To amend the National Flood Insurance Act of 1968 to reduce losses to properties for which repetitive flood insurance claim payments have been made.

March 25, 2004

Mr. BUNNING (for himself, Mr. SHELBY, Mr. SARBANES, Mr. SCHUMER, Mrs. DOLE, and Mr. HAGEL) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs

To amend the National Flood Insurance Act of 1968 to reduce losses to properties for which repetitive flood insurance claim payments have been made.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Flood Insurance Reform Act of 2004'.

(b) TABLE OF CONTENTS- The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Congressional findings.

TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

Sec. 101. Extension of program and consolidation of authorizations.

Sec. 102. Establishment of pilot program for mitigation of severe repetitive loss properties.

Sec. 103. Amendments to existing flood mitigation assistance program.

Sec. 104. FEMA authority to fund mitigation activities for individual repetitive claims properties.

Sec. 105. Amendments to additional coverage for compliance with land use and control measures.

Sec. 106. Actuarial rate properties.

Sec. 107. Geospatial digital flood hazard data.

Sec. 108. Replacement of mobile homes on original sites.

Sec. 109. Reiteration of FEMA responsibility to map mudslides.

TITLE II--MISCELLANEOUS PROVISIONS

Sec. 201. Definitions.

Sec. 202. Supplemental forms.

Sec. 203. Acknowledgement form.

Sec. 204. Flood insurance claims handbook.

Sec. 205. Appeal of decisions relating to flood insurance coverage.

Sec. 206. Study and report on use of cost compliance coverage.

Sec. 207. Minimum training and education requirements.

Sec. 208. GAO study and report.

Sec. 209. Prospective payment of flood insurance premiums.

Sec. 210. Report on changes to fee schedule or fee payment arrangements.

SEC. 2. CONGRESSIONAL FINDINGS.

The Congress finds that--

(1) the national flood insurance program--

(A) identifies the flood risk;

(B) provides flood risk information to the public;

(C) encourages State and local governments to make appropriate land use adjustments to constrict the development of land which is exposed to flood damage and minimize damage caused by flood losses; and

(D) makes flood insurance available on a nationwide basis that would otherwise not be available, to accelerate recovery from floods, mitigate future losses, save lives, and reduce the personal and national costs of flood disasters;

(2) the national flood insurance program insures approximately 4,400,000 policyholders;

(3) approximately 48,000 properties currently insured under the program have experienced, within a 10-year period, 2 or more flood losses where each such loss exceeds the amount $1,000;

(4) approximately 10,000 of these repetitive-loss properties have experienced either 2 or 3 losses that cumulatively exceed building value or 4 or more losses, each exceeding $1,000;

(5) repetitive-loss properties constitute a significant drain on the resources of the national flood insurance program, costing about $200,000,000 annually;

(6) repetitive-loss properties comprise approximately 1 percent of currently insured properties but are expected to account for 25 to 30 percent of claims losses;

(7) the vast majority of repetitive-loss properties were built before local community implementation of floodplain management standards under the program and thus are eligible for subsidized flood insurance;

(8) while some property owners take advantage of the program allowing subsidized flood insurance without requiring mitigation action, others are trapped in a vicious cycle of suffering flooding, then repairing flood damage, then suffering flooding, without the means to mitigate losses or move out of harm's way;

(9) mitigation of repetitive-loss properties through buyouts, elevations, relocations, or flood-proofing will produce savings for policyholders under the program and for Federal taxpayers through reduced flood insurance losses and reduced Federal disaster assistance;

(10) a strategy of making mitigation offers aimed at high-priority repetitive-loss properties and shifting more of the burden of recovery costs to property owners who choose to remain vulnerable to repetitive flood damage can encourage property owners to take appropriate actions that reduce loss of life and property damage and benefit the financial soundness of the program;

(11) the method for addressing repetitive-loss properties should be flexible enough to take into

consideration legitimate circumstances that may prevent an owner from taking a mitigation action; and

(12) focusing the mitigation and buy-out of repetitive loss properties upon communities and property owners that choose to voluntarily participate in a mitigation and buy-out program will maximize the benefits of such a program, while minimizing any adverse impact on communities and property owners.

TITLE I--AMENDMENTS TO FLOOD INSURANCE ACT OF 1968

SEC. 101. EXTENSION OF PROGRAM AND CONSOLIDATION OF AUTHORIZATIONS.

(a) BORROWING AUTHORITY- The first sentence of section 1309(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), is amended by striking `through December' and all that follows through `, and' and inserting `through the date specified in section 1319, and'.

(b) AUTHORITY FOR CONTRACTS- Section 1319 of the National Flood Insurance Act of 1968 (42 U.S.C. 4026), is amended by striking `after' and all that follows and inserting `after September 30, 2008.'.

(c) EMERGENCY IMPLEMENTATION- Section 1336(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4056(a)), is amended by striking `during the period' and all that follows through `in accordance' and inserting `during the period ending on the date specified in section 1319, in accordance'.

(d) AUTHORIZATION OF APPROPRIATIONS FOR STUDIES- Section 1376(c) of the National Flood Insurance Act of 1968 (42 U.S.C. 4127(c)), is amended by striking `through' and all that follows and inserting `through the date specified in section 1319, for studies under this title.'.

SEC. 102. ESTABLISHMENT OF PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE LOSS PROPERTIES.

(a) IN GENERAL- The National Flood Insurance Act of 1968 is amended by inserting after section 1361 (42 U.S.C. 4102) the following:

`SEC. 1361A. PILOT PROGRAM FOR MITIGATION OF SEVERE REPETITIVE LOSS PROPERTIES.

(a) AUTHORITY- To the extent amounts are made available for use under this section, the Director may, subject to the limitations of this section, provide financial assistance to States and communities for taking actions with respect to severe repetitive loss properties (as such term is defined in subsection (b)) to mitigate flood damage to such properties and losses to the National Flood Insurance Fund from such properties.

`(b) SEVERE REPETITIVE LOSS PROPERTY- For purposes of this section, the term `severe repetitive loss property' has the following meaning:

`(1) SINGLE-FAMILY PROPERTIES- In the case of a property consisting of 1 to 4 residences, such term means a property that--

`(A) is covered under a contract for flood insurance made available under this title; and

`(B) has incurred flood-related damage--

`(i) for which 3 or more separate claims payments have been made under flood insurance coverage under this title, with the amount of each such claim exceeding $3,000, and with the cumulative amount of such claims payments exceeding $15,000;

`(ii) for which at least 2 separate claims payments have been made under such coverage, with the cumulative amount of such claims exceeding the value of the property.

`(2) MULTIFAMILY PROPERTIES- In the case of a property consisting of 5 or more residences, such term shall have such meaning as the Director shall by regulation provide.

`(c) ELIGIBLE ACTIVITIES- Amounts provided under this section to a State or community may be used only for the following activities:

`(1) MITIGATION ACTIVITIES- To carry out mitigation activities that reduce flood damages to severe repetitive loss properties, including elevation, relocation, demolition, and floodproofing of structures, and minor physical localized flood control projects, and the demolition and rebuilding of properties to at least 1 foot above Base Flood Elevation or greater, if required by any local ordinance.

`(2) PURCHASE- To purchase severe repetitive loss properties, subject to subsection (f).

`(d) MATCHING REQUIREMENT-

`(1) IN GENERAL- Except as provided in paragraph (2), in any 1-year period the Director may not provide assistance under this section to a State or community in an amount exceeding 3 times the amount that the State or community certifies, as the Director shall require, that the State or community will contribute from non-Federal funds for carrying out the eligible activities to be funded with such assistance amounts.

`(2) REDUCED COMMUNITY MATCH- With respect to any 1-year period in which assistance is made available under this section, the Director may adjust the contribution required under paragraph (1) by any State, and for the communities located in that State, to not less than 10 percent of the cost of the activities for each severe repetitive loss property for which grant amounts are provided if, for such year--

`(A) the State has an approved State mitigation plan meeting the requirements for hazard mitigation planning under section 322 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5165) that specifies how the State intends to reduce the number of severe repetitive loss properties; and

`(B) the Director determines, after consultation with the State, that the State has taken actions to reduce the number of such properties.

`(3) NON-FEDERAL FUNDS- For purposes of this subsection, the term `non-Federal funds' includes State or local agency funds, in-kind contributions, any salary paid to staff to carry out the eligible activities of the recipient, the value of the time and services contributed by volunteers to carry out

such activities (at a rate determined by the Director), and the value of any donated material or building and the value of any lease on a building.

`(e) STANDARDS FOR MITIGATION OFFERS- The program under this section for providing assistance for eligible activities for severe repetitive loss properties shall be subject to the following limitations:

`(1) PRIORITY- In determining the properties for which to provide assistance for eligible activities under subsection (c), the Director shall provide assistance for properties in the order that will result in the greatest amount of savings to the National Flood Insurance Fund in the shortest period of time.

`(2) OFFERS- The Director shall provide assistance in a manner that permits States and communities to make offers to owners of severe repetitive loss properties to take eligible activities under subsection (c) as soon as practicable.

`(3) NOTICE- Upon making an offer to provide assistance with respect to a property for any eligible activity under subsection (c), the State or community shall notify each holder of a recorded interest on the property of such offer and activity.

`(f) PURCHASE OFFERS- A State or community may take action under subsection (c)(2) to purchase a severe repetitive loss property only if the following requirements are met:

`(1) USE OF PROPERTY- The State or community enters into an agreement with the Director that provides assurances that the property purchased will be used in a manner that is consistent with the requirements of section 404(b)(2)(B) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170c(b)(2)(B)) for properties acquired, accepted, or from which a structure will be removed pursuant to a project provided property acquisition and relocation assistance under such section 404(b).

`(2) OFFERS- The Director shall provide assistance in a manner that permits States and communities to makes offers to owners of severe repetitive loss properties and of associated land to engage in eligible activities as soon as possible.

`(3) PURCHASE PRICE- The amount of purchase offer is not less than the greatest of--

`(A) the amount of the original purchase price of the property, when purchased by the holder of the current policy of flood insurance under this title;

`(B) the total amount owed, at the time the offer to purchase is made, under any loan secured by a recorded interest on the property; and

`(C) an amount equal to the fair market value of the property immediately before the most recent flood event affecting the property.

`(g) INCREASED PREMIUMS IN CASES OF REFUSAL TO MITIGATE-

`(1) IN GENERAL- In any case in which the owner of a severe repetitive loss property refuses an offer to take action under paragraph (1) or (2) of subsection (c) with respect to such property, the Director shall--

`(A) notify each holder of a recorded interest on the property of such refusal; and

`(B) notwithstanding subsections (a) through (c) of section 1308, thereafter the chargeable premium rate with respect to the property shall be the amount equal to 150 percent of the chargeable rate for the property at the time that the offer was made, as adjusted by any other premium adjustments otherwise applicable to the property and any subsequent increases pursuant to paragraph (2) and subject to the limitation under paragraph (3).

`(2) INCREASED PREMIUMS UPON SUBSEQUENT FLOOD DAMAGE- Notwithstanding subsections (a) through (c) of section 1308, if the owner of a severe repetitive loss property does not accept an offer to take action under paragraph (1) or (2) of subsection (c) with respect to such property and a claim payment exceeding $1,500 is made under flood insurance coverage under this title for damage to the property caused by a flood event occurring after such offer is made, thereafter the chargeable premium rate with respect to the property shall be the amount equal to 150 percent of the chargeable rate for the property at the time of such flood event, as adjusted by any other premium adjustments otherwise applicable to the property and any subsequent increases pursuant to this paragraph and subject to the limitation under paragraph (3).

`(3) LIMITATION ON INCREASED PREMIUMS- In no case may the chargeable premium rate for a severe repetitive loss property be increased pursuant to this subsection to an amount exceeding the applicable estimated risk premium rate for the area (or subdivision thereof) under section 1307(a)(1).

`(4) TREATMENT OF DEDUCTIBLES- Any increase in chargeable premium rates required under this subsection for a severe repetitive loss property may be carried out, to the extent appropriate, as determined by the Director, by adjusting any deductible charged in connection with flood insurance coverage under this title for the property.

`(5) NOTICE OF CONTINUED OFFER- Upon each renewal or modification of any flood insurance coverage under this title for a severe repetitive loss property, the Director shall notify the owner that the offer made pursuant to subsection (c) is still open.

`(6) APPEALS-

`(A) IN GENERAL- Any owner of a severe repetitive loss property may appeal a determination of the Director to take action under paragraph (1)(B) or (2) with respect to such property, based only upon the following grounds:

`(i) As a result of such action, the owner of the property will not be able to purchase a replacement primary residence of comparable value and that is functionally equivalent.

`(ii) Based on independent information, such as contractor estimates or appraisals, the property owner believes that the price offered for purchasing the property is not an accurate estimation of the value of the property, or the amount offered for mitigation activities will not cover the actual cost of mitigation.

`(iii) As a result of such action, the preservation or maintenance of any prehistoric or historic district, site, building, structure, or object included in, or eligible for inclusion in, the National Register of historic places will be interfered with, impaired, or disrupted.

`(iv) The flooding that resulted in the flood insurance claims described in subsection (b)(2) for the property resulted from significant actions by a third party in violation of Federal, State, or local law, ordinance, or regulation.

`(v) In purchasing the property, the owner relied upon flood insurance rate maps of the Federal Emergency Management Agency that were current at the time and did not indicate that the property was located in an area having special flood hazards.

`(B) PROCEDURE- An appeal under this paragraph of a determination of the Director shall be made by filing, with the Director, a request for an appeal within 90 days after receiving notice of such determination. Upon receiving the request, the Director shall select, from a list of independent third parties compiled by the Director for such purpose, a party to hear such appeal. Within 90 days after filing of the request for the appeal, such third party shall review the determination of the Director and shall set aside such determination if the third party determines that the grounds under subparagraph (A) exist. During the pendency of an appeal under this paragraph, the Director shall stay the applicability of the rates established pursuant to paragraph (1)(B) or (2), as applicable.

`(C) EFFECT OF FINAL DETERMINATION- In an appeal under this paragraph--

`(i) if a final determination is made that the grounds under subparagraph (A) exist, the third party hearing such appeal shall make a determination of how much to reduce the chargeable risk premium rate for flood insurance coverage for the property involved in the appeal from the amount required under paragraph (1)(B) or (2) and the Director shall promptly reduce the chargeable risk premium rate for such property by such amount; and

`(ii) if a final determination is made that the grounds under subparagraph (A) do not exist, the Director shall promptly increase the chargeable risk premium rate for such property to the amount established pursuant to paragraph (1)(B) or (2), as applicable, and shall collect from the property owner the amount necessary to cover the stay of the applicability of such increased rates during the pendency of the appeal.

`(D) COSTS- If the third party hearing an appeal under this paragraph is compensated for such service, the costs of such compensation shall be borne--

`(i) by the owner of the property requesting the appeal, if the final determination in the appeal is that the grounds under subparagraph (A) do not exist; and

`(ii) by the National Flood Insurance Fund, if such final determination is that the grounds under subparagraph (A) do exist.

`(E) REPORT- Not later than 6 months after the date of the enactment of the Flood Insurance Reform Act of 2004, the Director shall submit a report describing the rules, procedures, and administration for appeals under this paragraph to--

`(i) the Committee on Banking, Housing, and Urban Affairs of the Senate; and

`(ii) the Committee on Financial Services of the House of Representatives.

`(h) DISCRETIONARY ACTIONS IN CASES OF FRAUDULENT CLAIMS- If the Director determines that a fraudulent claim was made under flood insurance coverage under this title for a severe repetitive loss property, the Director may--

`(1) cancel the policy and deny the provision to such policyholder of any new flood insurance coverage under this title for the property; or

`(2) refuse to renew the policy with such policyholder upon expiration and deny the provision of any new flood insurance coverage under this title to such policyholder for the property.

`(i) FUNDING-

`(1) IN GENERAL- Pursuant to section 1310(a)(8), the Director may use amounts from the National Flood Insurance Fund to provide assistance under this section in each of fiscal years 2004, 2005, 2006, 2007, and 2008, except that the amount so used in each such fiscal year may not exceed $40,000,000 and shall remain available until expended. Notwithstanding any other provision of this title, amounts made available pursuant to this subsection shall not be subject to offsetting collections through premium rates for flood insurance coverage under this title.

`(2) ADMINISTRATIVE EXPENSES- Of the amounts made available under this subsection, the Director may use up to 5 percent for expenses associated with the administration of section 1361A.

`(j) TERMINATION- The Director may not provide assistance under this section to any State or community after September 30, 2008.'.

(b) AVAILABILITY OF NATIONAL FLOOD INSURANCE FUND AMOUNTS- Section 1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended--

(1) in paragraph (7), by striking `and' at the end; and

(2) by striking paragraph (8) and inserting the following:

`(8) for financial assistance under section 1361A to States and communities for taking actions under such section with respect to severe repetitive loss properties, but only to the extent provided in section 1361A(i); and'.

SEC. 103. AMENDMENTS TO EXISTING FLOOD MITIGATION ASSISTANCE PROGRAM.

(a) STANDARD FOR APPROVAL OF MITIGATION PLANS- Section 1366(e)(3) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by adding at the end the following new sentence: `The Director may approve only mitigation plans that give priority for funding to such properties, or to such subsets of properties, as are in the best interest of the National Flood Insurance Fund.'.

(b) PRIORITY FOR MITIGATION ASSISTANCE- Section 1366(e) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by striking paragraph (4) and inserting the following:

`(4) PRIORITY FOR MITIGATION ASSISTANCE- In providing grants under this subsection for mitigation activities, the Director shall give first priority for funding to such properties, or to such subsets of such properties as the Director may establish, that the Director determines are in the best interests of the National Flood Insurance Fund and for which matching amounts under subsection (f) are available.'.

(c) COORDINATION WITH STATES AND COMMUNITIES- Section 1366 of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) is amended by adding at the end the following:

`(m) COORDINATION WITH STATES AND COMMUNITIES- The Director shall, in consultation and coordination with States and communities take such actions as are appropriate to encourage and improve participation in the national flood insurance program of owners of properties, including owners of properties that are not located in areas having special flood hazards but are located within the 100-year floodplain.'.

(d) FUNDING- Section 1367(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104d(b)) is amended by striking paragraph (1) and inserting the following:

`(1) in each fiscal year, amounts from the National Flood Insurance Fund not exceeding $40,000,000, to remain available until expended;'.

(e) REDUCED COMMUNITY MATCH- Section 1366(g) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c(g)), is amended--

(2) by redesignating paragraph (2) as paragraph (3); and

(3) by inserting after paragraph (1) the following:

`(2) REDUCED COMMUNITY MATCH- With respect to any 1-year period in which assistance is made available under this section, the Director may adjust the contribution required under paragraph (1) by any State, and for the communities located in that State, to not less than 10 percent of the cost of the activities for each severe repetitive loss property for which grant amounts are provided if, for such year--

`(A) the State has an approved State mitigation plan meeting the requirements for hazard mitigation planning under section 322 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5165) that specifies how the State intends to reduce the number of severe repetitive loss properties; and

`(B) the Director determines, after consultation with the State, that the State has taken actions to reduce the number of such properties.'.

(f) NATIONAL FLOOD MITIGATION FUND- Section 1366(b)(2) of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c(b)(2)), is amended by striking `$1,500,000' and inserting `7.5 percent of the available funds under this section'.

SEC. 104. FEMA AUTHORITY TO FUND MITIGATION ACTIVITIES FOR INDIVIDUAL REPETITIVE CLAIMS PROPERTIES.

(a) IN GENERAL- Chapter I of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amended by adding at the end the following:

`SEC. 1323. GRANTS FOR REPETITIVE INSURANCE CLAIMS PROPERTIES.

`(a) IN GENERAL- The Director may provide funding for mitigation actions that reduce flood damages to individual properties for which 1 or more claim payments for losses have been made under flood insurance coverage under this title, but only if the Director determines that--

`(1) such activities are in the best interest of the National Flood Insurance Fund; and

`(2) such activities can not be funded under the program under section 1366 because--

`(A) the requirements of section 1366(g) are not being met by the State or community in which the property is located; or

`(B) the State or community does not have the capacity to manage such activities.

`(b) PRIORITY FOR WORST-CASE PROPERTIES- In determining the properties for which funding is to be provided under this section, the Director shall consult with the States in which such properties are located and provide assistance for properties in the order that will result in the greatest amount of savings to the National Flood Insurance Fund in the shortest period of time.'.

(b) AVAILABILITY OF NATIONAL FLOOD INSURANCE FUND AMOUNTS- Section 1310(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4017(a)) is amended by adding at the end the following:

`(9) for funding, not to exceed $10,000,000 in any fiscal year, for mitigation actions under section

1323, except that, notwithstanding any other provision of this title, amounts made available pursuant to this paragraph shall not be subject to offsetting collections through premium rates for flood insurance coverage under this title.'.

SEC. 105. AMENDMENTS TO ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE AND CONTROL MEASURES.

(a) COMPLIANCE WITH LAND USE AND CONTROL MEASURES- Section 1304(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)) is amended--

(1) in the matter preceding paragraph (1)--

(A) by striking `compliance' and inserting `implementing measures that are consistent'; and

(B) by inserting `by the community' after `established';

(2) in paragraph (2), by striking `have flood damage in which the cost of repairs equals or exceeds 50 percent of the value of the structure at the time of the flood event; and' and inserting `are substantially damaged structures;'

(3) in paragraph (3), by striking `compliance with land use and control measures.' and inserting `the implementation of such measures; and'; and

(4) by inserting after paragraph (3) and before the last undesignated paragraph the following:

`(4) properties for which an offer of mitigation assistance is made under--

`(A) section 1366 (Flood Mitigation Assistance Program);

`(B) section 1368 (Repetitive Loss Priority Program and Individual Priority Property Program);

`(C) 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);

`(D) 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

`(E) any programs authorized or for which funds are appropriated to address any unmet needs or for which supplemental funds are made available.'.

(b) DEFINITIONS- Section 1370(a) of the National Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is amended--

(1) by striking paragraph (7) and inserting the following:

`(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.';

(2) in paragraph (13), by striking `and' at the end;

(3) in paragraph (14), by striking the period and inserting `; and'; and

(4) by adding at the end the following:

`(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 Director, or by a community ordinance, whichever is lower.'.

SEC. 106. ACTUARIAL RATE PROPERTIES.

(a) IN GENERAL- Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 4015) is amended by striking subsection (c) and inserting the following:

`(c) ACTUARIAL RATE PROPERTIES- Subject only to the limitations provided under paragraphs (1) and (2), the chargeable rate shall not be less than the applicable estimated risk premium rate for such area (or subdivision thereof) under section 1307(a)(1) with respect to the following properties:

`(1) POST-FIRM PROPERTIES- Any property the construction or substantial improvement of which the Director determines has been started after December 31, 1974, or started after the effective date of the initial rate map published by the Director under paragraph (2) of section 1360 for the area in which such property is located, whichever is later, except that the chargeable rate for properties under this paragraph shall be subject to the limitation under subsection (e).

`(2) CERTAIN LEASED COASTAL AND RIVER PROPERTIES- Any property leased from the Federal Government (including residential and nonresidential properties) that the Director determines is located on the river-facing side of any dike, levee, or other riverine flood control structure, or seaward of any seawall or other coastal flood control structure.'.

(b) INAPPLICABILITY OF ANNUAL LIMITATIONS ON PREMIUM INCREASES- Section 1308(e) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(e)) is amended by striking `Notwithstanding' and inserting `Except with respect to properties described under paragraph (2) or (3) of subsection (c), and notwithstanding'.

SEC. 107. GEOSPATIAL DIGITAL FLOOD HAZARD DATA.

For the purposes of flood insurance and floodplain management activities conducted pursuant to the National Flood Insurance Program under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.), geospatial digital flood hazard data distributed by the Federal Emergency Management Agency, or its designee, or the printed products derived from that data, are interchangeable and legally equivalent for the determination of the location of 1 in 100 year and 1 in 500 year flood planes, provided that all other geospatial data shown on the printed product meets or exceeds any accuracy standard promulgated by the Federal Emergency Management Agency.

SEC. 108. REPLACEMENT OF MOBILE HOMES ON ORIGINAL SITES.

Section 1315 of the National Flood Insurance Act of 1968 (42 U.S.C. 4022) is amended by adding at the end the following:

`(c) REPLACEMENT OF MOBILE HOMES ON ORIGINAL SITES-

`(1) COMMUNITY PARTICIPATION- The placement of any mobile home on any site shall not affect the eligibility of any community to participate in the flood insurance program under this title and the Flood Disaster Protection Act of 1973 (notwithstanding that such placement may fail to comply with any elevation or flood damage mitigation requirements), if--

`(A) such mobile home was previously located on such site;

`(B) such mobile home was relocated from such site because of flooding that threatened or affected such site; and

`(C) such replacement is conducted not later than the expiration of the 180-day period that begins upon the subsidence (in the area of such site) of the body of water that flooded to a level considered lower than flood levels.

`(2) DEFINITION- For purposes of this subsection, the term `mobile home' has the meaning given such term in the law of the State in which the mobile home is located.'.

SEC. 109. REITERATION OF FEMA RESPONSIBILITY TO MAP MUDSLIDES.

As directed in section 1360(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4101(b)), the Director of the Federal Emergency Management Agency is again directed to accelerate the identification of risk zones within flood-prone and mudslide-prone areas, as provided by subsection (a)(2) of such section 1360, in order to make known the degree of hazard within each such zone at the earliest possible date.

TITLE II--MISCELLANEOUS PROVISIONS

SEC. 201. DEFINITIONS.

In this title, the following definitions shall apply:

(1) DIRECTOR- The term `Director' means the Director of the Federal Emergency Management Agency.

(2) FLOOD INSURANCE POLICY- The term `flood insurance policy' means a flood insurance policy issued under the National Flood Insurance Act of 1968 (42 U.S.C. et seq.).

(3) PROGRAM- The term `Program' means the National Flood Insurance Program established under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.).

SEC. 202. SUPPLEMENTAL FORMS.

(a) IN GENERAL- Not later than 6 months after the date of enactment of this Act, the Director shall develop supplemental forms to be issued in conjunction with the issuance of a flood insurance policy that set forth, in simple terms--

(1) the exact coverages being purchased by a policyholder;

(2) any exclusions from coverage that apply to the coverages purchased;

(3) an explanation, including illustrations, of how lost items and damages will be valued under the policy at the time of loss;

(4) the number and dollar value of claims filed under a flood insurance policy over the life of the property, and the effect, under the National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.), of the filing of any further claims under a flood insurance policy with respect to that property; and

(5) any other information that the Director determines will be helpful to policyholders in understanding flood insurance coverage.

(b) DISTRIBUTION- The forms developed under subsection (a) shall be given to--

(1) all holders of a flood insurance policy at the time of purchase and renewal; and

(2) insurance companies and agents that are authorized to sell flood insurance policies.

SEC. 203. ACKNOWLEDGEMENT FORM.

(a) IN GENERAL- Not later than 6 months after the date of enactment of this Act, the Director shall develop an acknowledgement form to be signed by the purchaser of a flood insurance policy that contains--

(1) an acknowledgement that the purchaser has received a copy of the standard flood insurance policy, and any forms developed under section 202; and

(2) an acknowledgement that the purchaser has been told that the contents of a property or dwelling are not covered under the terms of the standard flood insurance policy, and that the policyholder has the option to purchase additional coverage for such contents.

(b) DISTRIBUTION- Copies of an acknowledgement form executed under subsection (a) shall be made available to the purchaser and the Director.

SEC. 204. FLOOD INSURANCE CLAIMS HANDBOOK.

(a) IN GENERAL- Not later than 6 months after the date of enactment of this Act, the Director shall develop a flood insurance claims handbook that contains--

(1) a description of the procedures to be followed to file a claim under the Program, including how to pursue a claim to completion;

(2) how to file supplementary claims, proof of loss, and any other information relating to the filing of claims under the Program; and

(3) detailed information regarding the appeals process established under section 205.

(b) DISTRIBUTION- The handbook developed under subsection (a) shall be made available to--

(1) each insurance company and agent authorized to sell flood insurance policies; and

(2) each purchaser, at the time of purchase and renewal, of a flood insurance policy, and at the time of any flood loss sustained by such purchaser.

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.

SEC. 206. STUDY AND REPORT ON USE OF COST COMPLIANCE COVERAGE.

Not later than 1 year after the date of enactment of this Act, the Director of the Federal Emergency Management Agency shall submit to Congress a report that sets forth--

(1) the use of cost of compliance coverage under section 1304(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)) in connection with flood insurance policies;

(2) any barriers to policyholders using the funds provided by cost of compliance coverage under that section 1304(b) under a flood insurance policy, and recommendations to address those barriers; and

(3) the steps that the Federal Emergency Management Agency has taken to ensure that funds paid for cost of compliance coverage under that section 1304(b) are being used to lessen the burdens on all homeowners and the Program.

SEC. 207. MINIMUM TRAINING AND EDUCATION REQUIREMENTS.

The Director of the Federal Emergency Management Agency shall, in cooperation with the insurance industry and other interested parties--

(1) establish minimum training and education requirements for all insurance agents who sell flood insurance policies; and

(2) not later than 6 months after the date of enactment of this Act, publish these requirements in the Federal Register, and inform insurance companies and agents of the requirements.

SEC. 208. GAO STUDY AND REPORT.

(a) STUDY- The Comptroller General of the United States shall conduct a study of--

(1) the adequacy of the scope of coverage provided under flood insurance policies in meeting the intended goal of Congress that flood victims be restored to their pre-flood conditions, and any recommendations to ensure that goal is being met;

(2) the adequacy of payments to flood victims under flood insurance policies; and

(3) the practices of the Federal Emergency Management Agency and insurance adjusters in estimating losses incurred during a flood, and how such practices affect the adequacy of payments to flood victims.

(b) REPORT- Not later than 1 year after the date of enactment of this Act, the Comptroller General shall submit to Congress a report regarding the results of the study under subsection (a).

SEC. 209. PROSPECTIVE PAYMENT OF FLOOD INSURANCE PREMIUMS.

Section 1308 of the National Flood Insurance Act of 1968 (42 U.S.C. 4015) is amended by adding at the end the following:

`(f) ADJUSTMENT OF PREMIUM- Notwithstanding any other provision of law, if the Director determines that the holder of a flood insurance policy issued under this Act is paying a lower premium than is required under this section due to an error in the flood plain determination, the Director may only prospectively charge the higher premium rate.'.

SEC. 210. REPORT ON CHANGES TO FEE SCHEDULE OR FEE PAYMENT ARRANGEMENTS.

Not later than 3 months after the date of enactment of this Act, the Director shall submit a report on any changes or modifications made to the fee schedule or fee payment arrangements between the Federal Emergency Management Agency and insurance adjusters who provide services with respect to flood insurance policies to--

(1) the Committee on Banking, Housing, and Urban Affairs of the Senate; and

(2) the Committee on Financial Services of the House of Representatives.

END