Senate Seeks Reforms In Flood InsuranceProgram

WASHINGTON - (05/23/06) – A bill introduced in the SenateMonday would major reforms to the bankrupt National Flood InsuranceProgram by phasing out federal subsidies for millions ofnon-primary residences, businesses and repetitive loss properties.The bill would increase current premiums on those properties by asmuch as 25% a year until the subsidies are eliminated, as well aslift the cap on premium increases on residential properties from10% a year to 15% a year, to help recapitalize the program,inundated the past two years by billions of dollars in excessclaims from Hurricane Katrina and several other major tropicalstorms. The program, administered by the Federal EmergencyManagement Agency, has experienced more than $25 billion of claimsin the past two years, more than 10 times the available funding.Congress has increased funding for the program three times sincethen but is still as much as $10 billion short. The bill, whichwill be voted Thursday by the Senate Banking Committee, would alsoincrease penalties for non-compliance with mandatory insurance;extend the mandatory coverage area; and raise minimumdeductibles.