US lawmakers progress privatisation efforts in flood programme reform
The House Financial Services Committee has passed several measures to reform and reauthorize the National Flood Insurance Program (NFIP), which is set to expire on September, 30, 2017.
The NFIP was established in 1968 to help offer flood insurance to homeowners, renters, and business owners and is the primary underwriter of flood insurance policies in the US.
The NFIP is part of Federal Emergency Management Agency (FEMA) and has relied on the US Treasury to fund deficits when losses have exceeded the programme’s claims. NFIP had accrued $23 billion in losses to the US Treasury.
In January, FEMA secured more than $1 billion of reinsurance coverage for NFIP for 2017 in a deal involving some 25 reinsurers brokered by Guy Carpenter.
The current reform efforts are expected to lower flood insurance rates and boost the private flood insurance market.
Among the bills that passed the Committee on June 21 were the 'Flood Insurance Market Parity and Modernization Act', which would clarify that flood insurance policies written by private carriers satisfy the mandatory purchase requirement, and the 'Taxpayer Exposure Mitigation Act of 2017', which would provide for greater transfer of risk under NFIP to private capital and reinsurance markets.
“These reform bills will benefit all Americans because they will invite private sector competition and lead to a sustainable flood insurance program – sustainable for homeowners, small business owners, residential and commercial real estate markets, and sustainable for hardworking taxpayers,” said House Financial Services Committee chairman Jeb Hensarling.
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