Wednesday, June 28, 2006
WASHINGTON (AP) -- The federal flood insurance program, still reeling from historic losses from Hurricane Katrina, may get a helping hand from Congress.
The House voted 416-4 Tuesday to phase out subsidies on some vacation homes and commercial property and raise premiums at a faster rate. The bill also increases the amount of coverage a property owner can buy and boosts fines for mortgage lenders who don't tell customers they have to buy flood insurance.
The National Flood Insurance Program, a part of the Federal Emergency Management Agency, was established by Congress in 1968 to help homeowners, particularly those living in flood plains, obtain flood insurance that private insurers were unwilling to offer. Under the program, private insurers sell the government-subsidized policies.
The program covers some 4.9 million policyholders in 21,000 communities across the country that agree to carry out floodplain management and other steps to reduce flood damage.
The program was self-supporting for its first 37 years, but last year it was jolted by claims from some 225,000 property owners for $22 billion arising from hurricanes Katrina, Rita and others.
The changes
Since those storms Congress has had to step in three times to raise the NFIP's borrowing power, from $1.5 billion a year ago to $20.8 billion, so the program could continue paying off claims.
The House-passed legislation would raise the borrowing authority to $25 billion. It also increases the premium rate increase ceiling for a given year from 10 percent to 15 percent.
It directs FEMA to review the nation's flood maps, which help determine which property owners are required to buy flood insurance.
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