" that needs to be eliminated. She said one percent of the properties in the program account for 40 percent of the claims because they repeatedly flood and the government subsidizes their reconstruction. A Miller amendment to terminate NFIP and allow states to form interstate compacts to provide insurance fell, 384-38.