House Passes Flood Insurance Modernization

The House has just passed the Flood Insurance Reform and Modernization Act of 2007 by a vote of 263-146. The bill reauthorizes for five years the National Flood Insurance Program (NFIP), which was brought to the fore after Hurricane Katrina. The bill addresses many of the issues regarding insurance companies classifying damage as flood rather than wind so as to force the federal government to pay claims, which were brought up during extensive hearings in the new Congress. The bill addressed the issues by expanding the NFIP to provide for multiple peril coverage (wind and flood), and with an amendment introduced by Rep. Gene Taylor (MS-04) which prohibits a company that sells and services flood insurance policies from including language in its own windstorm policies that would exclude coverage of wind damage solely because flooding also contributed to the damage. It also provides for a new community outreach program, requires the updating and modernizing of flood maps, and addresses several other weaknesses in the program exposed by the 2005 hurricane season.

Rep. Gene Taylor spoke in favor of the bill:

“One of the gentlemen mentioned that the insurance companies have settled 90-something percent of the claims. Let me address that. I was pretty busy as you might guess after the storm. I put off meeting with my adjuster for two weeks. By the time I met with my adjuster I had heard dozens if not hundreds of my constituents, as I’m going around passing out MREs, telling me ‘they already told me they are not going to pay me… I had a homeowners’ policy, they’re not going to pay me.’ So by the time they came to my policy, to my house, I asked my agent: ‘Please don’t say a word. Each one of my steps is about three feet, let’s just count the steps until we find my roof.’ We passed off about 150 of them, 450 feet. I showed them my roof. Pointed out it was tin. Reminded them that tin doesn’t float. Showed them the holes where it had been ripped from the bolts. I said, ‘This is my roof, I’m the only guy in this neighborhood that has this style roof, this is my roof, and it’s 450 feet from where my house used to be. Now, let’s walk back to where my house used to be.’ ‘Miss, what do you have to say?’ – the claims adjuster. First words out of her mouth: ‘I see no evidence of wind damage. We are however prepared to pay you for flooding.’ To which I reminded her that was very sweet of State Farm, that’s not their money, that’s the nation’s money. What about the claim for that roof that flew over there?”

Majority Whip and Chair of the House Democratic Caucus Taskforce on Hurricane Katrina, James Clyburn, released the following statement on passage.

“Two years ago Hurricanes Katrina and Rita pummeled our Gulf Coast with heavy winds, storm surge, and levee breaches that killed more than 1,600 people and caused billions of dollars in damage to thousands of homes and businesses. Many Gulf Coast residents were left to weather an even stronger storm in Katrina and Rita's aftermath when their insurance companies abandoned them and refused to properly cover their losses.

“Today, the Democratic-led Congress passed the Flood Insurance Reform and Modernization Act, legislation designed to hold insurance companies more accountable and prevent the denials of coverage that so many Katrina and Rita survivors were rightfully entitled. Specifically, this bill authorizes the National Flood Insurance Program (NFIP) to provide for an optional multiple peril policy to cover both wind and flood risk in one insurance policy.

“While the multiple peril provisions fall short of being as comprehensive as the Democratic Leadership would like, we will use this bill as a building block in promoting future initiatives with more inclusive multiple peril coverage plans.

“Democrats returned to the Gulf Coast on the Second Anniversary of Hurricane Katrina committed to a strong partnership for the future with the region. Passage of today's legislation honors that commitment. I commend Congressman Gene Taylor for his advocacy and perseverance in pushing to get this important legislation to the House Floor.”

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