Talks on flood insurance overhaul heating up after long stint of inaction on Capitol Hill

Advocate, The (Baton Rouge, LA)

May 26--WASHINGTON -- Discussions over the future of the National Flood Insurance Program have picked up on Capitol Hill over the past week, the first recent signs of progress toward an overhaul ahead of an approaching July 31 deadline for Congress to renew the federally run insurance scheme.

Staffers for key senators, including Louisiana Republicans Bill Cassidy and John Kennedy, have been trying to hash out a potential compromise on key aspects of the NFIP, including how to handle properties that repeatedly flood and whether to make it easier for private insurance companies to offer competing flood policies.

Those negotiations, which picked up steam over the past week, come after weeks of inaction in the U.S. Senate that left Louisiana lawmakers frustrated. The flood insurance program has been limping along on a series of temporary extensions since September, and its latest deadline looms ominously in the midst of hurricane season.

Aides to Senate Majority Leader Mitch McConnell, R-Kentucky, and Minority Leader Chuck Schumer, D-New York, joined the talks this week, as did the top-ranking members of the Senate Banking Committee, which oversees the program.

The discussions point toward a potential compromise, though no deal is imminent. Several senators and staffers expressed cautious optimism that they could bridge wide gaps between current proposals.

"We're working on some middle ground. I don't know if we'll succeed," said Kennedy, who co-authored a proposal with New Jersey Democratic Sen. Bob Menendez. "I'm working hard to get a bill, I know Bill Cassidy is and others are, but I'd be lying if I told you we'd worked everything out."

Sharply different visions of how to reshape the beleaguered National Flood Insurance Program have led to deadlock on Capitol Hill. The program is tens of billions of dollars in debt and is still paying out millions more in claims stemming from a series of devastating 2017 hurricanes.

Those payouts -- and mounting aggravation among victims of 2013's Hurricane Sandy and the 2016 Baton Rouge-area flood who've ended up in court over claims -- have put pressure on Congress to enact structural changes to the NFIP to shore up its finances and streamline the claims process.

Some critics of the program want to substantially hike premiums on homeowners who currently enjoy below-market subsidized policies and deny coverage altogether to so-called "repetitive loss" properties, building that have flooded more than once.

That's prompted concern from lawmakers who represent flood-prone and coastal areas, including Louisiana's congressional delegation. They've pushed instead for changes to draw more premium-paying customers into the program, ease the cost of interest charges on NFIP's debt and invest more in work to mitigate potential flood damage.

The House of Representatives passed a five-year overhaul of the National Flood Insurance Program in November.

But that bill, drawn up largely by retiring House Financial Services Chairman Jeb Hensarling, R-Texas, a longtime critic of the NFIP, has little chance of passing in the Senate, despite a compromise with House Majority Whip Steve Scalise, R-Jefferson, that softened many of its provisions. Coastal lawmakers and Democrats hold more sway in the Senate.

The Federal Emergency Management Agency, which runs the program, announced in April it was rolling out its own set of tweaks to the program, loosening the rules on private insurers offering their own policies and adding $1.5 billion in reinsurance coverage to help offset potential future losses.

U.S. Rep. Sean Duffy, a Wisconsin Republican who chairs the House's insurance subcommittee, has also reached out to senators working on flood insurance, including Menendez.

"He expressed a desire to see if we could come to some agreement and we talked about it for a while," Menendez told The Advocate this week. "I said, 'I'm ready, I'm not ideologically driven on flood insurance, but it has to be a good enough bill.' Our staffs are working together to see if we can come to a way forward."

Cassidy, who co-authored another flood insurance bill with New York Democrat Kirsten Gillibrand, has also been pushing for a deal on flood insurance, including the need for claims reforms, investing in more accurate flood-risk maps and mitigation, and a compromise on allowing more private market competition.

Cassidy's office has stressed the need to keep flood insurance premiums affordable for low- and middle-income homeowners in any overhaul.

Kennedy noted that private insurance remains the biggest hurdle for any deal. He and other coastal lawmakers fear that letting private companies compete directly with the NFIP could lead to "cherry-picking," where private companies poach the most lucrative policies and leave the NFIP with the riskiest and most heavily subsidized properties, exacerbating the NFIP's financial woes.

Among the potential compromises on the table is charging adjustment fees or other surcharges on private flood policies to help fund mapping, mitigation work and losses in the federally run program.

Still, it's unclear whether lawmakers can cobble together the votes to pass a full reform through both chambers of Congress. Kennedy called that a "50-50" proposition and said there's still a strong chance his colleagues wind up punting with another short-term extension.

"I want a bill. We've got to face this," Kennedy said. "It's becomes more of a priority as we have more and more natural disasters but, if you can roll it over, that's the path of least resistance when you have other pressing issues."

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