The American Bankers Association is urging lawmakers to reauthorize the National Flood Insurance Program for five years and make changes to modernize and improve the program’s stability and affordability, as well as improve compliance requirements for the Flood Disaster Protection Act.
Last month, Sens. Bill Cassidy (R-La.) and Corey Booker (D-N.J.) requested public input on 46 questions covering various aspects of the NFIP, including reauthorization, mandatory purchase and continuous coverage requirements, and NFIP coverage limits. ABA submitted a letter to the senators and other members of the Senate Banking Committee, in which it listed several recommendations. Among them, the association suggested reauthorizing the NFIP for a five-year period, noting that the 33 short-term extensions and four lapses of the program since 2017 have consistently caused major disruptions to the mortgage market and undermined confidence in the program.
“Stability in the program is essential to ensuring that borrowers in flood-prone areas can obtain the insurance necessary to protect their homes and banks can protect the collateral securing their mortgage loans,” ABA said.
ABA also recommended that flood supervision reflect a more risk-based framework and that civil money penalty authority be narrowed to cover only violations that result in a lack of flood insurance coverage on property that requires it; that Congress require regulators update the Interagency Flood Insurance Q&As on a regular basis through the notice-and-comment process; that Congress consider establishing federal preemption over flood disclosure requirements and state laws that limit flood insurance coverage; and that Congress recognize private flood insurance policies that contain coverage equivalent to an NFIP policy as satisfying the continuous coverage requirement.
