* Senate likely to give bill final approval
* Backers include bankers and builders
By Thomas Ferraro
WASHINGTON, March 4 The U.S. House of
Representatives, in a rare act of bipartisanship, overwhelmingly
passed a bill on Tuesday to protect millions of American
homeowners and businesses from dramatic increases in their flood
On a vote of 306-91, the Republican-led House sent the
measure - the Homeowners Flood Insurance Affordability Act of
2014 - to the Democratic-led Senate for likely final approval.
With homeowners and businesses facing premiums hikes of up
to 10-fold or more as result of a 2-year-old law, the bill would
limit annual increases of any individual policy under the
National Flood Insurance Program to no more than 18 percent.
The legislation also instructs the Federal Emergency
Management Agency to have "an affordability target" that would
seek to limit the cost of a flood insurance policy to 1 percent
of a home's total coverage amount.
The 18 percent cap and "affordability target" were among the
changes Democrats and Republicans agreed to in revamping the
bill, initially approved by the Senate earlier this year.
The legislation was drafted in response to the
Biggert-Waters Flood Insurance Reform Act of 2012, which was
designed to allow premiums to rise to reflect the true risk of
living in high-flood areas.
The law was passed to address a $24 billion deficit in the
NFIP, which serves about 5 million people and had mounting
losses, largely from Hurricane Katrina in New Orleans in 2005.
Shortly after enactment of the 2012 law, Superstorm Sandy
hammered much of the U.S. Northeastern coast, generating another
wave of insurance claims.
That law did not stipulate that rates would soar by more
than 10 times, but that is what happened to the surprise of
lawmakers and consternation of homeowners and small businesses.
Such rate hikes, they warned, could force many homeowners
and businesses to sell their properties, which in turn could
lower real estate values and damage the U.S. economy.
With so much at stake, normally warring Democrats and
Republicans in Congress came together to find a solution.
The Senate bill would have delayed any rate hikes for four
years while FEMA seeks changes. The House version would not
delay the hikes, but limit them.
Backers of the bill include realtors, banks and
homebuilders. A number of conservative groups oppose it, largely
because of the continuation of subsidized insurance rates.
The nonpartisan Congressional Budget Office said the
House-passed bill would have zero impact on the financial
standing of the NFIP over the next decade.
The CBO said the bill would pay for itself with annual
assessments to NFIP's reserve fund - $25 a year for primary
homeowners and $250 a year for businesses and vacation
(Reporting by Thomas Ferraro; Editing by Peter Cooney)