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

Side-by-Side Comparison of Flood Insurance
Reform Legislation in the 110 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
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policyholders, outdated flood insurance rate maps, allegations of uneven compliance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.

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
110 Congress
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.

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.

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.”

Table 1. Side-by-Side Comparison of Flood Insurance Reform Legislation: H.R. 3121 and S. 2284
ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
TitleFlood Insurance Reform and Modernization Act of 2007Flood Insurance Reform and Modernization Act of 2007
PurposeTo protect the integrity of the NFIP by fully funding existingTo address the programs debt to the U.S. Treasury and
legal obligations and increasing (1) incentives for homeownersstrengthen 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 ExtensionWould reauthorize the NFIP five years through September 30,Same as H.R. 3121. (Sec. 104)
2013. (Sec. 27)
Reform of Premium Rate Structure
iki/CRS-RL34367Increase in AnnualWould authorize annual increase in NFIP premiums to beWould authorize annual increase in NFIP premiums to be capped
g/wLimitation on Premiumcapped at 15% (up from 10%). (Sec. 11)at 15% (up from 10%) for most properties and 25% for properties
s.orIncreasesthat have lost the entitlement to subsidized rates. (Sec. 106)
Reduction of PremiumWould require the Administrator of the Federal EmergencyDoes not mention the phase-in of actuarial rates for pre-FIRM
://wikiRate SubsidiesManagement Agency (FEMA) to phase-in actuarial rates forstructures but, beginning 90 days after the enactment of the law,
httpnonresidential (commercial) pre-Flood Insurance Rate Mapthe potential to obtain less than actuarial rates is eliminated for
(FIRM) properties and pre-FIRM properties that are not theprospective insureds.” This will apply toprospective 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 propertiesundergo improvements or renovations exceeding 30% of the fair
until the actuarial rate is achieved. Specifies that the aggregatemarket value of the property, and any property that sustains
increase in chargeable premium rates during any 12-monthdamage exceeding 50% of the fair market value of the property
period, however, may not exceed 20% for non-residentialafter 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 PremiumWould require phase-in of actuarial rates on newly purchasedWould prohibit the Administrator from offering flood insurance
Rate Subsidy on Newpre-FIRM properties using the same phase-in structure thatto prospective insurers at less than actuarial rates if the property
Policies or Lapsed Policiesnonresidential and non-primary homes would be subject tois 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))

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Minimum AnnualNo similar provision.Would increase the annual deductible from $1,000 to $1,500 for
Deductible for Pre-FIRMpre-FIRM properties with coverage of less than $100,000, and
Propertiesfrom $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 FloodWould clarify that people forced to purchase flood insuranceNo similar provision.
Insurance Rates foras a result of new flood insurance rate maps who have lived in
Properties in Formerlyan area where the levees were previously certified, and have
Protected Areasnow 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 IncreasesWould require NFIP to provide a 5-year phase-in of floodWould require that owners of properties mapped into the 100-year
From Remappinginsurance premiums for newly covered low-cost propertiesflood plain must pay rates that accurately reflect the current risk
iki/CRS-RL34367placed within a floodplain through an updating of the floodof flood to such properties. Properties covered by flood insurance
g/winsurance rate maps if the value of the home does not exceedat the time of remapping will have the new rates phased in over a
s.or75% of the state median home value. (Sec. 22(f))two year period at the rate of 50% per year. The practical
leakapplication of this provision would be a prohibition against
NFIPs current practice of allowing properties that are mapped
://wikiinto the 100-year flood plain to indefinitely pay rates that reflect
httptheir 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 inNo similar provision.Would require NFIP to use actuarial principles in determining
Determining Chargeablerates, and to consider catastrophic loss years in the calculation of
Premiumhistorical annual obligations of the NFIP. (Sec. 114)
Mandatory Purchase Requirements
Expansion of MandatoryWould require the Government Accountability Office (GAO)Would require that state chartered lending institutions must be
Coverage Requirement toto conduct a study of the impact of amending the Floodsubject to regulations by that state that are consistent with the
State Regulated LendingDisaster Protection Act of 1973 to extend NFIP’s mandatoryNFIP’s mandatory flood insurance purchase requirements.
Institutionpurchase 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))

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Grants for Outreach toWould authorize $50 million for each of fiscal years 2008No similar provision.
Property Owners andthrough 2012 for FEMA to make grants to local government
Rentersagencies 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 ofWould require the FEMA Administrator to notify tenants ofNo similar provision.
Availability of Contentsthe availability of contents insurance and where to obtain
Insurancecoverage. Sets out contents of the notice. (Sec. 10)
iki/CRS-RL34367Notice of Flood InsuranceAvailability UnderWould amend Section 5(b) of the Real Estate SettlementProcedures Act of 1974 (RESPA) to create a new noticeSame as H.R. 3121. (Sec. 124)
g/wRESPAs Good Faithprovision to ensure that individuals who purchase homes in
s.orEstimateareas of elevated flood risk (whether or not the property is
leaklocated in a special flood hazard area) are made aware of the
risk and given an opportunity to purchase flood insurance.
://wiki(Sec. 20)
httpCivil Penalties for LendingWould increase the civil penalty from $350 to $2,000 forWould increase the civil penalty from $350 to $2,000 for lenders
Institutionslenders that do not enforce the mandatory flood insurancethat do not enforce the mandatory flood insurance purchasing
purchasing requirements. The annual cap on fines that can berequirement. (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 fromtechnical 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)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Escrow of Flood InsuranceWould require that lending institutions place flood insuranceWould require state and federally-regulated lenders to include
Paymentspayments 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 oramounts 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 EffectsWould require that the FEMA Administrator study and reportNo similar provision. However, would require GAO to report to
of Charging Actuarially-to Congress on the economic effects of charging full actuarialCongress within one year of the enactment of the law the number
Based Premium Rates forrisk premiums on non-primary residence and non-residentialand experience of NFIP insured properties constructed prior to
Pre-FIRM Structurespre-FIRM structures. (Sec. 29)1976 (pre-FIRM structures) or area mapping. (Sec. 132(c))
Maximum CoverageWould increase coverage limits from $250,000 (structure) andNo similar provision.
Limits$100,000 (contents) to $335,000 (structure) and $135,000
(contents) for any single-family dwelling and from $500,000
iki/CRS-RL34367to $670,000 for structures and related contents ofnonresidential properties. (Sec. 8)
s.orMandatory CoverageAreasWould require the GAO to study the regulatory, financial, andeconomic feasibility (i.e., costs of home-ownership, actuarialWould require the FEMA Administrator to issue new regulationsestablishing a revised definition of areas of SFHA that reflect a
leaksoundness of program, lender compliance) of expanding theresidual risk, including areas located behind levees, dams, or other
://wikistandard for mandatory flood insurance purchase to includeproperties in areas of residual risk that would flood if not forman-made structures. (Sec. 107(b))
httpthe presence of structural flood control measures such asWould 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 InsuranceNo similar provision.Would authorize the Administrator to make flood insurance
for Multi-family Propertiesavailable 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 forWould make coverage immediately effective if a policy isNo similar provision.

Effective Date of Policiespurchased within 30 days of the purchase or transfer of a
property. (Sec. 5)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
New Lines of CoverageWould provide optional coverage for: (1) additional livingNo 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 ProgramWould extend through 2012 the authorization ofWould authorize the appropriation of $240 million and extend
of Mitigation of Severeappropriations ($40 million a year from the National Floodthe severe repetitive loss property pilot program through fiscal
Repetitive Loss PropertiesInsurance Fund) for the mitigation pilot program that fundsyear 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 ofWould require the Administrator of FEMA, within threeWould require that NFIP insurance policies explicitly state all
Replacement Costmonths of enactment, to: (1) issue plain language regulationsconditions, exclusions and other limitations in plain English and
Provisions, Forms, andto clarify the applicability of replacement cost coverage forin boldface type twice the font size of the body of the insurance
iki/CRS-RL34367Policy Languagecontents in the Standard Flood Insurance Policy; (2) revise anypolicy. Violations of this requirement would be subject to a fine
g/wregulations, forms, notices, guidance, and publications to moreof not more than $50,000 at the discretion of the Administrator.
s.orclearly describe the meaning of full cost of repair or(Sec. 134)
leakreplacement under the replacement cost coverage; and (3)
revise the language in flood insurance policies regarding rating
://wikiand coverage, such as classification of buildings, basements,crawl spaces, detached garages, enclosures below elevated
httpbuildings, 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
ForgivenessNFIP to the extent such borrowed sums were used to fund the
payment of claims resulting from the hurricanes of 2005.
(Sec. 112)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Borrowing AuthorityNo similar provision. Would decrease the borrowing authority for the NFIP from
Limits$20.775 to $1.5 billion. (Sec. 112)
Reserve FundNo 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 forWould require FEMA to submit a report to Congress thatWould require that whenever the NFIP has to borrow from the
Borrowing Authorityincludes a plan for repaying borrowed funds within 10 years.Treasury, FEMA would submit to Treasury and Congress a
iki/CRS-RL34367(Sec. 12)schedule for repayment of funds. This reporting requirement
g/wwould continue every six months thereafter until the borrowed
s.orfunds are repaid. (Sed. 116)
Additional NFIP Staff Would authorize to be appropriated such sums as may beNo similar provision.
://wikinecessary for the NFIP to hire additional staff to implement
httpthe provisions of this Act. (Sec. 25)
M itigatio n
Flood MitigationWould eliminate the limitation on aggregate amount ofNo similar provision.

Assistance Programassistance 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)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Mitigation Grants forWould direct FEMA to provide mitigation grants to individualNo similar provision.
Individual Repetitiveowners of repetitive loss properties in communities that do not
Claims Propertiesparticipate 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 andWould direct FEMA to develop a plan to verify that theNo similar provision.
Maintenance of Floodrecipients of Homeowner Grant Assistance Program in
Insurance on HomeownerMississippi and Road Home Grants in Louisiana, funded by
Assistance Grants inDepartment of Housing and Urban Development Community
Mississippi and RoadDevelopment Block Grants, maintain flood insurance on their
Home Grants in Louisianaproperties as required as a condition of receiving the grants.
(Sec. 32)
Claims and Write-Your-Own (WYO) Insurers
iki/CRS-RL34367Administrative Expense ofWrite-Your-OwnWould require Write-Your-Own (WYO) companies to submitto FEMA an annual report of all administrative and operationalWould require the FEMA Administrator not later than 180 daysafter enactment to conduct a rulemaking proceeding to devise a
g/wInsurance Companiescosts of the program, along with a biennial independent auditdata collection methodology to allow FEMA to collect consistent
s.orconducted by a certified public accountant. Would require theinformation on the expenses of WYO companies. Would require
leakFEMA Administrator review the records and audits toWYO companies, within 60 days after the effective date of the
://wikidetermine 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
httpAdministrator 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 Insurersmust 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))

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
FEMA Participation inWould permit state insurance commissioners to submit aSame as H.R. 3121. (Sec. 126)
State Disaster Claimsrequest 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.
Reiteration of FEMAUnder the Bunning-Bereuter-Blumenauer Flood InsuranceWould reiterate the responsibility of FEMA under the 2004
Responsibility Under theReform Act of 2004 (P.L. 108-264; 118 Stat. 712), wouldReform Act to establish minimum training requirements, and
2004 Reform Actagaindirect FEMA to establish an appeals process within 90require that FEMA report to Congress within three months after
iki/CRS-RL34367days of enactment that policyholders can use to resolvedecisions of the Administrator relating to claims, proofs ofenactment, describing the implementation of each provision in the2004 Reform Act.
g/wloss, and loss estimates. (Sec. 127)
leakWould require the Administrator to continue to work with the
insurance industry, state insurance regulators, and other
://wikiinterested parties to implement previously developed minimum
httptraining 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 forWould extend to 180 days the period of time policyholdersNo similar provision.
Filing Proof of Losshave 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 toWould prohibit FEMA from enforcing penalties assessedSame as H.R. 3121. (Sec. 117)
Condominium Ownersagainst individual condominium owners where the
condominium association is underinsured. (Sec. 30)
Extension of Pilot ProgramWould authorize an extension of the pilot program forSame as H.R. 3121. (Sec. 30)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
for Mitigation of Severemitigation of severe repetitive loss properties from FY2008
Repetitive Loss Propertiesthrough 2012. (Sec. 17)
Authority of FEMA toNo similar provision.Would authorize the FEMA Administrator to collect from WYO
Collect Information oninsurers any information and data needed to determine the
Claims Paymentsaccuracy 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 forAmends Section 1304 of the National Flood Insurance Act ofNo similar provision.

Flood and Windstorm 1968 to enable the purchase of optional insurance against both
iki/CRS-RL34367flood and windstorm losses. Requires communities thatparticipate in the NFIP to adopt adequate criteria for land
g/wmanagement and use. Would authorize the FEMA Administrator
s.orto study and investigate to determine appropriate measures (e.g.,
leaklaws, regulations, and ordinance relating) that could be adopted in
://wikiwindstorm-prone areas with respect to windstorm risks, zoningbuilding codes, building permits, subdivision and other building
httprestrictions 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)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Flood Mapping
National Flood MappingWould require the Administrator in consultation with theWould require FEMA to establish an ongoing flood mapping
ProgramTechnical Mapping Advisory Council to establish an ongoingprogram to review, update and maintain flood insurance rate
program to review, update, and maintain flood insurance ratemaps, including all flood-risk zone areas within the 100-year and
maps. Each map shall include a depiction of the 500-year500-year floodplains and areas of residual risk, including those
floodplain, as well as residual risk” areas behind levees andprotected 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 theAdministrator 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 topographyprobable 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.
iki/CRS-RL34367(Sec. 22(a))
g/wWould require the Administrator to: (1) establish standards toFEMA would be required to use the most accurate and consistent
s.orensure the adequacy and consistency of maps and methods ofdata in mapping program. (Sec. 122)
leakdata collection and analysis; (2) give priority to updating and
maintaining maps of coastal areas affected by Hurricanes
://wikiKatrina and Rita in order to provide guidance with respect to
httphurricane 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 emergingWould require the various federal departments to work together
weather forecasting technologies, and consider the impacts ofto coordinate mapping and risk determination budgeting, and
global warming and the potential future impacts of globalrequires the Office of Management and Budget (OMB), FEMA
climate change-related weather events, in assessing flood andand 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 consultationSame 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 ofSame as H.R. 3121. (Sec. 119)

fiscal years 2008 through 2013. (Sec. 22)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Floodplain managementNo 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))
iki/CRS-RL34367Removal of Limitation onNo similar provision.Would remove the current prohibition that prevents states from
g/wState Contributions forcontributing greater than 50% of the cost of revising and updating
s.orUpdating Flood Mapsmap modernization. (Sec. 120)
NonmandatoryWould authorize FEMA to include a note on flood insuranceWould require the FEMA Administrator to provide notice to any
://wikiParticipation in the 500-rate maps identifying 100-year and 500-year certified leveescommunity located in the 500-year floodplain within six months
httpYear Floodplain Areasand encourage property owners to evaluate their risk offlooding. Would clarify that the note shall not be consideredafter the date of completion of the initial mapping of the 500-yearfloodplain. 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)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Technical MappingWould reestablish the Technical Mapping Advisory Council,Similar to H.R. 3121, but also would add two additional members
Advisory Counciland establish terms of office, to provide direction andto the Advisory Council, one representing a state agency that has
assistance to the Administrator of FEMA concerning floodentered 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, localFIRMs and the other a local governmental agency that has done
and regional flood and storm water agencies, state geographicthe same.
information coordinators, and flood insurance servicing (Sec. 118(b))
companies. (Sec. 22(b))
Post-Disaster FloodWould allow the Administrator of FEMA to issue interimNo similar provision.
Elevation Determinationsflood 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))
iki/CRS-RL34367Communities may request updates after repairs to flood
g/wprojects, at no cost. (Sec. 22(d))
leakBuilding Codes inWould authorize FEMA to submit a report to Congress on theSee section below entitled,FEMA Report on Building Codes.”
Floodplain Managementregulatory, financial and economic impacts of including (Sec. 135)
://wikiCriterianationally recognized building codes as part of the floodplain
httpmanagement criteria of the NFIP. (Sec. 28)
Interagency CoordinationNo similar provision.Would require FEMA to contract with the National Academy of
StudyPublic 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
(Sec. 122)
Testing of NewNo similar provision.Would authorize the building of temporary residential structures
Floodproofingfor the purpose of testing new floodproofing technologies. This
Technologiesactivity 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)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Notification of Appeal ofWould require FEMA Administrator to notify the chiefNo similar provision.
Map Changes andexecutive officer of local communities about their right to
Notification ofappeal projected base flood elevation determinations, and the
Establishment of Floodcontact information of the person who handles appeals at
ElevationsFEMA. 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 FloodNo similar provision.Would require the leadership of DHS, OMB and other federal
Risk Determination Dataagencies to work together to ensure that flood risk determination
iki/CRS-RL34367Sharing and Budgetingdata and geospatial data are appropriately shared among federal
g/wEffortsagencies in order to coordinate the effort of the nation to reduce
s.orits vulnerability to flooding hazards. Would require the Director
leakof OMB, in consultation with FEMA, USGS, NOAA, and the
Army Corp of Engineers, to submit an interagency budget
://wikicrosscut report that displays the budget proposed for each of the
httpfederal agencies working on flood risk determination data and
digital elevation models. (Sec. 121)
Flood Insurance AdvocateWould authorize the creation of the position of National FloodWould establish an Office of the Flood Insurance Advocate with
Insurance Advocate in FEMA, who would report to FEMAthe power to assist claimants with NFIP claims, including
Administrator. The national advocate would transmit aintervention in specific claims; identify changes that could resolve
comprehensive report to Congress about the major problemsproblems claimants experience with flood claims; audit and
facing the NFIP and report to Congress 6 months afterinvestigate insurers to ensure that only flood losses are allocated
enactment about the feasibility and effectiveness ofto 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 assistflood program to promote efficiency and reduce fraud and
insureds in resolving problems with the NFIP, including issuesconflicts of interests; request documents and testimony; and
related to bureaucratic obstacles in the event of a disaster. Theestablish regional flood insurance advocates. (Sec. 131)

Administrator would be required to submit the report to
Congress. (Sec. 34)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Commission on Natural Catastrophe Risk Management and Insurance
Commission on NaturalNo similar provision.Would establish a 16-member nonpartisan Commission on Natural
Catastrophe RiskCatastrophe Risk Management and Insurance (Commission) to
Management andexamine 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
iki/CRS-RL34367protection; (5) implementation of a catastrophic insurance system
g/wthat can resolve key obstacles impeding broader implementation
s.orof catastrophic risk management and financing with insurance; (6)
leakthe financial feasibility of a national, regional, or other pooling
mechanism designed to provide adequate insurance coverage and
://wikiincreased underwriting capacity to insurers and reinsurers,
httpincluding 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

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(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 toWould direct GAO to conduct a study of potential methods,No similar provision.
Increase Participation ofpractices, and incentives that would increase the degree to
Low-Income Families inwhich low-income property owners living in high-risk areas
the NFIPparticipate in the NFIP. The study would analyze the
iki/CRS-RL34367feasibility of providing coverage to low-income families atdiscounted rates, the amounts of the discount to make it
g/waffordable, and the extent to which low-income families would
s.orbe affected by expanding the mandatory purchase
leakrequirements. (Sec. 19)
://wikiReport on FinancialWould require FEMA to submit an annual report to CongressWould require GAO to conduct a study and submit a report to
httpConditions of NFIPon the financial status of the program. The report wouldCongress on NFIPs activities and financial health, including the
include information on the current and projected levels ofamount paid in premiums, losses, expenses, number of policies,
claims, premium receipts, expenses, and Treasury borrowinginsurance 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 onWould require the GAO to study the regulatory, financial, andWould require GAO to submit a report to Congress on: (1) the
Expanding the NFIPeconomic feasibility (i.e., costs of home-ownership, actuarialnumber of flood insurance policyholders currently insured; (2) the
soundness of program, lender compliance) of expanding theincreased losses the NFIP would have sustained during the 2004
standard for mandatory flood insurance purchase requirementand 2005 hurricane seasons if the program had insured all policies
to include (1) properties in areas of residual risk that wouldup to $417,000, and (3) the availability in the private marketplace
flood if not for the presence of structural flood controlof 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)).

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
GAO Review of FEMANo 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-FIRMWould authorize GAO to issue a report on the status of theWould require GAO to conduct a study of pre-FIRM structures
Structurespre-FIRM properties including the number of properties, costthat are receiving discounted premium rates. This study would be
of providing coverage, the rate at which such properties willdesigned to determine the number and types of pre-FIRM
cease to be covered under the program and the effects of thestructures 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 theNo similar provision.
Insurance Program onmultiperil insurance program on enrollment and pricing of
State Residual Marketsstate residual property and casualty markets or plans and state
catastrophe plans. (Sec. 33)
FEMA Report on BuildingWould authorize FEMA to submit a report to Congress on theWould require FEMA to conduct a study and submit a report to
iki/CRS-RL34367Codesregulatory, financial and economic impacts of includingCongress on the impact, effectiveness and feasibility of including
g/wnationally recognized building codes as part of the floodplainnationally recognized building codes as part of FEMAs
s.ormanagement criteria of the NFIP. (Sec. 28)floodplain management criteria. The study would determine,
leakamong other things, the regulatory, financial, and economicimpacts of the building code requirement on homeowners, states
://wikiand local communities, local land use policies, FEMA, the stateand local community resources needed to enforce this requirement
httpand the effectiveness of the codes in reducing flood-related
damage to buildings and contents. (Sec. 135)
GAO Feasibility Study onNo similar provision.Would require GAO to submit a report to Congress on the
Private Reinsurancefeasibility 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 ExpenseNo 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)

ProvisionH.R. 3121 (Waters)(Passed by House 9/27/07)S. 2284(Passed by Senate 5/13/08)
Miscellaneous Provision
Strategic PetroleumNo similar provision.Would suspend federal government petroleum acquisition for the
ReservesStrategic Petroleum Reserves. (Sec. 302)
Reimbursement ofNo similar provision.Would modify the project for flood control, Big Sioux River and
Expenses in Flood ControlSkunk Creek, Sioux Falls, South Dakota to authorize the
Projectsreimbursement 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.