A new bill, HR 6300, gives the Obama Administration Executive Order 13547 the full power of law. Executive Order 13547 – Stewardship of the Ocean, Our Coasts, and the Great Lakes adopts the recommendations of the Ocean Policy Task Force and implement them under the guidance of the National Ocean Council. The recommendations provided by the Ocean Policy Task Force will establish national ocean policy that will:
- Ensure the protection, maintenance, and restoration of the health of the ocean, coastal, and Great Lakes ecosystem and resources
- Enhance the sustainability of ocean and coastal economics
- Preserve our maritime heritage
- Support sustainable uses and access
- Provide for adaptive management to enhance our understanding of capacity to response to climate change and ocean acidification
- Coordinate with our nation security and foreign policy interests
The bill is sponsored by Rep. Jimmy Panetta and is in committee. What are its chances with a Republican controlled House?
The Water Resources Development Act will be on the Senate floor next week. Stay tuned for updates on the biennial WRDA that will hopefully accomplish many of the issues relating to Corps process and project delivery timeline, and many others. For my full analysis on WRDA18, including all the coastal related provisions and a comparison of the two bill from the House and Senate, please click here.
In other news…
The National Flood Insurance Program was set to expire July 31st 2018, until Louisiana Senator John Kennedy submitted an amendment to the Farm Bill, HR 2 - Agriculture and Nutrition Act of 2018, to extend the NFIP for 6 months to January 31st, 2019. Kennedy urged his colleagues to support the amendment stating, “in the absence of reauthorizing legislation, the National Flood Insurance Program will lapse, in the middle of hurricane season, leaving more than five million American families and businesses vulnerable. I don’t want people to be scared every time it rains.” The Senate passed HR 2 last Thursday and the House had previously passed the bill without the Kennedy amendment.
During the 2017 storm season total losses (insured and uninsured) were at a record $270.9 billion, creating a NFIP debt of $16 billion that Congress ended up forgiving to allow the program to payout claims. In order to maintain stability in the NFIP’s capacity to pay out claims, FEMA purchased reinsurance for a $150 million dollar premium for 2017-2018. Hurricane Harvey triggered a full use of that policy. There has been discussion among members of Congress about private insurance writing flood insurance policies and the effects it would have on the NFIP - To preface a future update on this topic, here are a few concerns:
- Effects of private sector competing against the NFIP in residential markets
- Currently private insurers mainly offer secondary coverage on commercial properties that extends beyond what the NFIP will cover. Private insurers tend to focus on high-value properties with higher premiums which justify the underwriting of a policy. How will the private sector compete with NFIP in residential markets?
- Private coverage compared to NFIP for fulfilling mortgage requirements
- Federally backed mortgages are required to maintain mortgage insurance. The Biggert-Waters act of 2012 authorized the use of private insurance to satisfy the Mandatory Purchase Requirement. The problem is that the law (Sec.100239, H.R. 4348) states that the private coverage must be ‘at least as broad’ as the coverage under the NFIP. This is vague, and for the interest of the Federal government, it would be best that private insurance coverage be qualified or standardized in some form, with numbers or formulas.
- Legislation to rescind eligibility for NFIP with private insurance
- Currently no legislation exists that allows private insurance to satisfy the continuous coverage requirement of the NFIP. If homeowners opt for private insurance, allowing their NFIP policy to lapse, any subsidy the policyholder receives will be immediately eliminated.
- Rate variance for policyholders & ability to assess flood risk accurately for private insurers
- The NFIP has calculated and methodic processes for gathering information on flood risk, assessing flood risk data, and providing appropriate rates that are justified based on Flood Insurance Rate Maps, and other tools that inform the policymaking process. How will private insurers take on this responsibility and provide the same assurance that they are receiving adequate coverage the way the NFIP does?
- Regulatory uncertainty
- Increased consumer choice, cheaper policies, variable consumer protections, floodplain mapping etc. will all be drivers of change in the flood insurance market. How will the private sector administer their services to parallel the NFIP rather than cross-cut it?
Keep an eye out for an update coming soon with foresight on NFIP.
