109th CONGRESS
1st Session
H. R. 4320
To restore the financial solvency of the national flood insurance
program, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
November 15, 2005
Mr. OXLEY (for himself and Mr. FRANK of Massachusetts) introduced the following
bill; which was referred to the Committee on Financial Services
A BILL
To restore the financial solvency of the national flood insurance
program, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `National Flood Insurance Program Commitment
to Policyholders and Reform Act of 2005'.
SEC. 2. FINDINGS AND PURPOSES.
(a) Findings- The Congress finds that--
(1) the amount of the flood insurance claims resulting from Hurricane
Katrina and Hurricane Rita will likely exceed the aggregate amount of
all claims previously paid in the history of the national flood insurance
program, and will require an increase in the program's borrowing authority;
(2) flood insurance policyholders have a legitimate expectation that they
will receive fair and timely compensation for losses covered under their
policies;
(3) substantial flooding has occurred, and will likely occur again, outside
of the areas designated as the 100-year floodplain;
(4) to adequately and correctly assess potential flood damage and losses
in all areas on the United States, the national flood insurance program
will need to update its flood maps with the latest technology;
(5) the maximum coverage limits for flood insurance policies should be
increased to reflect inflation and the increased cost of housing;
(6) significant reforms to the national flood insurance program required
in the Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004
have yet to be implemented; and
(7) despite reforms required in the Bunning-Bereuter-Blumenauer Flood
Insurance Reform Act of 2004, the national flood insurance program requires
a modernized and updated administrative model to ensure that the people
of the United States have continued access to flood insurance.
(b) Purposes- The purposes of this Act are--
(1) to protect the integrity of the national flood insurance program by
fully funding existing legal obligations expected by existing policyholders
who have paid policy premiums in return for flood insurance coverage;
(2) to increase incentives for homeowners and communities to participate
in the national flood insurance program and to improve oversight to ensure
full participation in the program for owners of properties for which such
participation is mandatory;
(3) to increase awareness of homeowners of flood risks and improve the
quality of information regarding such risks provided to homeowners; and
(4) to better mitigate future flood damage risks through a combination
of enhanced protective measures, property elevation, and buyouts of flood-prone
properties.
SEC. 3. MANDATORY PURCHASE REQUIREMENT FOR 500-YEAR FLOOD PLAIN.
(a) Flood Disaster Protection Act of 1973- Section 3(a) of the Flood Disaster
Protection Act of 1973 (42 U.S.C. 4003(a)) is amended--
(1) in paragraph (10), by striking `and' at the end;
(2) in paragraph (11), by striking the period at the end and inserting
a semicolon; and
(3) by adding at the end the following new paragraph:
`(12) `area having special flood hazards' or `flood hazard area' means
any area that is determined by the Director--
`(A) pursuant section 1360 of the National Flood Insurance Act of 1968,
to be subject to inundation by the flood that has a 0.2 percent chance
of being equaled or exceeded in any year; or
`(B) to be an area that would be an area described in subparagraph (A)
of this paragraph, but for the existence of a structural flood protection
system;'.
(b) National Flood Insurance Act of 1968- The National Flood Insurance Act
of 1968 is amended--
(1) in section 1370(a) (42 U.S.C. 4121(a))--
(A) in paragraph (14), by striking `and' at the end;
(B) in paragraph (15), by striking the period at the end and inserting
a semicolon; and
(C) by adding at the end the following new paragraph:
`(16) the term `area having special flood hazards' and `flood hazard area'
mean an area that is determined by the Director--
`(A) pursuant section 1360, to be subject to inundation by the flood
that has a 0.2 percent chance of being equaled or exceeded in any year;
or
`(B) to be an area that would be an area described in subparagraph (A)
of this paragraph, but for the existence of a structural flood protection
system;';
(2) in section 1361A(g)(4) (42 U.S.C. 4102a(g)(4)), by striking `flood
hazard area' and inserting `area having special flood hazards'; and
(3) in section 1366(m) (42 U.S.C. 4104c(m)), by striking `100-year' and
inserting `500-year'.
(c) Annual Flood Map Modernization Reports and Certification of Completion-
(1) IN GENERAL- During the period that ends upon the completion by the
Director of the Federal Emergency Management Agency of the updating and
modernization of all floodplain areas and flood-risk zones, the Director
shall submit a report annually to the Congress describing the extent to
which such updating and modernization has been completed. Upon the completion
of such updating, the Director shall submit to the Congress, and cause
to be published in the Federal Register, a report certifying such completion.
(2) TIMING- The first report under this subsection shall be submitted
not later than June 30, 2006, and successive reports required under this
subsection during the period referred to in paragraph (1) shall be submitted
not later than June 30 of each year during such period.
(d) Applicability- The amendments made by subsections (a) and (b) shall
take effect, and apply beginning on--
(2) publication of the certification by the Director pursuant to subsection
(c),
SEC. 4. ENFORCEMENT.
Paragraph (5) of section 102(f) of the Flood Disaster Protection Act of
1973 (42 U.S.C. 4012a) is amended--
(1) by striking `$350' and inserting `$2,000'; and
(2) by striking the last sentence.
SEC. 5. REITERATION OF FEMA RESPONSIBILITIES UNDER 2004 REFORM ACT.
(a) Appeals Process- As directed in section 205 of the Bunning-Bereuter-Blumenauer
Flood Insurance Reform Act of 2004 (42 U.S.C. 4011 note), the Director of
the Federal Emergency Management Agency is again directed to, not later
than 90 days after the date of the enactment of this Act, 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 as required by such section.
(b) Minimum Training and Education Requirements- The Director of the Federal
Emergency Management Agency is directed to enforce the minimum training
and education requirements for all insurance agents who sell flood insurance
policies that have been established under the notice published September
1, 2005 (70 Fed. Reg. 52117) pursuant to section 207 of the Bunning-Bereuter-Blumenauer
Flood Insurance Reform Act of 2004 (42 U.S.C. 4011 note).
(c) Mitigation Programs- Not later than the expiration of the 30-day period
beginning on the date of the enactment of this Act, the Director of the
Federal Emergency Management Agency shall issue regulations necessary to
implement the amendments made by sections 102, 103, 104, and 105 of the
Bunning-Bereuter-Blumenauer Flood Insurance Reform Act of 2004 (118 Stat.
714 et seq.).
(d) Report- Not later than the expiration of the 6-month period beginning
on the date of the enactment of this Act, the Director of the Federal Emergency
Management Agency shall submit a report to the Congress describing the implementation
of each provision of the Bunning-Bereuter-Blumenauer Flood Insurance Reform
Act of 2004 (Public Law 108-264) and identifying each regulation, order,
notice, and other material issued by the Director in implementing each such
provision.
SEC. 6. MAXIMUM COVERAGE LIMITS.
Subsection (b) of section 1306 of the National Flood Insurance Act of 1968
(42 U.S.C. 4013(b)) is amended--
(1) in paragraph (2), by striking `$250,000' and inserting `$335,500';
(2) in paragraph (3), by striking `$100,000' and inserting `$135,000';
and
(3) in paragraph (4), by striking `$500,000' each place such term appears
and inserting `$670,700'.
SEC. 7. COVERAGE FOR ADDITIONAL LIVING EXPENSES AND BUSINESS INTERRUPTION.
Subsection (b) of section 1306 of the National Flood Insurance Act of 1968
(42 U.S.C. 4013), as amended by section 5 of this Act, is further amended--
(1) in paragraph (4), by striking `and' at the end;
(2) in paragraph (5), by striking the period at the end and inserting
a semicolon; and
(3) by adding at the end the following new paragraph:
`(6) in the case of any residential property, each renewal or new contract
for flood insurance coverage shall provide not less than $1,000 aggregate
liability per dwelling unit for any necessary increases in living expenses
incurred by the insured when losses from a flood make the residence unfit
to live in, which coverage shall be available only at chargeable rates
that are not less than the estimated premium rates for such coverage determined
in accordance with section 1307(a)(1);
`(7) in the case of any residential property, coverage for additional
living expenses described in paragraph (6) shall be made available to
every insured upon renewal and every applicant in excess of the limits
provided in paragraph (6) in such amounts and at such rates as the Director
shall establish, except that such chargeable rates shall not be less than
the estimated premium rates for such coverage determined in accordance
with section 1307(a)(1); and
`(8) the Director shall make available, for purchase by any policyholder
of a policy for flood insurance coverage for a commercial property, optional
coverage for losses resulting from any partial or total interruption of
the policyholder's business caused by damage to or loss of such property
from a flood, except that--
`(A) for purposes of such coverage, losses shall be determined based
on the profits the covered business would have earned, based on previous
financial records, had the flood not occurred; and
`(B) such coverage shall be made available only at chargeable rates
that are not less than the estimated premium rates for such coverage
determined in accordance with section 1307(a)(1).'.
SEC. 8. INCREASE IN BORROWING AUTHORITY.
(a) Borrowing Authority- The first sentence of subsection (a) of section
1309 of the National Flood Insurance Act of 1968 (42 U.S.C. 4016(a)), as
amended by the National Flood Insurance Program Enhanced Borrowing Authority
Act of 2005 (Public Law 109-65; 119 Stat. 1998), is amended by striking
`$3,500,000,000' and inserting `$22,000,000,000'.
(b) FEMA Report- Not later than the expiration of the 6-month period beginning
on the date of the enactment of this Act, the Director of the Federal Emergency
Management Agency shall submit a report to the Congress setting forth a
plan for repaying any amounts borrowed pursuant to increase in borrowing
authority authorized under the amendments made by subsection (a).
SEC. 9. CLARIFICATION OF REPLACEMENT COST PROVISIONS, FORMS, AND POLICY
LANGUAGE.
Not later than the expiration of the 3-month period beginning on the date
of the enactment of this Act, the Director of the Federal Emergency Management
Agency shall--
(1) issue regulations, and revise any materials made available by such
Agency, to clarify the applicability of replacement cost coverage under
the national flood insurance program;
(2) revise any regulations, forms, notices, guidance, and publications
relating to the full cost of repair or replacement under the replacement
cost coverage to more clearly describe such coverage to flood insurance
policyholders and information to be provided by such policyholders relating
to such coverage, and to avoid providing misleading information to such
policyholders; and
(3) revise the language in standard flood insurance policies under such
program regarding rating and coverage descriptions in a manner that is
consistent with language used widely in other homeowners and property
and casualty insurance policies, including such language regarding classification
of buildings, basements, crawl spaces, detached garages, enclosures below
elevated buildings, and replacement costs.
SEC. 10. FEMA REPORTS ON FINANCIAL STATUS OF INSURANCE PROGRAM.
Section 1320 of the National Flood Insurance Act of 1968 (42 U.S.C. 4027)
is amended--
(1) in the section heading, by striking `REPORT TO THE PRESIDENT' and
inserting `REPORTS';
(2) in subsection (a), by striking `In General' and inserting `Biennial
Report to President'; and
(3) by adding at the end the following new subsection:
`(c) Semiannual Reports to Congress on Financial Status- Not later than
June 30 and December 31 of each year, the Director shall submit a report
to the Congress regarding the financial status of the national flood insurance
program under this title. Each such report shall describe the financial
status of the National Flood Insurance Fund and current and projected levels
of claims, premium receipts, expenses, and borrowing under the program.'.
END
