Side-by-Side Comparison of Flood Insurance Reform Legislation in the 110th Congress

Side-by-Side Comparison of Flood Insurance Reform Legislation in the 110th Congress

Order Code RL34367
Side-by-Side Comparison of Flood Insurance
Reform Legislation in the 110th Congress
Updated June 24, 2008
Rawle O. King
Analyst in Financial Economics and Risk Assessment
Government and Finance Division

Side-by-Side Comparison of Flood Insurance Reform
Legislation in the 110th Congress
Summary
In 1968, Congress established the National Flood Insurance Program (NFIP) in
response to severe flooding following a series of hurricanes in 1963, 1964, and 1965.
The key policy objectives of the NFIP were threefold: (1) reduce the nation’s flood
risk through floodplain management; (2) improve flood hazard data and risk
assessment by mapping the nation’s floodplains; and (3) make affordable flood
insurance widely available in communities that adopt and enforce measures to make
future construction safer from flooding. Fiscally, the program had been self-
supporting from the mid-1980s until the 2005 hurricanes. These storms exposed
serious weaknesses, which Congress is attempting to address in an effort to return the
NFIP to financial soundness.
In the aftermath of the 2005 hurricanes, the NFIP faced unprecedented financial
and regulatory strains. The program had to borrow $17.535 billion from the U.S.
Treasury in order to pay claims and expenses. Those concerned about program
challenges in the wake of the 2005 storms cite the increasing need to borrow from the
U.S. Treasury, substantial premium discounts or cross-subsidies among classes of
policyholders, outdated flood insurance rate maps, allegations of uneven compliance
with mandatory purchase requirements, and questions as to the performance and
efficiency of private insurers operating under the NFIP’s Write Your Own program.
Policymakers are now examining ways to strengthen the NFIP. On July 19,
2007, Representative Maxine Waters introduced H.R. 3121 to restore the financial
solvency of the national flood insurance program. Chairman Barney Frank had
introduced H.R. 1682, an earlier version of H.R. 3121, on March 26, 2007. H.R.
3121 is designed to make the program satisfy traditional criteria for actuarial
soundness by phasing in actuarial premiums for owners of certain commercial
properties and some residential properties that are not the owners’ primary residence.
H.R. 3121 would also: (1) raise civil penalties on federally regulated lenders who fail
to enforce mandatory purchase of flood insurance for mortgage holders; (2) increase
program participation incentives; (3) add coverage for wind as well as water damage;
and (4) encourage revisions to flood maps. H.R. 3121 passed the House on
September 27, 2007.
On May 13, 2008, the Senate approved S. 2284, a flood insurance reform bill
designed to increase the amount of premiums collected to meet the cost of expected
claims under the NFIP. S. 2284 is substantially similar to H.R. 3121, except that the
Senate legislation would forgive the program’s outstanding debt to the Treasury and
exclude coverage for wind damages.
Some stakeholder groups have expressed concerns about making abrupt changes
to the NFIP, particularly phasing out the subsidized premiums. They point to a need
for flood insurance reform but say changes should be made in the broader context of
program reauthorization. NFIP authority expires September 30, 2008.
This report will be updated as events warrant.

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Summary of H.R. 3121 and S. 2284 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
List of Tables
Table 1. Side-by-Side Comparison of Flood Insurance Reform Legislation:
H.R. 3121 and S. 2284 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Side-by-Side Comparison of Flood
Insurance Reform Legislation in the
110th Congress
Background
In 1968, Congress established the National Flood Insurance Program (NFIP) in
response to rising flood losses and as an alternative to ad hoc federal disaster
assistance. The NFIP’s insurance operation was self-supporting from the mid-1980s
until the 2005 hurricane season when Hurricanes Katrina, Rita, and Wilma exposed
serious flaws in the program. The 2005 Gulf Coast hurricanes were catastrophic
disasters that required an estimated $19.28 billion in claims payouts under the NFIP.
The program now faces unprecedented financial and regulatory challenges and a
$17.535 billion debt owed to the U.S. Treasury. Members of Congress are concerned
about the financial challenges facing the NFIP and the need to reauthorize the
program before September 30, 2008.
An important aspect of the financial challenges facing the program involves the
rebuilding of the Gulf Coast region and the adequacy of the NFIP to meet the future
commercial and multifamily real estate mortgage financial needs of all other
communities. Without federal flood insurance, for example, lenders will often not
be able to sell mortgages in coastal areas and other regions prone to flooding.
Without a reliable and uninterrupted source of affordable flood insurance, mortgage
credit and home ownership would be more expensive.
The NFIP’s financial status has prompted policymakers to focus on the strengths
and weaknesses of the NFIP in managing and financing the nation’s flood risk.
Those concerned about program weaknesses typically cite the increasing need to
borrow from the U.S. Treasury, substantial premium cross-subsidies among classes
of policyholders, outdated flood insurance rate maps, allegations of uneven
compliance with mandatory purchase requirements, and questions as to the
performance and efficiency of the NFIP’s Write Your Own program.
Legislative efforts are now underway in Congress to reform the NFIP. On
March 26, 2007, Representative Barney Frank introduced H.R. 1682, the Flood
Insurance Reform and Modernization Act of 2007, in order to restore the financial
solvency of the national flood insurance program. On July 19, 2007, Representative
Maxine Waters introduced H.R. 3121 — a bill that is substantially similar to H.R.
1682. As approved by the full House on September 27, 2007, H.R. 3121 would add
two new sections to provide for optional wind damage coverage through the flood
insurance program and to extend the NFIP five years through September 30, 2013.
Section 4 of the bill was modified to reflect minor changes in the phase-in of
actuarial rates beginning on January 1, 2011.

CRS-2
On May 13, 2008, the full Senate approved S. 2284 to reauthorize the NFIP
through 2013, increase the amount of premiums collected to reduce the cost of future
claims, and expand the program to address concerns brought forth after the 2004 and
2005 hurricane seasons. S. 2284 is substantially similar to H.R. 3121, except that the
Senate legislation would forgive the program’s $17.5 billion in outstanding debt to
the Treasury and exclude coverage for wind damages.
Some stakeholder groups have expressed concerns about making abrupt changes
to the NFIP, particularly phasing out the subsidized premiums. They point to a need
for flood insurance reform but say changes should be made in the broader context of
program reauthorization. NFIP authority expires September 30, 2008.
Many private insurers oppose the inclusion of wind coverage, claiming the
insurance industry is capable of insuring wind coverage. Opponents also stress that
including the wind peril in the program would expose the program to unnecessary
future indebtedness to the Treasury. Supporters insist that the federal flood insurance
program lost billions due to its lack of a wind damage provision. The reason is that claim
adjusters arguably attributed all damage, including obvious wind damages, to flood.

CRS-3
Summary of H.R. 3121 and S. 2284
H.R. 3121 is substantially similar to S. 2284 in that both bills would modify the
NFIP to bring more consumers into the system and gradually phase out premium
subsidies currently available for structures built prior to the mapping and
implementation of NFIP floodplain management requirements — the so-called Pre-
Flood Insurance Rate Maps (Pre-FIRM) structures.1 The bills would achieve these
outcomes in different ways.
Specifically, H.R. 3121 would: (1) phase out subsidized premiums for some
policyholders; (2) require FEMA for the first time to map the nation’s 500-year
floodplain and areas that would be flooded if a dam or levee failed; (3) notify
borrowers of requirements making flood insurance potentially available to all
homeowners, and not just to those in the 100-year floodplain, as part of the Real
Estate Settlement Procedures Act (RESPA) process; (4) provide for the purchase of
optional insurance coverage for wind as well as water damage; and (5) extend the
NFIP five years through September 30, 2013.
S. 2284, like H.R. 3121, would phase out the premium subsidies on pre-FIRM
properties, require mapping the 500-year floodplain and areas behind levees, require
borrowers to be notified about the availability of flood insurance, and extend the
program through fiscal 2013. The Senate bill, however, would: (1) forgive the debt
owed to the Treasury; (2) continue to exclude coverage for wind damage; (3)
establish a reserve fund that maintains a balance equal to 1% of total potential loss
exposure of the program to pay extraordinary future claims; (4) establish an
“ombudsman” or consumer advocate within FEMA to ensure that the Write Your
Own companies pay claims in an appropriate manner; and (5) create a nonpartisan
commission to examine the proper approach to manage catastrophic risks.
Table 1 provides a detailed side-by-side comparison of key provisions in H.R.
3121 and S. 2284.2
1 Pre-FIRM buildings pay heavily discounted rates on the first $35,000 of their structure’s
insured value, and full risk-based premium rates for the remaining insured value.
2 Both the House and Senate passed versions refer to the FEMA “Director.” In 2006,
Congress enacted legislation (P.L. 109-295, 120 Stat. 1396) that identified the head of
FEMA as the “Administrator.” Table 1 uses the title “Administrator.”

CRS-4
Table 1. Side-by-Side Comparison of Flood Insurance Reform Legislation: H.R. 3121 and S. 2284
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Title
Flood Insurance Reform and Modernization Act of 2007
Flood Insurance Reform and Modernization Act of 2007
Purpose
To protect the integrity of the NFIP by fully funding existing
To address the program’s debt to the U.S. Treasury and
legal obligations and increasing (1) incentives for homeowners
strengthen its financial solvency to ensure it can pay future claims.
and communities to participate in the program and (2)
(Sec. 102)
awareness of both flood risks and the quality of information
regarding such risks. Would also expand the NFIP to make
optional wind coverage available to NFIP participants.
(Sec. 2(a))
Program Extension
Would reauthorize the NFIP five years through September 30,
Same as H.R. 3121. (Sec. 104)
2013. (Sec. 27)
Reform of Premium Rate Structure
Increase in Annual
Would authorize annual increase in NFIP premiums to be
Would authorize annual increase in NFIP premiums to be capped
Limitation on Premium
capped at 15% (up from 10%). (Sec. 11)
at 15% (up from 10%) for most properties and 25% for properties
Increases
that have lost the entitlement to subsidized rates. (Sec. 106)
Reduction of Premium
Would require the Administrator of the Federal Emergency
Does not mention the phase-in of actuarial rates for pre-FIRM
Rate Subsidies
Management Agency (FEMA) to phase-in actuarial rates for
structures but, beginning 90 days after the enactment of the law,
nonresidential (commercial) pre-Flood Insurance Rate Map
the potential to obtain less than actuarial rates is eliminated for
(FIRM) properties and pre-FIRM properties that are not the
“prospective insureds.” This will apply to “prospective insureds”
primary residence of either the owner or a tenant on January 1,
who are policyholders of non-residential structures, non-primary
2011. FEMA would be authorized to assess an additional 15%
residences, severe repetitive loss properties, properties that
on top of routine annual rate increases for those properties
undergo improvements or renovations exceeding 30% of the fair
until the actuarial rate is achieved. Specifies that the aggregate
market value of the property, and any property that sustains
increase in chargeable premium rates during any 12-month
damage exceeding 50% of the fair market value of the property
period, however, may not exceed 20% for non-residential
after enactment of the bill. [See below section, “Phase-In of Rate
properties and 25% for non-primary residences.
Increases From Remapping” for 2-year phase-in of actuarial rates
(Sec. 4(c)(2)(B))
following the publication of new flood maps.] (Sec. 106)
Extension of Premium
Would require phase-in of actuarial rates on newly purchased
Would prohibit the Administrator from offering flood insurance
Rate Subsidy on New
pre-FIRM properties using the same phase-in structure that
to prospective insurers at less than actuarial rates if the property
Policies or Lapsed Policies
nonresidential and non-primary homes would be subject to
is not insured within 90 days of enactment of the law, the policy
under the legislation. (Sec. 4(b)(2)(C))
lapsed as a result of the deliberate choice of the policyholder or
the prospective insured refused to accept an offer for mitigation
assistance following a major disaster.
(Sec. 106(a))

CRS-5
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Minimum Annual
No similar provision.
Would increase the annual deductible from $1,000 to $1,500 for
Deductible for Pre-FIRM
pre-FIRM properties with coverage of less than $100,000, and
Properties
from $1,000 to $2,000 for pre-FIRM properties with coverage of
more than $100,000. Minimum post-FIRM property deductibles
would increase from $500 to $750 for coverage less than
$100,000 and from $500 to $1,000 for coverage greater than
$100,000. (Sec. 113)
5-Year Discount of Flood
Would clarify that people forced to purchase flood insurance
No similar provision.
Insurance Rates for
as a result of new flood insurance rate maps who have lived in
Properties in Formerly
an area where the levees were previously certified, and have
Protected Areas
now been decertified, will receive a grace period of five years
in which they will be entitled to a 50% reduction in insurance
premiums while the levees are being recertified. (Sec. 22(e))
Phase-In of Rate Increases
Would require NFIP to provide a 5-year phase-in of flood
Would require that owners of properties mapped into the 100-year
From Remapping
insurance premiums for newly covered low-cost properties
flood plain must pay rates that accurately reflect the current risk
placed within a floodplain through an updating of the flood
of flood to such properties. Properties covered by flood insurance
insurance rate maps if the value of the home does not exceed
at the time of remapping will have the new rates phased in over a
75% of the state median home value. (Sec. 22(f))
two year period at the rate of 50% per year. The practical
application of this provision would be a prohibition against
NFIP’s current practice of allowing properties that are mapped
into the 100-year flood plain to indefinitely pay rates that reflect
their old risk level. Would also prohibit the Administrator from
adjusting the chargeable premium rate for properties in all areas
located in the St. Louis District of the Mission Valley Division of
the U.S. Army Corp of Engineers. (Sec. 108)
Considerations in
No similar provision.
Would require NFIP to use actuarial principles in determining
Determining Chargeable
rates, and to consider catastrophic loss years in the calculation of
Premium
historical annual obligations of the NFIP. (Sec. 114)
Mandatory Purchase Requirements
Expansion of Mandatory
Would require the Government Accountability Office (GAO)
Would require that state chartered lending institutions must be
Coverage Requirement to
to conduct a study of the impact of amending the Flood
subject to regulations by that state that are consistent with the
State Regulated Lending
Disaster Protection Act of 1973 to extend NFIP’s mandatory
NFIP’s mandatory flood insurance purchase requirements.
Institution
purchase requirements to properties in special flood hazard
(Sec. 109)
areas (SFHA) that are covered by a mortgage loan issued by a
non-federally regulated lending institution. (Sec. 3(a)(2))

CRS-6
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Grants for Outreach to
Would authorize $50 million for each of fiscal years 2008
No similar provision.
Property Owners and
through 2012 for FEMA to make grants to local government
Renters
agencies for outreach activities designed to encourage and
facilitate the purchase of flood insurance. Local governments
would use the grants to notify owners and renters about SFHA
and the mandatory purchase requirement, and educate such
owners and renters regarding the flood risk and the benefits
and costs of maintaining or acquiring flood insurance. FEMA
would be required to submit a report to Congress identifying
and describing the marketing and outreach efforts under the
NFIP. (Sec. 15(a))
Notification to Tenants of
Would require the FEMA Administrator to notify tenants of
No similar provision.
Availability of Contents
the availability of contents insurance and where to obtain
Insurance
coverage. Sets out contents of the notice. (Sec. 10)
Notice of Flood Insurance
Would amend Section 5(b) of the Real Estate Settlement
Same as H.R. 3121. (Sec. 124)
Availability Under
Procedures Act of 1974 (RESPA) to create a new notice
RESPA’s Good Faith
provision to ensure that individuals who purchase homes in
Estimate
areas of elevated flood risk (whether or not the property is
located in a special flood hazard area) are made aware of the
risk and given an opportunity to purchase flood insurance.
(Sec. 20)
Civil Penalties for Lending
Would increase the civil penalty from $350 to $2,000 for
Would increase the civil penalty from $350 to $2,000 for lenders
Institutions
lenders that do not enforce the mandatory flood insurance
that do not enforce the mandatory flood insurance purchasing
purchasing requirements. The annual cap on fines that can be
requirement. (Sec. 110)
levied against a lender would increase from $100,000 to
$1,000,000. Would also add a “safe harbor” provision to
protect mortgage lenders from “technical noncompliance” with
flood insurance requirements and “unintended clerical errors”
by stating that no penalties may be imposed on lenders who
make good faith efforts to comply with the requirements. The
$1 million cap would not apply to regulated lending
institutions during a calendar year if, in any three of the five
calendar years immediately preceding that calendar year, the
institution was assessed penalties that totaled $1 million.
(Sec. 6)

CRS-7
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Escrow of Flood Insurance
Would require that lending institutions place flood insurance
Would require state and federally-regulated lenders to include
Payments
payments into an escrow account on behalf of the borrower.
NFIP premium amounts with each mortgage payments with these
The requirement would apply to any mortgage outstanding or
amounts being placed in escrow to pay the NFIP premium.
entered into on or after the expiration of the 2-year period
(Sec. 111(a))
beginning on the date of enactment of law.
(Sec. 20)
Study of Economic Effects
Would require that the FEMA Administrator study and report
No similar provision. However, would require GAO to report to
of Charging Actuarially-
to Congress on the economic effects of charging full actuarial
Congress within one year of the enactment of the law the number
Based Premium Rates for
risk premiums on non-primary residence and non-residential
and experience of NFIP insured properties constructed prior to
Pre-FIRM Structures
pre-FIRM structures. (Sec. 29)
1976 (pre-FIRM structures) or area mapping. (Sec. 132(c))
Coverage
Maximum Coverage
Would increase coverage limits from $250,000 (structure) and
No similar provision.
Limits
$100,000 (contents) to $335,000 (structure) and $135,000
(contents) for any single-family dwelling and from $500,000
to $670,000 for structures and related contents of
nonresidential properties. (Sec. 8)
Mandatory Coverage
Would require the GAO to study the regulatory, financial, and
Would require the FEMA Administrator to issue new regulations
Areas
economic feasibility (i.e., costs of home-ownership, actuarial
establishing a revised definition of areas of SFHA that reflect a
soundness of program, lender compliance) of expanding the
residual risk, including areas located behind levees, dams, or other
standard for mandatory flood insurance purchase to include
man-made structures. (Sec. 107(b))
properties in areas of residual risk that would flood if not for
the presence of structural flood control measures such as
Would require that homes located behind levees, dams, and other
levees, floodwalls, and dams. (Sec. 3(a)(2))
man-made structures become part of special flood hazard areas
(SFHA) and therefore subject to the insurance purchase
requirements, but only after the mapping of all residual risk areas
in the United States. (Sec. 107(c))
Availability of Insurance
No similar provision.
Would authorize the Administrator to make flood insurance
for Multi-family Properties
available to cover residential properties of more than four units.
The maximum coverage amount would be equal to the coverage
amount made available to commercial properties, which is
$500,000 for structure and $500,000 for contents. (Sec. 105)
Waiting Period for
Would make coverage immediately effective if a policy is
No similar provision.
Effective Date of Policies
purchased within 30 days of the purchase or transfer of a
property. (Sec. 5)

CRS-8
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
New Lines of Coverage
Would provide optional coverage for: (1) additional living
No similar provision.
expenses following a flood loss when the residence is unfit to
live in, (2) residential basement improvements (i.e., crawl
spaces and other enclosed areas under buildings), (3) business
interruption for commercial multifamily property, and (4) full
replacement cost of the contents of properties. (Sec. 9)
Extension of Pilot Program
Would extend through 2012 the authorization of
Would authorize the appropriation of $240 million and extend
of Mitigation of Severe
appropriations ($40 million a year from the National Flood
the severe repetitive loss property pilot program through fiscal
Repetitive Loss Properties
Insurance Fund) for the mitigation pilot program that funds
year 2013.
preventive measures for severe repetitive loss properties
(Sec. 130)
(SRLP). SRLPs are defined as those that sustain four or more
losses totaling more than $20,000, or two or more losses that
cumulatively exceed the value of the property. (Sec. 17)
Clarification of
Would require the Administrator of FEMA, within three
Would require that NFIP insurance policies explicitly state all
Replacement Cost
months of enactment, to: (1) issue plain language regulations
conditions, exclusions and other limitations in plain English and
Provisions, Forms, and
to clarify the applicability of replacement cost coverage for
in boldface type twice the font size of the body of the insurance
Policy Language
contents in the Standard Flood Insurance Policy; (2) revise any
policy. Violations of this requirement would be subject to a fine
regulations, forms, notices, guidance, and publications to more
of not more than $50,000 at the discretion of the Administrator.
clearly describe the meaning of full cost of repair or
(Sec. 134)
replacement under the replacement cost coverage; and (3)
revise the language in flood insurance policies regarding rating
and coverage, such as classification of buildings, basements,
crawl spaces, detached garages, enclosures below elevated
buildings, and replacement cost, to make flood policy
provisions consistent with language used widely in
homeowners policies. (Sec. 24)
Financial/Borrowing Authority
Borrowing Authority Debt
No similar provision.
Would eliminate any obligations owed to the U.S. Treasury by the
Forgiveness
NFIP to the extent such borrowed sums were used to fund the
payment of claims resulting from the hurricanes of 2005.
(Sec. 112)

CRS-9
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Borrowing Authority
No similar provision.
Would decrease the borrowing authority for the NFIP from
Limits
$20.775 to $1.5 billion. (Sec. 112)
Reserve Fund
No similar provision.
Would establish in the U.S. Treasury the National Flood Insurance
Reserve Fund to meet the expected future obligations of the NFIP
in higher-than-average loss years. The Fund would be capitalized
in an amount equal to 1% of total potential loss exposure of all
outstanding flood insurance policies in force during the prior
fiscal year. NFIP will be required to contribute 7.5% of reserve
annually until the fund is fully capitalized. After achieving the
target reserve, any reduction in the reserve would be replaced
through contributions of at least 7.5% of the target amount of the
reserve annually. If NFIP is not able to make the minimum
contribution it must report that fact to Congress. (Sec. 115)
Repayment Plan for
Would require FEMA to submit a report to Congress that
Would require that whenever the NFIP has to borrow from the
Borrowing Authority
includes a plan for repaying borrowed funds within 10 years.
Treasury, FEMA would submit to Treasury and Congress a
(Sec. 12)
schedule for repayment of funds. This reporting requirement
would continue every six months thereafter until the borrowed
funds are repaid. (Sed. 116)
Additional NFIP Staff
Would authorize to be appropriated such sums as may be
No similar provision.
necessary for the NFIP to hire additional staff to implement
the provisions of this Act. (Sec. 25)
Mitigation
Flood Mitigation
Would eliminate the limitation on aggregate amount of
No similar provision.
Assistance Program
assistance and allow for the use of Flood Mitigation Assistance
(FMA) funds to demolish and rebuild damaged property.
Amounts made available would not be subject to offsetting
collections through premium rates for flood insurance
coverage. (Sec. 18)

CRS-10
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Mitigation Grants for
Would direct FEMA to provide mitigation grants to individual
No similar provision.
Individual Repetitive
owners of repetitive loss properties in communities that do not
Claims Properties
participate in the NFIP. [These communities might not
participate because they have withdrawn from the NFIP or the
community cannot meet the federal requirements for
qualifying for FEMA funding.] (Sec. 16)
Verification and
Would direct FEMA to develop a plan to verify that the
No similar provision.
Maintenance of Flood
recipients of Homeowner Grant Assistance Program in
Insurance on Homeowner
Mississippi and Road Home Grants in Louisiana, funded by
Assistance Grants in
Department of Housing and Urban Development Community
Mississippi and Road
Development Block Grants, maintain flood insurance on their
Home Grants in Louisiana
properties as required as a condition of receiving the grants.
(Sec. 32)
Claims and Write-Your-Own (WYO) Insurers
Administrative Expense of
Would require Write-Your-Own (WYO) companies to submit
Would require the FEMA Administrator not later than 180 days
Write-Your-Own
to FEMA an annual report of all administrative and operational
after enactment to conduct a rulemaking proceeding to devise a
Insurance Companies
costs of the program, along with a biennial independent audit
data collection methodology to allow FEMA to collect consistent
conducted by a certified public accountant. Would require the
information on the expenses of WYO companies. Would require
FEMA Administrator review the records and audits to
WYO companies, within 60 days after the effective date of the
determine if such payments are reasonable. (Sec. 31)
final rule, to submit 5 years of expense levels for selling, writing,
and servicing policies based on that methodology. The
Administrator would be required to conduct a rule-making
proceeding to formulate revised expense reimbursement levels for
the WYO companies expenses in selling, writing, and servicing
flood insurance policies. Would also require the Administrator to
submit a report to Congress on the rationale and purpose of the
rule and degree to which such rule accurately represents the true
operating cost and expenses of WYO companies.
(Sec. 129)
Information from Write-
No similar provision.
Would require that within 20 days of enactment, WYO insurers
Your-Own Insurers
must provide to the FEMA Administrator any biennial report
prepared in the prior five years. The Administrator must provide
these reports to GAO not later than 10 days after receiving the
report for the WYO insurer. An insurer that fails to provide the
report would be reported to Congress by the Administrator and
fined $1,000 per day. (Sec. 129(a))

CRS-11
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
FEMA Participation in
Would permit state insurance commissioners to submit a
Same as H.R. 3121. (Sec. 126)
State Disaster Claims
request to the Administrator of FEMA to have FEMA
Mediation Programs
participate in state-sponsored nonbinding mediation of
catastrophe-related insurance claims that may involve a
combination of flood and other losses. All statements made
and documents produced during the mediation would be
deemed privileged, and would be considered confidential
settlement negotiations made in anticipation of litigation.
Participation in the mediation would not affect or expand the
liability or rights or obligations of any party in contract.
FEMA would not be required to pay any mediation fees. (Sec.
13)
Reiteration of FEMA
Under the Bunning-Bereuter-Blumenauer Flood Insurance
Would reiterate the responsibility of FEMA under the 2004
Responsibility Under the
Reform Act of 2004 (P.L. 108-264; 118 Stat. 712), would
Reform Act to establish minimum training requirements, and
2004 Reform Act
“again” direct FEMA to establish an appeals process within 90
require that FEMA report to Congress within three months after
days of enactment that policyholders can use to resolve
enactment, describing the implementation of each provision in the
decisions of the Administrator relating to claims, proofs of
2004 Reform Act.
loss, and loss estimates.
(Sec. 127)
Would require the Administrator to continue to work with the
insurance industry, state insurance regulators, and other
interested parties to implement previously developed minimum
training and education standards for all insurance agents who
sell flood insurance policies. (Sec. 21)
Would require the Administrator to submit a report to
Congress within six months describing FEMA’s
implementation of provisions in the Reform Act of 2004.
(Sec. 21)
Extension of Deadline for
Would extend to 180 days the period of time policyholders
No similar provision.
Filing Proof of Loss
have to file proof of loss of property. The FEMA
Administrator would not be able to deny a claim for damage
based solely on the failure of the policyholder to meet such
deadline if the insured demonstrates a good cause for such
failure. (Sec. 26)
Payment of Claims to
Would prohibit FEMA from enforcing penalties assessed
Same as H.R. 3121. (Sec. 117)
Condominium Owners
against individual condominium owners where the
condominium association is underinsured. (Sec. 30)
Extension of Pilot Program
Would authorize an extension of the pilot program for
Same as H.R. 3121. (Sec. 30)

CRS-12
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
for Mitigation of Severe
mitigation of severe repetitive loss properties from FY2008
Repetitive Loss Properties
through 2012. (Sec. 17)
Authority of FEMA to
No similar provision.
Would authorize the FEMA Administrator to collect from WYO
Collect Information on
insurers any information and data needed to determine the
Claims Payments
accuracy of flood claims resolution. The type of information to
be collected would include (1) adjuster flood and wind damage
assessments; (2) amount paid for wind and flood elements of the
claim; (3) total amount paid to the claimant from all parties as a
result of the event; (4) amount paid by the insurer for other flood
losses; and (5) total amount paid to the policyholder by the insurer
for all flood. (Sec. 128)
Multiple Peril Coverage for Flood and Windstorm Losses
Multiperil Coverage for
Amends Section 1304 of the National Flood Insurance Act of
No similar provision.
Flood and Windstorm
1968 to enable the purchase of optional insurance against both
flood and windstorm losses. Requires communities that
participate in the NFIP to adopt adequate criteria for land
management and use. Would authorize the FEMA Administrator
to study and investigate to determine appropriate measures (e.g.,
laws, regulations, and ordinance relating) that could be adopted in
windstorm-prone areas with respect to windstorm risks, zoning
building codes, building permits, subdivision and other building
restrictions for such areas, and windstorm damage prevention. The
Administrator would be required to use the study results to
establish comprehensive criteria designed to reduce damages
caused by windstorms. Establishes limits on the amount of
coverage to not exceed the lesser of the replacement cost for
covered losses or $500,000 for single-family dwelling, $1,000,000
for non-residential structure and $750,000 for contents. (Sec. 7)
Would allow multiple peril and flood insurance coverage of
multiple dwelling residential structures up to the total number of
dwelling units times the maximum coverage limit per residential
unit (Sec. 7(a)(7)(A)). Prohibits a WYO company from including
language in its own homeowners’ and windstorm policies that
would exclude coverage of wind damage solely because flooding
also contributed to the damage. (Sec. 35)
Would require that the contract between the WYO and the NFIP
state that the insurer has a fiduciary responsibility to federal
taxpayers and will act in the best interests of the NFIP. (Sec. 35)

CRS-13
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Flood Mapping
National Flood Mapping
Would require the Administrator in consultation with the
Would require FEMA to establish an ongoing flood mapping
Program
Technical Mapping Advisory Council to establish an ongoing
program to review, update and maintain flood insurance rate
program to review, update, and maintain flood insurance rate
maps, including all flood-risk zone areas within the 100-year and
maps. Each map shall include a depiction of the 500-year
500-year floodplains and areas of residual risk, including those
floodplain, as well as “residual risk” areas behind levees and
protected by levees, dams, and other man-made structures.
flood control dams. Updated flood maps would include
(Sec. 119)
relevant information on coastal inundation provided by the
Army Corps of Engineers, storm surge modeling by the
Administrator would be authorized to establish or update flood-
National Oceanic and Atmospheric Administration (NOAA),
risk zone data in residual risk areas and make estimates of
and stream flows, watershed characteristics, and topography
probable flood caused losses for the various flood risk zones.
provided by the U.S. Geological Survey (USGS). Would
(Sec. 119)
require that no changes in flood insurance status can go into
effect until the remapping process is completed for the entire
Army Corp of Engineers district affected by the map.
(Sec. 22(a))
Would require the Administrator to: (1) establish standards to
FEMA would be required to use the most accurate and consistent
ensure the adequacy and consistency of maps and methods of
data in mapping program. (Sec. 122)
data collection and analysis; (2) give priority to updating and
maintaining maps of coastal areas affected by Hurricanes
Katrina and Rita in order to provide guidance with respect to
hurricane recovery efforts; and (3) submit a report to Congress
that describes the flood map modernization activities by June
30 of each year.
Would require FEMA, when practical, to utilize emerging
Would require the various federal departments to work together
weather forecasting technologies, and consider the impacts of
to coordinate mapping and risk determination budgeting, and
global warming and the potential future impacts of global
requires the Office of Management and Budget (OMB), FEMA
climate change-related weather events, in assessing flood and
and other federal agencies to submit a joint report to Congress
storm risks.
within 30 days of the budget submission on the crosscutting
budget issues with respect to mapping. (Sec. 121(a))
After each flood map is updated, FEMA shall, in consultation
Same as H.R. 3121. (Sec. 119(d)(2))
with the chief executive officer of each community affected,
conduct a program to educate the community about the
updated flood insurance maps.
Would authorize the appropriation of $400 million for each of
Same as H.R. 3121. (Sec. 119)
fiscal years 2008 through 2013. (Sec. 22)

CRS-14
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Floodplain management
No similar provision.
Would require the Secretary of Department of Homeland Security,
Coordination
the Administrator of FEMA, the Director of the Office of
Management and Budget (OMB), and the heads of each federal
department or agency to work together to ensure that flood risk
determination data and geospatial data are shared among all
federal agencies in order to coordinate the efforts of the nation to
reduce its vulnerability to flood hazards. (Sec. 121(a))
The Director of OMB, in coordination with FEMA, USGS,
NOAA, USACE and other federal agencies, must submit to
Congress, within 30 days of submitting the budget of the United
States, an interagency budget crosscut report showing the budget
proposed for each of the federal agencies working on flood risk
determination data and digital elevation models.
Sec. 121(a))
Removal of Limitation on
No similar provision.
Would remove the current prohibition that prevents states from
State Contributions for
contributing greater than 50% of the cost of revising and updating
Updating Flood Maps
map modernization. (Sec. 120)
Nonmandatory
Would authorize FEMA to include a note on flood insurance
Would require the FEMA Administrator to provide notice to any
Participation in the 500-
rate maps identifying 100-year and 500-year certified levees
community located in the 500-year floodplain within six months
Year Floodplain Areas
and encourage property owners to evaluate their risk of
after the date of completion of the initial mapping of the 500-year
flooding. Would clarify that the note shall not be considered
floodplain. Regulatory lending institutions, as a condition of
a legal requirement of participation in the NFIP.
making loans secured by property located within the 500-year
(Sec. 36)
floodplain, would be required to notify the purchaser or lessee and
the servicer of the loan that such properties is within the 500-year
floodplain. Federal and state lenders would be subject to penalties
for noncompliance. (Sec. 123)
Would exempt property within the 500-year floodplain from the
mandatory purchase requirement. The NFIP and federal or state
lending institutions must notify communities that they are located
within the 500-year floodplain (i.e., an area with at least a 0.2%
chance of being inundated with water in any year). [Owners of
properties within the 500-year floodplain, but outside of the 100-
year floodplain, would not be subject to mandatory purchase
requirements but might voluntarily purchase flood insurance upon
receiving notification of potential risk. ] (Sec. 123)

CRS-15
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Technical Mapping
Would reestablish the Technical Mapping Advisory Council,
Similar to H.R. 3121, but also would add two additional members
Advisory Council
and establish terms of office, to provide direction and
to the Advisory Council, one representing a state agency that has
assistance to the Administrator of FEMA concerning flood
entered into a cooperative technical partnership with the
mapping activities. The Council would include, among others,
Administrator and has demonstrated the capability to produce
representatives from the U.S. Army Corps of Engineers, local
FIRMs and the other a local governmental agency that has done
and regional flood and storm water agencies, state geographic
the same.
information coordinators, and flood insurance servicing
(Sec. 118(b))
companies. (Sec. 22(b))
Post-Disaster Flood
Would allow the Administrator of FEMA to issue interim
No similar provision.
Elevation Determinations
flood elevation requirements for any areas affected by flood-
related disaster. Interim elevation determinations would take
effect immediately upon issuance and may remain in effect
until FEMA established new flood elevations for such area.
(Sec. 22(c))
Communities may request updates after repairs to flood
projects, at no cost. (Sec. 22(d))
Building Codes in
Would authorize FEMA to submit a report to Congress on the
See section below entitled, “FEMA Report on Building Codes.”
Floodplain Management
regulatory, financial and economic impacts of including
(Sec. 135)
Criteria
nationally recognized building codes as part of the floodplain
management criteria of the NFIP. (Sec. 28)
Interagency Coordination
No similar provision.
Would require FEMA to contract with the National Academy of
Study
Public Administration to conduct a study on how FEMA can
improve interagency and intergovernmental coordination on flood
mapping and funding, and how FEMA can establish joint funding
mechanisms with other federal agencies and units of state and
local governments to share the collection and use of data for
mapping.
(Sec. 122)
Testing of New
No similar provision.
Would authorize the building of temporary residential structures
Floodproofing
for the purpose of testing new floodproofing technologies. This
Technologies
activity would not be considered in violation of any flood risk
mitigation plan developed by a state or community and approved
by the Administrator of FEMA. (Sec. 125)

CRS-16
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Notification of Appeal of
Would require FEMA Administrator to notify the chief
No similar provision.
Map Changes and
executive officer of local communities about their right to
Notification of
appeal projected base flood elevation determinations, and the
Establishment of Flood
contact information of the person who handles appeals at
Elevations
FEMA. The Administrator would also be required to publish
a notice in the Federal Register and local newspapers of such
change and provide written notification by first class mail to
each property affected by a proposed change in flood
elevation, prior to the 90-day appeal period. Notification
would include an explanation of the appeals process, the status
of each property with respect to flood zone and flood
insurance requirements under the act, and contact information
for responsible officials. (Sec. 23)
Coordination of Flood
No similar provision.
Would require the leadership of DHS, OMB and other federal
Risk Determination Data
agencies to work together to ensure that flood risk determination
Sharing and Budgeting
data and geospatial data are appropriately shared among federal
Efforts
agencies in order to coordinate the effort of the nation to reduce
its vulnerability to flooding hazards. Would require the Director
of OMB, in consultation with FEMA, USGS, NOAA, and the
Army Corp of Engineers, to submit an interagency budget
crosscut report that displays the budget proposed for each of the
federal agencies working on flood risk determination data and
digital elevation models. (Sec. 121)
Flood Insurance Advocate
Would authorize the creation of the position of National Flood Would establish an Office of the Flood Insurance Advocate with
Insurance Advocate in FEMA, who would report to FEMA
the power to assist claimants with NFIP claims, including
Administrator. The national advocate would transmit a
intervention in specific claims; identify changes that could resolve
comprehensive report to Congress about the major problems
problems claimants experience with flood claims; audit and
facing the NFIP and report to Congress 6 months after
investigate insurers to ensure that only flood losses are allocated
enactment about the feasibility and effectiveness of
to NFIP policies; investigate insurers to ensure they are settling
establishing an Office of the Flood Insurance Advocate,
flood claims in good faith; conduct investigations relating the
headed by the National Flood Insurance Advocate, to assist
flood program to promote efficiency and reduce fraud and
insureds in resolving problems with the NFIP, including issues
conflicts of interests; request documents and testimony; and
related to bureaucratic obstacles in the event of a disaster. The
establish regional flood insurance advocates. (Sec. 131)
Administrator would be required to submit the report to
Congress. (Sec. 34)

CRS-17
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Commission on Natural Catastrophe Risk Management and Insurance
Commission on Natural
No similar provision.
Would establish a 16-member nonpartisan Commission on Natural
Catastrophe Risk
Catastrophe Risk Management and Insurance (“Commission”) to
Management and
examine the risks posed to the United States by natural
Insurance
catastrophes, and the means of mitigating those risks and paying
for losses caused by natural catastrophes. The Commission would
examine such issues as: (1) the condition of the property and
casualty insurance and reinsurance markets prior to and in the
aftermath of Hurricane Katrina, Rita, and Wilma in 2005, and the
four major hurricanes that struck in 2004; (2) the current ability of
states, communities, and individuals to mitigate their natural
catastrophe risks, including the affordability and availability of
such activities; (3) the exposure of the U.S. to natural
catastrophes; (4) the catastrophic insurance and reinsurance
markets and the relevant practices in providing insurance
protection; (5) implementation of a catastrophic insurance system
that can resolve key obstacles impeding broader implementation
of catastrophic risk management and financing with insurance; (6)
the financial feasibility of a national, regional, or other pooling
mechanism designed to provide adequate insurance coverage and
increased underwriting capacity to insurers and reinsurers,
including private-public partnerships to increase insurance
capacity in constrained markets; (7) methods to promote public
insurance policies to reduce losses caused by natural catastrophes
in the uninsured sectors of the U.S. population; (8) approaches to
address access to insurance in low-income communities; (9) the
impact of federal and state laws, regulations, and policies on the
affordability and availability of catastrophe insurance and the
capacity of private catastrophe insurance markets; (10) the
financial condition of state residual markets and catastrophe funds
in high-risk regions; (11) the role that innovation in financial
services, and specifically risked-linked securities, in improving the
affordability and availability of natural catastrophe insurance; (12)
the need for strengthened land use regulations and building codes
in states at high risk for natural catastrophes; and (13) the
appropriate role, if any, for the federal government in stabilizing
the property and casualty insurance and reinsurance markets. (Sec
205)

CRS-18
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
No similar provision.
The Commission would submit a report to Congress not later than
9 months after enactment with a possible 3-month extension.
(Sec. 206)
No similar provision.
The Commission would terminate 90 days after the date on which
the Commission submits its report. (Sec. 209)
No similar provision.
Would authorize to be appropriated such sums as may be
necessary to complete the work of the Commission. (Sec. 210)
GAO Studies and Other Reports
GAO Study of Methods to
Would direct GAO to conduct a study of potential methods,
No similar provision.
Increase Participation of
practices, and incentives that would increase the degree to
Low-Income Families in
which low-income property owners living in high-risk areas
the NFIP
participate in the NFIP. The study would analyze the
feasibility of providing coverage to low-income families at
discounted rates, the amounts of the discount to make it
affordable, and the extent to which low-income families would
be affected by expanding the mandatory purchase
requirements. (Sec. 19)
Report on Financial
Would require FEMA to submit an annual report to Congress
Would require GAO to conduct a study and submit a report to
Conditions of NFIP
on the financial status of the program. The report would
Congress on NFIP’s activities and financial health, including the
include information on the current and projected levels of
amount paid in premiums, losses, expenses, number of policies,
claims, premium receipts, expenses, and Treasury borrowing
insurance in force, estimate of average loss year and a description
under the program. (Sec. 14)
and amount of claims paid. (Sec. 132(b))
GAO Report on
Would require the GAO to study the regulatory, financial, and
Would require GAO to submit a report to Congress on: (1) the
Expanding the NFIP
economic feasibility (i.e., costs of home-ownership, actuarial
number of flood insurance policyholders currently insured; (2) the
soundness of program, lender compliance) of expanding the
increased losses the NFIP would have sustained during the 2004
standard for mandatory flood insurance purchase requirement
and 2005 hurricane seasons if the program had insured all policies
to include (1) properties in areas of residual risk that would
up to $417,000, and (3) the availability in the private marketplace
flood if not for the presence of structural flood control
of flood insurance coverage in amounts that exceed the current
measures such as levees, floodwalls, and dams (Sec. 3(a)(2));
coverage limits. (Sec. 132(a))
and (2) properties that are located in any area having special
flood hazards and which secures the repayment of a non-
federally related loan. (Sec. 3(a)(3)).

CRS-19
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
GAO Review of FEMA
No similar provision.
Would require GAO, in conjunction with the DHS Inspector
Contractors
Generals Office, to review the three largest contractors FEMA
uses in administering the NFIP. (Sec. 132(d))
GAO Study on Pre-FIRM
Would authorize GAO to issue a report on the status of the
Would require GAO to conduct a study of pre-FIRM structures
Structures
pre-FIRM properties including the number of properties, cost
that are receiving discounted premium rates. This study would be
of providing coverage, the rate at which such properties will
designed to determine the number and types of pre-FIRM
cease to be covered under the program and the effects of the
structures and who owns the properties, their locations, and
2004 Reform Act will have on pre-FIRM properties. (Sec. 3)
property values. (Sec. 132(c))
GAO Study of Multiperil
Would authorize GAO to conduct a study of the effects of the
No similar provision.
Insurance Program on
multiperil insurance program on enrollment and pricing of
State Residual Markets
state residual property and casualty markets or plans and state
catastrophe plans. (Sec. 33)
FEMA Report on Building
Would authorize FEMA to submit a report to Congress on the
Would require FEMA to conduct a study and submit a report to
Codes
regulatory, financial and economic impacts of including
Congress on the impact, effectiveness and feasibility of including
nationally recognized building codes as part of the floodplain
nationally recognized building codes as part of FEMA’s
management criteria of the NFIP. (Sec. 28)
floodplain management criteria. The study would determine,
among other things, the regulatory, financial, and economic
impacts of the building code requirement on homeowners, states
and local communities, local land use policies, FEMA, the state
and local community resources needed to enforce this requirement
and the effectiveness of the codes in reducing flood-related
damage to buildings and contents. (Sec. 135)
GAO Feasibility Study on
No similar provision.
Would require GAO to submit a report to Congress on the
Private Reinsurance
feasibility of purchasing private reinsurance or retrocessionary
coverage to underwrite primary private insurers for flood losses
and the estimated potential total savings to the taxpayer of taking
this action. (Sec. 133)
WYO Insurer Expense
No similar provision.
Would require FEMA within 6 months of enactment to develop a
process to collect expense information from WYO insurers and
revise expense reimbursement process. GAO would receive data
from the Administrator and report to Congress on the
effectiveness of the new process. (Sec. 129)

CRS-20
Provision
H.R. 3121 (Waters)
S. 2284
(Passed by House 9/27/07)
(Passed by Senate 5/13/08)
Miscellaneous Provision
Strategic Petroleum
No similar provision.
Would suspend federal government petroleum acquisition for the
Reserves
Strategic Petroleum Reserves. (Sec. 302)
Reimbursement of
No similar provision.
Would modify the project for flood control, Big Sioux River and
Expenses in Flood Control
Skunk Creek, Sioux Falls, South Dakota to authorize the
Projects
reimbursement of the non-federal share of project, only if
additional federal funds are appropriated for that purpose.
(Sec. 301)
Source: Congressional Research Service examination of legislation.