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115th Congress   }                                      {       Report
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                      {      115-233

======================================================================



 
   NATIONAL FLOOD INSURANCE PROGRAM ADMINISTRATIVE REFORM ACT OF 2017

                                _______
                                

 July 18, 2017.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2875]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2875) to make administrative reforms to the 
National Flood Insurance Program to increase fairness and 
accuracy and protect the taxpayer from program fraud and abuse, 
and for other purposes, having considered the same, report 
favorably thereon without amendment and recommend that the bill 
do pass.

                          Purpose and Summary

    Introduced by Representative Nydia Velazquez on June 12, 
2017, H.R. 2875, the ``National Flood Insurance Program 
Administrative Reform Act of 2017,'' makes administrative 
reforms to the National Flood Insurance Program to increase 
fairness and accuracy and protect the taxpayer from program 
fraud and abuse.

                  Background and Need for Legislation


                            GENERAL OVERVIEW

    Floods are among the most frequently occurring and costly 
natural disasters. Most declarations of federal disasters by 
the Federal Emergency Management Agency (FEMA) are related to 
flooding. Yet despite the frequency and severity of losses that 
result from flooding, the private insurance market generally 
did not provide insurance for flooding; when it did, insurance 
for flood-related damage can be expensive because the 
properties most at-risk tend to be highly concentrated 
geographically and the potential risk of economic losses is 
extremely high.
    To supplement the availability of flood insurance in the 
private market, Congress, in 1968, created the National Flood 
Insurance Program (NFIP), which is administered by FEMA and 
provides flood insurance to approximately 5.1 million 
policyholders across the country. In exchange for premiums paid 
by policyholders, NFIP makes federally backed flood insurance 
available to homeowners and other property owners (for example, 
businesses, churches, and farmers) in these communities.
    Homeowners with mortgages held by federally regulated 
lenders on property in participating communities identified by 
FEMA to be in Special Flood Hazard Areas are required to 
purchase flood insurance (mandatory purchase requirement). NFIP 
coverage limits vary by program (regular or emergency) and 
property type (for example, residential or nonresidential). In 
NFIP's regular program, the maximum coverage limits for 
residential policyholders are $250,000 for buildings and 
$100,000 for contents. For commercial policyholders (that is, 
those with policies for nonresidential properties), the maximum 
coverage limit is $500,000 per building and $500,000 for 
contents owned by the building owner. There is additional 
coverage for contents owned by the tenants.
    Residents and business owners in over 22,000 participating 
communities across the United States and its territories are 
able to buy NFIP flood insurance policies through insurance 
agents and companies that participate as third-party 
administrators in the ``Write Your Own'' (WYO) program. The WYO 
program allows private insurance carriers to issue and service 
government underwritten and taxpayer backed NFIP policies with 
no private financial liability from the insurer. Insurance 
companies that participate in the WYO program receive an 
expense allowance for policies they write and the claims they 
process. In addition, their agents earn a commission for the 
policies they sell. The federal government, however, retains 
responsibility for managing the risk and paying claims, as well 
as covering any litigation costs should a WYO insurer be sued 
in court.
    Property owners can purchase flood insurance through the 
NFIP only if their communities participate in the NFIP. To 
participate in the NFIP, a community must agree to abide by 
certain statutory provisions intended to mitigate the risk of 
flooding, such as building codes that require new structures 
built in floodplains (high-risk areas) to be protected against 
flooding or to be elevated above the 100-year floodplain.
    As of June 5, 2017, the NFIP has an outstanding debt of 
$24.6 billion borrowed from taxpayers, with roughly $1.1 
billion available cash-on-hand and $5.825 billion remaining of 
its total temporary $30.425 billion Treasury borrowing 
authority. The NFIP's debt results primarily from its borrowing 
to pay claims relating to the Gulf Coast hurricanes in 2005 and 
Superstorm Sandy in October 2012. This borrowing stems from a 
structural imbalance in how the NFIP measures and prices for 
risk, resulting in only 46 percent of premium dollars collected 
in 2016 being available for the payments of claims. With such a 
low portion of premiums available to pay claims, the pressure 
on the NFIP to borrow from taxpayers increases. The NFIP's 
structural budget crisis has required periodic legislation to 
increase its borrowing authority, the most recent example of 
which occurred in January 2013 when Congress increased the 
NFIP's borrowing authority by $9.7 billion--from $20.725 
billion to its current $30.425 billion level.
    Superstorm Sandy, which made landfall in October 2012, 
resulted in $65 billion in damage and destroyed or damaged 
650,000 residential homes. Following the destruction, FEMA paid 
thousands of flood insurance claims to victims but, reports 
began to surface that many claims might have been severely 
underpaid due to the submission of false engineering reports. 
By 2015, there were both constituent and media reports that 
described ``dozens of cases'' where original drafts of 
engineering reports were either revised or deleted in order to 
understate the extent to which the policyholder suffered 
insured losses, thus lowering payments to flood insurance 
claimants. Policyholders alleged that these practices were 
widespread. As a result of these practices, insurance companies 
made lower payments than they otherwise should have, causing 
many homeowners to be unable to rebuild their homes.
    Superstorm Sandy resulted in 144,000 claims received by 
FEMA, through the Write Your Own companies, paying 
approximately $8.4 billion to policyholders. Because of the 
concerns regarding certain alleged fraudulent practices, FEMA 
established a task force in February 2015 to expeditiously 
resolve litigation from the claims involving Superstorm Sandy 
and offer all policyholders, who believe they may have been 
underpaid, the opportunity to have their claims reviewed. As of 
March 2017, FEMA paid out an additional $350 million to 
policyholders on those claims resulting from the Superstorm 
Sandy claims event.
    H.R. 2875 is a culmination of the lessons learned from 
FEMA, stakeholders, and policymakers during the claims paying 
process responding to Superstorm Sandy. According to the 
Department of Homeland Security's Inspector General,

          FEMA does not provide adequate oversight of the WYO 
        [Write Your Own] program under NFIP. Specifically, FEMA 
        is not using the results from its Financial Control 
        Plan reviews to make program improvements; is not 
        performing adequate oversight of the SALAE [Special 
        Allocated Loss Adjustment Expenses] reimbursement 
        process; and does not have controls to provide proper 
        oversight of the appeals process. These conditions 
        exist because FEMA does not have adequate guidance, 
        resources, or internal controls. As a result of this 
        inadequate oversight, FEMA is unable to ensure that WYO 
        companies are properly implementing NFIP and is unable 
        to identify systemic problems in the program. 
        Furthermore, without adequate internal controls in 
        place, FEMA's NFIP funds may be at risk for fraud, 
        waste, abuse or mismanagement.

    H.R. 2875 addresses concerns which range from the 
inadequacy of mitigation programs, fraudulent statements and 
claims, lack of oversight of the taxpayer-funded litigation 
practices and costs, the need for a more transparent process 
for claims payments and appeals, and better disclosures.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Housing & Insurance held two hearings examining matters 
relating to H.R. 2875 on March 9, 2017 and March 16, 2017. The 
Committee on Financial Services held a hearing examining 
matters relating to H.R. 2875 on June 7, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
June 21, 2017 to consider H.R. 2875. The Committee ordered H.R. 
2785 to be reported favorably to the House, without amendment, 
by a recorded vote of 58 yeas to 0 nays (Recorded vote no. FC-
64), a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 53 yeas to 0 nays 
(Recorded vote no. FC-58), a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 2875 
will make administrative reforms to the National Flood 
Insurance Program to increase fairness and accuracy and protect 
the taxpayer from program fraud and abuse.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 18, 2017.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2875, the National 
Flood Insurance Program Administrative Reform Act of 2017.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Robert Reese.
            Sincerely,
                                             Mark P. Hadley
                                        (For Keith Hall, Director).
    Enclosure.

H.R. 2875--National Flood Insurance Program Administrative Reform Act 
        of 2017

    Summary: Under current law, property owners can buy flood 
insurance through the National Flood Insurance Program (NFIP). 
Property owners who buy insurance through the NFIP pay annual 
premiums which are deposited into the National Flood Insurance 
Fund (NFIF) and are used to pay flood damage claims submitted 
by policyholders. Those premiums and payments are not subject 
to annual appropriation.
    H.R. 2875 would give NFIP policyholders the option to buy a 
higher level of coverage under the Increased Cost of Compliance 
(ICC) program, which provides payments to property owners to 
undertake flood mitigation activities following a flood claim. 
The bill also would direct the Federal Emergency Management 
Agency (FEMA) to make several administrative changes to the 
NFIP related to claims payment determinations, program 
staffing, and related matters.
    Assuming appropriation of the necessary amounts, CBO 
estimates that implementing H.R. 2875 would cost $11 million 
over the 2018-2022 period, mostly for an advisory committee on 
flood insurance. Enacting the legislation would affect direct 
spending and revenues; therefore, pay-as-you-go procedures 
apply. However, because any increase in NFIP collections and 
revenues would be offset by increased direct spending, CBO 
estimates that the net effect on the deficit would be 
negligible.
    CBO estimates that enacting H.R. 2875 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 2875 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of H.R. 2875 is shown in the following table. 
The costs of this legislation fall within budget function 450 
(community and regional development).

----------------------------------------------------------------------------------------------------------------
                                                       By fiscal year, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                        2017       2018       2019       2020       2021       2022    2017-2022
----------------------------------------------------------------------------------------------------------------
                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATIONa
 
Estimated Authorization Level......          0          3          2          2          2          2         11
Estimated Outlays..................          0          3          2          2          2          2         11
----------------------------------------------------------------------------------------------------------------
aH.R. 2875 would have an insignificant effect on direct spending and revenues in each year and over the 2017-
  2027 period.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
2875 will be enacted near the end of fiscal year 2017 and that 
the necessary amounts will be appropriated each year.

Spending subject to appropriation

    H.R. 2875 would establish a flood insurance advisory 
committee, which would include members from across the federal 
government and the private sector. The committee would be 
responsible for reviewing and making recommendations on several 
different aspects of the NFIP. Based on information from FEMA 
about the resources that would be needed for this committee, 
CBO estimates that implementing this provision would cost $10 
million over the 2018-2022 period, mostly for salaries, 
expenses, and expert advice.
    The bill also would direct the Government Accountability 
Office to complete two studies on the NFIP. The first would 
analyze the policies and practices for adjusting claims for 
losses under the NFIP. The second would analyze how the NFIP 
handles earth movements that stem from flooding, such as 
landslides, when adjusting claims for losses under the program. 
Based on the cost of similar studies, CBO estimates that 
completing those studies would cost $1 million in 2018.

Direct spending and revenues

    CBO estimates that enacting H.R. 2875 would have a 
negligible effect on the deficit over the 2018-2027 period.
    ICC Coverage. H.R. 2875 would give NFIP policyholders the 
option of buying additional ICC coverage, which provides 
assistance to help cover the cost of mitigation activities that 
will reduce the risk of future flood damage to a building. 
Under current law, when a building covered by the NFIP suffers 
a flood loss and is declared to be substantially or 
repetitively damaged, an ICC insurance policy will provide up 
to $30,000 to bring the building into compliance with state or 
community floodplain management laws or ordinances. Expected 
ICC program spending is covered by premium payments collected 
from NFIP policyholders.
    Under the bill, policyholders would have the option to buy 
up to an additional $30,000 in ICC coverage (making up to 
$60,000 of coverage possible for a single property). Property 
owners that buy additional ICC coverage would pay a surcharge 
for that coverage in an amount determined by FEMA. CBO 
estimates that any additional spending by the NFIP for extra 
ICC coverage would be offset by the additional collections from 
property owners who buy such coverage; thus, the net effect on 
direct spending would be negligible.
    Pre-Existing Conditions Pilot Program. The bill would 
authorize FEMA to create a pilot program through December 31, 
2022, that would allow private insurance companies who partner 
with FEMA to sell and service NFIP policies (known in the 
program as Write Your Own, or WYO, insurance companies) to 
inspect properties with NFIP insurance for pre-existing 
structural conditions that could result in the denial of an 
NFIP claim. Following an inspection the WYO company would 
submit a report outlining the presence or absence of any pre-
existing structural conditions to the property owner and FEMA.
    Under the pilot program, FEMA could impose a surcharge on 
each policy that opts to have an inspection for pre-existing 
conditions to account for any administrative costs faced by the 
WYO companies to complete those inspections. Because H.R. 2875 
gives FEMA discretion to set the surcharge at any rate, CBO 
estimates that any additional costs associated with completing 
those inspections would be offset by additional NFIP 
collections; thus, the net effect on direct spending would be 
negligible.
    Civil Penalties. H.R. 2875 would bar anyone from making a 
false or misleading statement, production, or submission when 
adjusting a claim for NFIP coverage. The bill would create a 
civil penalty of up to $10,000 per false statement. Civil 
penalties are recorded in the budget as revenues. CBO estimates 
that such revenues would be insignificant in any year under the 
bill. Furthermore, any civil penalties collected under the bill 
would be deposited into the NFIF and could be spent without 
further appropriation; thus, the net effect on the deficit 
would be negligible.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. CBO estimates that enacting the bill would have an 
insignificant effect on direct spending and revenues over the 
2018-2027 period.
    Increase in long-term direct spending and deficits: CBO 
estimates that enacting H.R. 2875 would not significantly 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2028.
    Intergovernmental and private-sector impact: H.R. 2875 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Robert Reese; Impact 
on state, local, and tribal governments: Rachel Austin; Impact 
on the private sector: Logan Smith.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    One advisory committee within the meaning of section 5(b) 
of the Federal Advisory Committee Act was created within this 
legislation. Pursuant to the Act, the Committee determines that 
the functions of the proposed advisory committee are not 
presently being performed by an agency or existing advisory 
committee. The Committee further determines that such functions 
cannot be performed by enlarging the mandate of an existing 
advisory committee. The advisory committee created by this 
legislation is as follows:
    Sec. 14. Federal Flood Insurance Advisory Committee.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2875 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(c)(5) of rule XIII, the Committee 
states that no provision of H.R. 2875 establishes or 
reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017), 
the Committee states that H.R. 2875 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Sec. 1. Short title

    This Act may be cited as the ``National Flood Insurance 
Program Administrative Reform Act of 2017''.

Sec. 2. Increased Cost of Compliance coverage

    Authorizes the FEMA Administrator to supplement its 
existing Increased Cost of Compliance (ICC) program (which is 
typically mandatory for many policyholders) coverage of up to 
$30,000 with the option of allowing policyholders to purchase 
additional enhanced ICC coverage of up to $60,000, as priced 
accordingly by NFIP. Like the existing ICC coverage, this 
enhanced ICC coverage would be used to comply with local and 
State floodplain management requirements by covering the cost 
of mitigating a building that has been substantially or 
repetitively damaged by floods. Additionally, the allowable 
uses of ICC coverage would be expanded to cover certain pre-
disaster mitigation costs for certain at-risk properties 
identified by State or local governments.

Sec. 3. Pilot program for properties with pre-existing conditions

    Authorizes the FEMA Administrator to create a pilot NFIP 
program to authorize Write Your Own (WYO) insurance companies 
to inspect pre-existing structural conditions of insured and 
pre-insured properties that could result in a denial of a flood 
insurance claim. A report covering any such conditions would be 
filed with the FEMA Administrator to create a pre-disaster 
baseline of the conditions that might affect the resolution of 
future NFIP claims. The NFIP is required to conduct a rigorous 
study and evaluation and report to Congress no later than 
December 31, 2021 prior to the pilot sunset on December 31, 
2022.

Sec. 4. Penalties for fraud and false statements in the National Flood 
        Insurance Program

    Requires the FEMA Administrator to prohibit false or 
fraudulent statements connected to the preparation, production, 
or submission of claims adjustment or engineering reports. 
Authorizes the FEMA Administrator to develop penalties for such 
violations, including disbarment from participation in the 
NFIP.

Sec. 5. Enhanced policyholder appeals process

    Codifies the due process protections for policyholders 
established after Superstorm Sandy by FEMA for individuals 
wishing to appeal a full or partial denial of their NFIP claim 
by their insurance company, and require FEMA to provide 
policyholders with a written appeal decision that upholds or 
overturns the decision of the insurer.

Sec. 6. Deadline for approval of claims

    Requires the FEMA Administrator to make final 
determinations regarding the approval of a claim for payment or 
disapproval of the claim within 90 days of the claim being 
made. Authorizes the FEMA Administrator to extend the 90-day 
deadline by an additional 15 days when extraordinary 
circumstances warrant more time.

Sec. 7. Litigation process oversight and reform

    Provides the FEMA Administrator with additional authorities 
and responsibilities for overseeing litigation conducted by WYO 
insurance companies acting on behalf of the NFIP. Requires the 
FEMA Administrator to ensure WYO litigation expenses are 
reasonable, appropriate, and cost-effective, with the authority 
to deny any expenses that are contrary to those terms. Gives 
the FEMA Administrator the authority to direct litigation 
strategy as necessary.

Sec. 8. Prohibition on hiring disbarred attorneys

    Prohibits the FEMA Administrator from hiring any attorney 
in connection with the program who has been suspended or 
disbarred.

Sec. 9. Underpayment of claims by Write Your Own (WYO) companies

    Requires the FEMA Administrator to align penalties for WYO 
insurance companies that knowingly underpay claims for losses 
covered to be commensurate with the NFIP's penalties applicable 
to overpayment of such claims.

Sec. 10. Use of technical assistance reports

    Requires the FEMA Administrator to restrict the use of 
outside technical reports by WYO insurance companies and the 
NFIP direct servicing agents as part of specific NFIP claims 
investigations only to such reports that are final and are 
prepared in compliance with applicable state and federal laws 
regarding professional licensure and conduct. Defines 
``technical assistance report'' to mean reports created for the 
purpose of furnishing technical assistance to an insurance 
claims adjuster assigned by NFIP, including those by engineers, 
surveyors, salvors, architects, and certified public 
accountants.

Sec. 11. Improved disclosure requirement for standard flood insurance 
        policies

    Requires the FEMA Administrator to create a coverage 
disclosure sheet for policyholders, which outlines the coverage 
afforded by the NFIP's standard flood insurance policy, 
including a description of the type of loss that would be 
covered, a summary of costs associated with the policy, clear 
communications of the policy's full flood risk determinations. 
Requires the disclosure to include an acknowledgement of the 
disclosure by the policyholder and the insurer selling the 
policy on behalf of the NFIP.

Sec. 12. Reserve Fund amounts

    Authorizes FEMA to transfer money from the Reserve Fund 
into the NFIP for the purposes of paying future claims.

Sec. 13. Sufficient staffing for Office of Flood Insurance Advocate

    Requires the FEMA Administrator to ensure the Office of the 
Flood Insurance Advocate has sufficient staffing within 180 
days after enactment.

Sec. 14. Federal Flood Insurance Advisory Committee

    Creates a new Technical Insurance Advisory Council 
consisting of federal, state, and local experts to review the 
NFIP's insurance practices and propose new standards to FEMA.

Sec. 15. Interagency guidance on compliance

    Twelve months after enactment and every two years 
thereafter, requires that federal banking agencies update the 
document entitled ``Interagency Questions and Answers Regarding 
Flood Insurance,'' which address many flood insurance 
compliance questions in order to understand any conflicts with 
FEMA requirements or other industry practices and limitations.

Sec. 16. GAO study of claims adjustment practices

    Requires the Comptroller General of the United States to 
conduct a study assessing the policies and practices for 
adjustment of claims for losses under the NFIP to determine 
whether the current system impacts the quality of the claims 
and adversely impacts policyholders.

Sec. 17. GAO study of flood insurance coverage treatment of earth 
        movement

    Requires the Comptroller General of the United States to 
conduct a study assessing the treatment of ``earth movement and 
subsidence caused by flooding'' on the NFIP and policyholders.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

NATIONAL FLOOD INSURANCE ACT OF 1968

           *       *       *       *       *       *       *



TITLE XIII--NATIONAL FLOOD INSURANCE

           *       *       *       *       *       *       *



            CHAPTER I--THE NATIONAL FLOOD INSURANCE PROGRAM


                            basic authority

  Sec. 1304. (a) To carry out the purposes of this title, the 
Administrator of the Federal Emergency Management Agency is 
authorized to establish and carry out a national flood 
insurance program which will enable interested persons to 
purchase insurance against loss resulting from physical damage 
to or loss of real property or personal property related 
thereto arising from any flood occurring in the United States.
  (b) Additional Coverage for Compliance With Land Use and 
Control Measures.--
          (1) Authority; eligible properties.--The national 
        flood insurance program established pursuant to 
        subsection (a) shall enable the purchase of insurance 
        to cover the cost of implementing measures that are 
        consistent with land use and control measures 
        established by the community under section 1361 for--
                  [(1)]  (A) properties that are repetitive 
                loss structures;
                  [(2)] (B) properties that are substantially 
                damaged structures;
                  [(3)] (C) properties that have sustained 
                flood damage on multiple occasions, if the 
                Administrator determines that it is cost-
                effective and in the best interests of the 
                National Flood Insurance [Fund to require 
                compliance with the land use and control 
                measures.] Fund to require the implementation 
                of such measures;
                  [(4)] (D) properties for which an offer of 
                mitigation assistance is made under--
                          [(A)] (i) section 1366 (Flood 
                        Mitigation Assistance Program);
                          [(B)] (ii) the Hazard Mitigation 
                        Grant Program authorized under section 
                        404 of the Robert T. Stafford Disaster 
                        Assistance and Emergency Relief Act (42 
                        U.S.C. 5170c);
                          [(C)] (iii) the Predisaster Hazard 
                        Mitigation Program under section 203 of 
                        the Robert T. Stafford Disaster 
                        Assistance and Emergency Relief Act (42 
                        U.S.C. 5133); and
                          [(D)] (iv) any programs authorized or 
                        for which funds are appropriated to 
                        address any unmet needs or for which 
                        supplemental funds are made 
                        available[.];
                  (E) properties that have been identified by 
                the Administrator, or by a community in 
                accordance with such requirements as the 
                Administrator shall establish, as at a high 
                risk of future flood damage; and
                  (F) properties that are located within an 
                area identified pursuant to section 
                1361(e)(1)(A) (42 U.S.C. 4102(e)(1)(A)) by a 
                covered community (as such term is defined in 
                paragraph (3) of such section 1361(e)).
[The Administrator shall impose a surcharge on each insured of 
not more than $75 per policy to provide cost of compliance 
coverage in accordance with the provisions of this subsection.]
          (2) Coverage amount.--
                  (A) Primary coverage.--Each policy for flood 
                insurance coverage made available under this 
                title shall provide coverage under this 
                subsection having an aggregate liability for 
                any single property of $30,000.
                  (B) Enhanced coverage.--The Administrator 
                shall make additional coverage available under 
                this subsection, in excess of the limit 
                specified in subparagraph (A), having an 
                aggregate liability for any single property of 
                up to $60,000.
          (3) Surcharge for coverage.--
                  (A) Primary coverage.--The Administrator 
                shall impose a surcharge on each insured of 
                such amount per policy as the Administrator 
                determines is appropriate to provide cost of 
                compliance coverage in accordance with 
                paragraph (2)(A).
                  (B) Enhanced coverage.--For each flood policy 
                for flood insurance coverage under this title 
                under which additional cost of compliance 
                coverage is provided pursuant to paragraph 
                (2)(B), the Administrator shall impose a 
                surcharge, in addition to the surcharge under 
                subparagraph (A) of this paragraph, in such 
                amount as the Administrator determines is 
                appropriate for the amount of such coverage 
                provided.
          (4) Use of certain materials.--The Administrator 
        shall require that any measures implemented using 
        amounts made available from coverage provided pursuant 
        to this subsection be carried out using materials, 
        identified by the Administrator, that minimize the 
        impact of flooding on the usability of the covered 
        property and reduce the duration that flooding renders 
        the property unusable or uninhabitable.
          (5) Continued flood insurance requirement.--The 
        Administrator may require, as a condition of providing 
        cost of compliance coverage under this subsection for a 
        property, that the owner of the property enter into 
        such binding agreements as the Administrator considers 
        necessary to ensure that the owner of the property (and 
        any subsequent owners) will maintain flood insurance 
        coverage under this title for the property in such 
        amount, and at all times during a period having such 
        duration, as the Administrator considers appropriate to 
        carry out the purposes of this subsection.
  (c) In carrying out the flood insurance program the 
Administrator shall, to the maxmium extent practicable, 
encourage and arrange for--
          (1) appropriate financial participation and risk 
        sharing in the program by insurance companies and other 
        insurers, and
          (2) other appropriate participation on other than a 
        risk-sharing basis, by insurance companies and other 
        insurers, insurance agents and brokers, and insurance 
        adjustment organizations, in accordance with the 
        provisions of chapter II.

           *       *       *       *       *       *       *


                     national flood insurance fund

  Sec. 1310. (a) To carry out the flood insurance program 
authorized by this title, the Administrator shall establish in 
the Treasury of the United States a National Flood Insurance 
Fund (hereinafter referred to as the ``fund'') which shall be 
an account separate from any other accounts or funds available 
to the Administrator and shall be available as described in 
subsection (f), without fiscal year limitation (except as 
otherwise provided in this section)--
          (1) for making such payments as may, from time to 
        time, be required under section 1334;
          (2) to pay reinsurance claims under the excess loss 
        reinsurance coverage provided under section 1335;
          (3) to repay to the Secretary of the Treasury such 
        sums as may be borrowed from him (together with 
        interest) in accordance with the authority provided in 
        section 1309;
          (4) to the extent approved in appropriations Acts, to 
        pay any administrative expenses of the flood insurance 
        and floodplain management programs (including the costs 
        of mapping activities under section 1360);
          (5) for the purposes specified in subsection (d) 
        under the conditions provided therein;
          (6) for carrying out the program under section 
        1315(b);
          (7) for transfers to the National Flood Mitigation 
        Fund, but only to the extent provided in section 
        1367(b)(1); and
          (8) for carrying out section 1363(f).
  (b) The fund shall be credited with--
          (1) such funds borrowed in accordance with the 
        authority provided in section 1309 as may from time to 
        time be deposited in the fund;
          (2) premiums, fees, or other charges which may be 
        paid or collected in connection with the excess loss 
        reinsurance coverage provided under section 1335;
          (3) such amounts as may be advanced to the fund from 
        appropriations in order to maintain the fund in an 
        operative condition adequate to meet its liabilities;
          (4) interest which may be earned on investments of 
        the fund pursuant to subsection (c);
          (5) such sums as are required to be paid to the 
        Administrator under section 1308(d); and
          (6) receipts from any other operations under this 
        title (including premiums under the conditions 
        specified in subsection (d), and salvage proceeds, if 
        any, resulting from reinsurance coverage).
  (c) If, after--
          (1) all outstanding obligations of the fund have been 
        liquidated, and
          (2) any outstanding amounts which may have been 
        advanced to the fund from appropriations authorized 
        under section 1376(a)(2)(B) have been credited to the 
        appropriation from which advanced, with interest 
        accrued at the rate, prescribed under section 15(e) of 
        the Federal Flood Insurance Act of 1956, as in effect 
        immediately prior to the enactment of this title,
the Administrator determines that the moneys of the fund are in 
excess of current needs, he may request the investment of such 
amounts as he deems advisable by the Secretary of the Treasury 
in obligations issued or guaranteed by the United States.
  (d) In the event the Administrator makes a determination in 
accordance with the provisions of section 1340 that operation 
of the flood insurance program, in whole or in part, should be 
carried out through the facilities of the Federal Government, 
the fund shall be available for all purposes incident thereto, 
including--
          (1) cost incurred in the adjustment and payment of 
        any claims for losses, and
          (2) payment of applicable operating costs set forth 
        in the schedules prescribed under section 1311,
for so long as the program is so carried out, and in such event 
any premiums paid shall be deposited by the Administrator to 
the credit of the fund.
  (e) An annual business-type budget for the fund shall be 
prepared, transmitted to the Congress, considered, and enacted 
in the manner prescribed by sections 9103 and 9104 of title 31, 
United States Code, for wholly-owned Government corporations.
  (f) The Fund shall be available, with respect to any fiscal 
year beginning on or after October 1, 1981, only to the extent 
approved in appropriation Acts; except that the fund shall be 
available for the purpose described in subsection (d)(1) 
without such approval.
  (g) Crediting of Reserve Fund Amounts.--Funds collected 
pursuant to section 1310A may be credited to the Fund under 
this section to be available for the purpose described in 
subsection (d)(1).

           *       *       *       *       *       *       *


                     operating costs and allowances

  Sec. 1311. (a) The Administrator shall from time to time 
negotiate with appropriate representatives of the insurance 
industry for the purpose of establishing--
          (1) a current schedule of operating costs applicable 
        both to risk-sharing insurance companies and other 
        insurers and to insurance companies and other insurers, 
        insurance agents and brokers, and insurance adjustment 
        organizations participating on other than a risk-
        sharing basis, and
          (2) a current schedule of operating allowances 
        applicable to risk-sharing insurance companies and 
        other insurers,
which may be payable in accordance with the provisions of 
chapter II, and such schedules shall from time to time be 
prescribed in regulations.
  (b) For purposes of subsection (a)--
          (1) the term ``operating costs'' shall (without 
        limiting such term) include--
                  (A) expense reimbursements covering the 
                direct, actual and necessary expenses incurred 
                in connection with selling and servicing flood 
                insurance coverage;
                  (B) reasonable compensation payable for 
                selling and servicing flood insurance coverage, 
                or commissions or service fees paid to 
                producers;
                  (C) loss adjustment expenses; and
                  (D) other direct, actual, and necessary 
                expenses which the Administrator finds are 
                incurred in connection with selling or 
                servicing flood insurance coverage; and
          (2) the term ``operating allowances'' shall (without 
        limiting such term) include amounts for profit and 
        contingencies which the Administrator finds reasonable 
        and necessary to carry out the purposes of this title.
  (c) Pilot Program for Investigation of Preexisting Structural 
Conditions.--
          (1) Voluntary program.--The Administrator shall carry 
        out a pilot program under this subsection to provide 
        for companies participating in the Write Your Own 
        program (as such term is defined in section 1370(a) (42 
        U.S.C. 4121(a))) to investigate preexisting structural 
        conditions of insured properties and potentially 
        insured properties that could result in the denial of a 
        claim under a policy for flood insurance coverage under 
        this title in the event of a flood loss to such 
        property. Participation in the pilot program shall be 
        voluntary on the part of Write Your Own companies.
          (2) Investigation of properties.--Under the pilot 
        program under this subsection, a Write Your Own company 
        participating in the program shall--
                  (A) provide in policies for flood insurance 
                coverage under this title covered by the 
                program that, upon the request of the 
                policyholder, the company shall provide for--
                          (i) an investigation of the property 
                        covered by such policy, using common 
                        methods, to determine whether 
                        preexisting structural conditions are 
                        present that could result in the denial 
                        of a claim under such policy for flood 
                        losses; and
                          (ii) if such investigation is not 
                        determinative, an on-site inspection of 
                        the property to determine whether such 
                        preexisting structural conditions are 
                        present;
                  (B) upon completion of an investigation or 
                inspection pursuant to subparagraph (A) that 
                determines that such a preexisting structural 
                condition is present or absent, submit a report 
                to the policyholder and Administrator 
                describing the condition; and
                  (C) impose a surcharge on each policy 
                described in subparagraph (A) in such amount 
                that the Administrator determines is 
                appropriate to cover the costs of 
                investigations and inspections performed 
                pursuant to such policies and reimburse Write 
                Your Own companies participating in the program 
                under this subsection for such costs.
          (3) Interim report.--Not later than December 31, 
        2021, the Administrator shall submit a report to the 
        Committee on Financial Services of the House of 
        Representatives and the Committee on Banking, Housing, 
        and Urban Affairs of the Senate describing the 
        operation of the pilot program to that date.
          (4) Sunset.--The Administrator may not provide any 
        policy for flood insurance described in paragraph 
        (2)(A) after December 31, 2022.
          (5) Final report.--Not later than March 31, 2023, the 
        Administrator shall submit a final report regarding the 
        pilot program under this section to the Committee on 
        Financial Services of the House of Representatives and 
        the Committee on Banking, Housing, and Urban Affairs of 
        the Senate. The report shall include any findings and 
        recommendations of the Administrator regarding the 
        pilot program.

                           payment of claims

  Sec. 1312. (a) In General.--[The Administrator] Subject to 
other provisions of this section, the Administrator is 
authorized to prescribe regulations establishing the general 
method or methods by which proved and approved claims for 
losses may be adjusted and paid for any damage to or loss of 
property which is covered by flood insurance made available 
under the provisions of this title.
  (b) Minimum Annual Deductible.--
          (1) Pre-firm properties.--For any structure which is 
        covered by flood insurance under this title, and on 
        which construction or substantial improvement occurred 
        on or before December 31, 1974, or before the effective 
        date of an initial flood insurance rate map published 
        by the Administrator under section 1360 for the area in 
        which such structure is located, the minimum annual 
        deductible for damage to such structure shall be--
                  (A) $1,500, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount equal to 
                or less than $100,000; and
                  (B) $2,000, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount greater 
                than $100,000.
          (2) Post-firm properties.--For any structure which is 
        covered by flood insurance under this title, and on 
        which construction or substantial improvement occurred 
        after December 31, 1974, or after the effective date of 
        an initial flood insurance rate map published by the 
        Administrator under section 1360 for the area in which 
        such structure is located, the minimum annual 
        deductible for damage to such structure shall be--
                  (A) $1,000, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount equal to 
                or less than $100,000; and
                  (B) $1,250, if the flood insurance coverage 
                for such structure covers loss of, or physical 
                damage to, such structure in an amount greater 
                than $100,000.
  (c) Payment of Claims to Condominium Owners.--The 
Administrator may not deny payment for any damage to or loss of 
property which is covered by flood insurance to condominium 
owners who purchased such flood insurance separate and apart 
from the flood insurance purchased by the condominium 
association in which such owner is a member, based solely, or 
in any part, on the flood insurance coverage of the condominium 
association or others on the overall property owned by the 
condominium association.
  (d) Deadline for Approval of Claims.--
          (1) In general.--The Administrator shall provide 
        that, in the case of any claim for damage to or loss of 
        property under flood insurance coverage made available 
        under this title, a final determination regarding 
        approval of a claim for payment or disapproval of the 
        claim be made, and notification of such determination 
        be provided to the insured making such claim, not later 
        than the expiration of the 90-day period (as such 
        period may be extended pursuant to paragraph (2)) 
        beginning upon the day on which such claim was made. 
        Payment of approved claims shall be made as soon as 
        possible after such approval.
          (2) Extension of deadline.--The Administrator shall 
        provide that the period referred to in paragraph (1) 
        may be extended by a single additional period of 15 
        days in cases where extraordinary circumstances are 
        demonstrated. The Administrator shall, by regulation, 
        establish criteria for demonstrating such extraordinary 
        circumstances and for determining to which claims such 
        extraordinary circumstances apply.
  (e) Use of Technical Assistance Reports.--When adjusting 
claims for any damage to or loss of property which is covered 
by flood insurance made available under this title, the 
Administrator may rely upon technical assistance reports, as 
such term is defined in section 1312A, only if such reports are 
final and are prepared in compliance with applicable State and 
Federal laws regarding professional licensure and conduct.

SEC. 1312A. DISCLOSURE OF TECHNICAL ASSISTANCE REPORTS.

  (a) In General.--Notwithstanding section 552a of title 5, 
United States Code, upon request by a policyholder, the 
Administrator shall provide a true, complete, and unredacted 
copy of any technical assistance report that the Administrator 
relied upon in adjusting and paying for any damage to or loss 
of property insured by the policyholder and covered by flood 
insurance made available under this title. Such disclosures 
shall be in addition to any other right of disclosure otherwise 
made available pursuant such section 552a or any other 
provision of law.
  (b) Direct Disclosure by Write Your Own Companies and Direct 
Servicing Agents.--A Write Your Own company or direct servicing 
agent in possession of a technical assistance report subject to 
disclosure under subsection (a) may disclose such technical 
assistance report without further review or approval by the 
Administrator.
  (c) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Policyholder.--The term ``policyholder'' means a 
        person or persons shown as an insured on the 
        declarations page of a policy for flood insurance 
        coverage sold pursuant to this title.
          (2) Technical assistance report.--The term 
        ``technical assistance report'' means a report created 
        for the purpose of furnishing technical assistance to 
        an insurance claims adjuster assigned by the National 
        Flood Insurance Program, including by engineers, 
        surveyors, salvors, architects, and certified public 
        accounts.

           *       *       *       *       *       *       *


  CHAPTER II--ORGANIZATION AND ADMINISTRATION OF THE FLOOD INSURANCE 
PROGRAM

           *       *       *       *       *       *       *



              Part C--Provisions of General Applicability


                     services by insurance industry

  Sec. 1345. (a) In administering the flood insurance program 
under this chapter, the Administrator is authorized to enter 
into any contracts, agreements, or other appropriate 
arrangements which may, from time to time, be necessary for the 
purpose of utilizing, on such terms and conditions as may be 
agreed upon, the facilities and services of any insurance 
companies or other insurers, insurance agents and brokers, or 
insurance adjustment organizations; and such contracts, 
agreements, or arrangements may include provision for payment 
of applicable operating costs and allowances for such 
facilities and services as set forth in the schedules 
prescribed under section 1311.
  (b) Any such contracts, agreements, or other arrangements may 
be entered into without regard to the provisions of section 
3709 of the Revised Statutes (41 U.S.C. 5) or any other 
provisions of law requiring competitive bidding and without 
regard to the provisions of the Federal Advisory Committee Act 
(5 U.S.C. App.).
  (c) The Administrator of the Federal Emergency Management 
Agency shall hold any agent or broker selling or undertaking to 
sell flood insurance under this title harmless from any 
judgment for damages against such agent or broker as a result 
of any court action by a policyholder or applicant arising out 
of an error or omission on the part of the Federal Emergency 
Management Agency, and shall provide any such agent or broker 
with indemnification, including court costs and reasonable 
attorney fees, arising out of and caused by an error or 
omission on the part of the Federal Emergency Management Agency 
and its contractors. The Administrator of the Federal Emergency 
Management Agency may not hold harmless or indemnify an agent 
or broker for his or her error or omission.
  (d) FEMA Authority on Transfer of Policies.--Notwithstanding 
any other provision of this title, the Administrator may, at 
the discretion of the Administrator, refuse to accept the 
transfer of the administration of policies for coverage under 
the flood insurance program under this title that are written 
and administered by any insurance company or other insurer, or 
any insurance agent or broker.
  (e) Risk Transfer.--The Administrator may secure reinsurance 
of coverage provided by the flood insurance program from the 
private reinsurance and capital markets at rates and on terms 
determined by the Administrator to be reasonable and 
appropriate, in an amount sufficient to maintain the ability of 
the program to pay claims.
  (f) Underpayment of Claims by WYO Companies.--The 
Administrator shall establish penalties for companies 
participating in the Write Your Own program knowingly 
underpaying claims for losses covered by flood insurance made 
available under this title, which penalties shall be 
commensurate, with respect to the amount of the penalty, to the 
penalties applicable to overpayment of such claims by a similar 
amount by such companies.

           *       *       *       *       *       *       *


SEC. 1349. PENALTIES FOR FRAUD AND FALSE STATEMENTS IN THE NATIONAL 
                    FLOOD INSURANCE PROGRAM.

  (a) Prohibited Acts.--A person shall not knowingly make a 
false or misleading statement, production, or submission in 
connection with the proving or adjusting of a claim for flood 
insurance coverage made available under this Act. Such 
prohibited acts include--
          (1) knowingly forging an engineering report, claims 
        adjustment report or technical assistance report used 
        to support a claim determination;
          (2) knowingly making any materially false, 
        fictitious, or fraudulent statement or representation 
        in an engineering report, claims adjustment report, or 
        technical assistance report to support a claim 
        determination;
          (3) knowingly submitting a materially false, 
        fictitious, or fraudulent claim.
  (b) Civil Enforcement.--The Attorney General may bring a 
civil action for such relief as may be appropriate whenever it 
appears that any person has violated or is about to violate any 
provision of this section. Such action may be brought in an 
appropriate United States district court.
  (c) Referral to Attorney General.--The Administrator shall 
expeditiously refer to the Attorney General for appropriate 
action any evidence developed in the performance of functions 
under this Act that may warrant consideration for criminal or 
civil prosecution.
  (d) Penalties.--
          (1) Civil monetary penalty.--Any person who violates 
        subsection (a) shall be subject to a civil penalty of 
        not more than $10,000 for each violation, which shall 
        be deposited into the National Flood Insurance Fund 
        established under section 1310 (42 U.S.C. 4017).
          (2) Suspension and debarment.--Any person who 
        violates subsection (a) shall not be eligible, for a 
        period of not less than 2 years and not to exceed 5 
        years, to--
                  (A) receive flood insurance coverage pursuant 
                to this title; or
                  (B) provide services in connection with the 
                selling, servicing, or handling of claims for 
                flood insurance policies provided pursuant to 
                this title.
          (3) Other penalties.--The penalties provided for in 
        this subsection shall be in addition to any other civil 
        or criminal penalty available under law.

SEC. 1350. APPROVAL OF DECISIONS RELATING TO FLOOD INSURANCE COVERAGE.

  (a) In General.--The Administrator shall establish an appeals 
process to enable holders of a flood insurance policy provided 
under this title to appeal the decisions of their insurer, with 
respect to the disallowance, in whole or in part, of any claims 
for proved and approved losses covered by flood insurance. Such 
appeals shall be limited to the claim or portion of the claim 
disallowed by the insurer.
  (b) Appeal Decision.--Upon a decision in an appeal under 
subsection (a), the Administrator shall provide the 
policyholder with a written appeal decision. The appeal 
decision shall explain the Administrator's determination to 
uphold or overturn the decision of the flood insurer. The 
Administrator may direct the flood insurer to take action 
necessary to resolve the appeal, to include re-inspection, re-
adjustment, or payment, as appropriate.
  (c) Rules of Construction.--This section shall not be 
construed as--
          (1) making the Federal Emergency Management Agency or 
        the Administrator a party to the flood insurance 
        contract; or
          (2) creating any action or remedy not otherwise 
        provided by this title.

SEC. 1351. OVERSIGHT OF LITIGATION.

  (a) Oversight.--The Administrator shall monitor and oversee 
litigation conducted by Write Your Own companies arising under 
contracts for flood insurance sold pursuant to this title, to 
ensure that--
          (1) litigation expenses are reasonable, appropriate, 
        and cost-effective; and
          (2) Write Your Own companies comply with guidance and 
        procedures established by the Administrator regarding 
        the conduct of litigation.
  (b) Denial of Reimbursement for Expenses.--The Administrator 
may deny reimbursement for litigation expenses that are 
determined to be unreasonable, excessive, contrary to guidance 
issued by the Administrator, or outside the scope of any 
arrangement entered into with a Write Your Own company.
  (c) Litigation Strategy.--The Administrator may direct 
litigation strategy for claims arising under a contract for 
flood insurance sold by a Write Your Own company.
  (d) Substitution.--If at any time, the Administrator 
determines there is a conflict of interest between the Write 
Your Own company and the National Flood Insurance Program, or 
it is in the best interest of the United States, the 
Administrator may promptly take any necessary action to be 
substituted for the WYO company in any action arising out of 
any claim arising under a contract for flood insurance sold by 
a Write Your Own company.

SEC. 1352. PROHIBITION ON HIRING DISBARRED ATTORNEYS.

  The Administrator may not at any time newly employ in 
connection with the flood insurance program under this title 
any attorney who has been suspended or disbarred by any court, 
bar, or Federal or State agency to which the individual was 
previously admitted to practice.

           *       *       *       *       *       *       *


        CHAPTER IV--APPROPRIATIONS AND MISCELLANEOUS PROVISIONS


                              definitions

  Sec. 1370. (a) As used in this title--
          (1) the term ``flood'' shall have such meaning as may 
        be prescribed in regulations of the Administrator, and 
        may include inundation from rising waters or from the 
        overflow of streams, rivers, or other bodies of water, 
        or from tidal surges, abnormally high tidal water, 
        tidal waves, tsunamis, hurricanes, or other severe 
        storms or deluge;
          (2) the terms ``United States'' (when used in a 
        geographic sense) and ``State'' includes the several 
        States, the District of Columbia, the territories and 
        possessions, the Commonwealth of Puerto Rico, and the 
        Trust Territory of the Pacific Islands;
          (3) the terms ``insurance company'', ``other 
        insurer'' and ``insurance agent or broker'' include any 
        organization or person that is authorized to engage in 
        the business of insurance under the laws of any State, 
        subject to the reporting requirements of the Securities 
        Exchange Act of 1934 pursuant to section 13(a) or 15(d) 
        of such Act (15 U.S.C. 78m(a) and 78o(d)), or 
        authorized by the Administrator to assume reinsurance 
        on risks insured by the flood insurance program;
          (4) the term ``insurance adjustment organization'' 
        includes any organizations and persons engaged in the 
        business of adjusting loss claims arising under 
        insurance policies issued by any insurance company or 
        other insurer;
          (5) the term ``person'' includes any individual or 
        group of individuals, corporation, partnership, 
        association, or any other organized group of persons, 
        including State and local governments and agencies 
        thereof;
          (6) the term ``Administrator'' means the 
        Administrator of the Federal Emergency Management 
        Agency;
          (7) the term ``repetitive loss structure'' means a 
        structure covered by a contract for flood insurance 
        that--
                  (A) has incurred flood-related damage on 2 
                occasions, in which the cost of repair, on the 
                average, equaled or exceeded 25 percent of the 
                value of the structure at the time of each such 
                flood event; and
                  (B) at the time of the second incidence of 
                flood-related damage, the contract for flood 
                insurance contains increased cost of compliance 
                coverage.
          (8) the term ``Federal agency lender'' means a 
        Federal agency that makes direct loans secured by 
        improved real estate or a mobile home, to the extent 
        such agency acts in such capacity;
          (9) the term ``Federal entity for lending 
        regulation'' means the Board of Governors of the 
        Federal Reserve System, the Federal Deposit Insurance 
        Corporation, the Comptroller of the Currency, the 
        National Credit Union Administration, and the Farm 
        Credit Administration, and with respect to a particular 
        regulated lending institution means the entity 
        primarily responsible for the supervision of the 
        institution;
          (10) the term ``improved real estate'' means real 
        estate upon which a building is located;
          (11) the term ``lender'' means a regulated lending 
        institution or Federal agency lender;
          (12) the term ``natural and beneficial floodplain 
        functions'' means--
                  (A) the functions associated with the natural 
                or relatively undisturbed floodplain that (i) 
                moderate flooding, retain flood waters, reduce 
                erosion and sedimentation, and mitigate the 
                effect of waves and storm surge from storms, 
                and (ii) reduce flood related damage; and
                  (B) ancillary beneficial functions, including 
                maintenance of water quality and recharge of 
                ground water, that reduce flood related damage;
          (13) the term ``regulated lending institution'' means 
        any bank, savings and loan association, credit union, 
        farm credit bank, Federal land bank association, 
        production credit association, or similar institution 
        subject to the supervision of a Federal entity for 
        lending regulation;
          (14) the term ``servicer'' means the person 
        responsible for receiving any scheduled periodic 
        payments from a borrower pursuant to the terms of a 
        loan, including amounts for taxes, insurance premiums, 
        and other charges with respect to the property securing 
        the loan, and making the payments of principal and 
        interest and such other payments with respect to the 
        amounts received from the borrower as may be required 
        pursuant to the terms of the loan; [and]
          (15) the term ``substantially damaged structure'' 
        means a structure covered by a contract for flood 
        insurance that has incurred damage for which the cost 
        of repair exceeds an amount specified in any regulation 
        promulgated by the Administrator, or by a community 
        ordinance, whichever is lower[.];
          (16) the term ``Write Your Own Program'' means the 
        program under which the Federal Emergency Management 
        Agency enters into a standard arrangement with private 
        property insurance companies to sell contracts for 
        flood insurance coverage under this title under their 
        own business lines of insurance, and to adjust and pay 
        claims arising under such contracts; and
          (17) the term ``Write Your Own company'' means a 
        private property insurance company that participates in 
        the Write Your Own Program.
  (b) The term ``flood'' shall also include inundation from 
mudslides which are proximately caused by accumulations of 
water on or under the ground; and all of the provisions of this 
title shall apply with respect to such mudslides in the same 
manner and to the same extent as with respect to floods 
described in subsection (a)(1), subject to and in accordance 
with such regulations, modifying the provisions of this title 
(including the provisions relating to land management and use) 
to the extent necessary to insure that they can be effectively 
so applied, as the Administrator may prescribe to achieve (with 
respect to such mudslides) the purposes of this title and the 
objectives of the program.
  (c) The term ``flood'' shall also include the collapse or 
subsidence of land along the shore of a lake or other body of 
water as a result of erosion or undermining caused by waves or 
currents of water exceeding anticipated cyclical levels, and 
all of the provisions of this title shall apply with respect to 
such collapse or subsidence in the same manner and to the same 
extent as with respect to floods described in subsection 
(a)(1), subject to and in accordance with such regulations, 
modifying the provisions of this title (including the 
provisions relating to land management and use) to the extent 
necessary to insure that they can be effectively so applied, as 
the Administrator may prescribe to achieve (with respect to 
such collapse or subsidence) the purposes of this title and the 
objectives of the program.

           *       *       *       *       *       *       *

                              ----------                              


 SECTION 205 OF THE BUNNING-BLUMENAUER-BEREUTER FLOOD INSURANCE REFORM 
                              ACT OF 2004


[SEC. 205. APPEAL OF DECISIONS RELATING TO FLOOD INSURANCE COVERAGE.

   [Not later than 6 months after the date of enactment of this 
Act, the Director shall, by regulation, establish an appeals 
process through which holders of a flood insurance policy may 
appeal the decisions, with respect to claims, proofs of loss, 
and loss estimates relating to such flood insurance policy, 
of--
          [(1) any insurance agent or adjuster, or insurance 
        company; or
          [(2) any employee or contractor of the Federal 
        Emergency Management Agency.]
                              ----------                              


BIGGERT-WATERS FLOOD INSURANCE REFORM ACT OF 2012

           *       *       *       *       *       *       *



DIVISION F--MISCELLANEOUS

           *       *       *       *       *       *       *


                       TITLE II--FLOOD INSURANCE

Subtitle A--Flood Insurance Reform and Modernization

           *       *       *       *       *       *       *


SEC. 100202. DEFINITIONS.

  (a) In General.--In this subtitle, the following definitions 
shall apply:
          (1) 100-YEAR FLOODPLAIN.--The term ``100-year 
        floodplain'' means that area which is subject to 
        inundation from a flood having a 1-percent chance of 
        being equaled or exceeded in any given year.
          (2) 500-YEAR FLOODPLAIN.--The term ``500-year 
        floodplain'' means that area which is subject to 
        inundation from a flood having a 0.2-percent chance of 
        being equaled or exceeded in any given year.
          (3) Administrator.--The term ``Administrator'' means 
        the Administrator of the Federal Emergency Management 
        Agency.
          (4) National flood insurance program.--The term 
        ``National Flood Insurance Program'' means the program 
        established under the National Flood Insurance Act of 
        1968 (42 U.S.C. 4011 et seq.).
          [(5) Write your own.--The term ``Write Your Own'' 
        means the cooperative undertaking between the insurance 
        industry and the Federal Insurance Administration which 
        allows participating property and casualty insurance 
        companies to write and service standard flood insurance 
        policies.]
          (5) Write your own.--The terms ``Write Your Own 
        Program'' and ``Write Your Own company'' have the 
        meanings given such terms in section 1370(a) of the 
        National Flood Insurance Act of 1968 (42 U.S.C. 
        4121(a)).
  (b) Common Terminology.--Except as otherwise provided in this 
subtitle, any terms used in this subtitle shall have the 
meaning given to such terms under section 1370 of the National 
Flood Insurance Act of 1968 (42 U.S.C. 4121).

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SEC. 100234. POLICY DISCLOSURES.

  (a) In General.--Notwithstanding any other provision of law, 
in addition to any other disclosures that may be required, each 
policy under the National Flood Insurance Program shall state 
all conditions, exclusions, and other limitations pertaining to 
coverage under the subject policy, regardless of the underlying 
insurance product, in plain English, in boldface type, and in a 
font size that is twice the size of the text of the body of the 
policy.
  (b) Violations.--The Administrator may impose a civil penalty 
of not more than $50,000 on any person that fails to comply 
with subsection (a).
  (c) Disclosure of Coverage.--
          (1) Disclosure sheet.--Each policy under the National 
        Flood Insurance Program shall include a disclosure 
        sheet that sets forth, in plain language--
                  (A) the definition of the term ``flood'' for 
                purposes of coverage under the policy;
                  (B) a description of what type of flood 
                forces are necessary so that losses from an 
                event are covered under the policy, including 
                overflow of inland or tidal waves, unusual and 
                rapid accumulation or runoff of a surface any 
                source, and mudflow;
                  (C) a statement of the types and 
                characteristics of losses that are not covered 
                under the policy;
                  (D) a summary of total cost and amount of 
                insurance coverage, and any other information 
                relating to such coverage required to be 
                disclosed under section 1308(l) of the National 
                Flood Insurance Act of 1968 (42 U.S.C. 
                4015(l));
                  (E) a statement that the disclosure sheet 
                provides general information about the 
                policyholder's standard flood insurance policy;
                  (F) a statement that the standard flood 
                insurance policy, together with the 
                application, endorsements, and declarations 
                page, make up the official contract and are 
                controlling in the event that there is any 
                difference between the information on the 
                disclosure sheet and the information in the 
                policy; and
                  (G) a statement that if the policyholder has 
                any questions regarding information in the 
                disclosure sheet or policy he or she should 
                contact the entity selling the policy on behalf 
                of the Program, together with contact 
                information sufficient to allow the 
                policyholder to contact such entity.
          (2) Acknowledgment sheet.--Each policy under the 
        National Flood Insurance Program shall include an 
        acknowledgment sheet that sets forth, in plain 
        language--
                  (A) a statement of whether or not there is a 
                basement in the property to be covered by the 
                policy;
                  (B) a statement of whether or not the policy 
                provides coverage for the contents of the 
                property covered by the policy;
                  (C) a statement that the standard flood 
                insurance policy, together with the 
                application, endorsements, and declarations 
                page, make up the official contract and are 
                controlling in the event that there is any 
                difference between the information on the 
                acknowledgment sheet and the information in the 
                policy; and
                  (D) a statement that if the policyholder has 
                any questions regarding information in the 
                acknowledgment sheet or policy he or she should 
                contact the entity selling the policy on behalf 
                of the Program, together with contact 
                information sufficient to allow the 
                policyholder to contact such entity.
          (3) Required signatures.--Notwithstanding section 
        1306(c) of the National Flood Insurance Act of 1968 (42 
        U.S.C. 4013(c)), a policy for flood insurance coverage 
        under the National Flood Insurance Program may not take 
        effect unless the disclosure sheet required under 
        paragraph (1) and the acknowledgment sheet required 
        under paragraph (2), with respect to the policy, are 
        signed and dated by the policyholder and the seller of 
        the policy who is acting on behalf of the Program.

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HOMEOWNER FLOOD INSURANCE AFFORDABILITY ACT OF 2014

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SEC. 24. DESIGNATION OF FLOOD INSURANCE ADVOCATE.

  (a) In General.--The Administrator shall designate a Flood 
Insurance Advocate to advocate for the fair treatment of policy 
holders under the National Flood Insurance Program and property 
owners in the mapping of flood hazards, the identification of 
risks from flood, and the implementation of measures to 
minimize the risk of flood.
  (b) Duties and Responsibilities.--The duties and 
responsibilities of the Flood Insurance Advocate designated 
under subsection (a) shall be to--
          (1) educate property owners and policyholders under 
        the National Flood Insurance Program on--
                  (A) individual flood risks;
                  (B) flood mitigation;
                  (C) measures to reduce flood insurance rates 
                through effective mitigation;
                  (D) the flood insurance rate map review and 
                amendment process; and
                  (E) any changes in the flood insurance 
                program as a result of any newly enacted laws 
                (including this Act);
          (2) assist policy holders under the National Flood 
        Insurance Program and property owners to understand the 
        procedural requirements related to appealing 
        preliminary flood insurance rate maps and implementing 
        measures to mitigate evolving flood risks;
          (3) assist in the development of regional capacity to 
        respond to individual constituent concerns about flood 
        insurance rate map amendments and revisions;
          (4) coordinate outreach and education with local 
        officials and community leaders in areas impacted by 
        proposed flood insurance rate map amendments and 
        revisions; and
          (5) aid potential policy holders under the National 
        Flood Insurance Program in obtaining and verifying 
        accurate and reliable flood insurance rate information 
        when purchasing or renewing a flood insurance policy.
  (c) Staff.--The Administrator shall ensure that the Flood 
Insurance Advocate has sufficient staff to carry out all of the 
duties and responsibilities of the Advocate under this section.

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