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116th Congress } { Report
HOUSE OF REPRESENTATIVES
1st Session } { 116-261
======================================================================
NATIONAL FLOOD INSURANCE PROGRAM ADMINISTRATIVE REFORM ACT OF 2019
_______
October 28, 2019.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Ms. Waters, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 3111]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 3111) 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 with an amendment and recommend that the bill
as amended do pass.
CONTENTS
Page
Purpose and Summary.............................................. 9
Background and Need for Legislation.............................. 9
Section-by-Section Analysis...................................... 10
Hearings......................................................... 12
Committee Consideration.......................................... 13
Committee Votes and Roll Call Votes.............................. 13
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 15
Statement of Performance Goals and Objectives.................... 15
New Budget Authority and CBO Cost Estimate....................... 15
Committee Cost Estimate.......................................... 17
Unfunded Mandate Statement....................................... 17
Advisory Committee............................................... 18
Application of Law to the Legislative Branch..................... 18
Earmark Statement................................................ 18
Duplication of Federal Programs.................................. 18
Changes to Existing Law.......................................... 18
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``National Flood
Insurance Program Administrative Reform Act of 2019''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Pilot program for properties with preexisting conditions.
Sec. 3. Penalties for fraud and false statements in the National Flood
Insurance Program.
Sec. 4. Enhanced policyholder appeals process rights.
Sec. 5. Deadline for approval of claims.
Sec. 6. Litigation process oversight and reform.
Sec. 7. Prohibition on hiring disbarred attorneys.
Sec. 8. Technical assistance reports.
Sec. 9. Improved disclosure requirement for standard flood insurance
policies.
Sec. 10. Reserve Fund amounts.
Sec. 11. Sufficient staffing for Office of Flood Insurance Advocate.
Sec. 12. Federal Flood Insurance Advisory Committee.
Sec. 13. Interagency guidance on compliance.
Sec. 14. GAO study of claims adjustment practices.
Sec. 15. GAO study of flood insurance coverage treatment of earth
movement.
Sec. 16. Definitions.
SEC. 2. PILOT PROGRAM FOR PROPERTIES WITH PREEXISTING CONDITIONS.
Section 1311 of the National Flood Insurance Act of 1968 (42 U.S.C.
4018) is amended by adding at the end the following new subsection:
``(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, 2023, 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, 2024.
``(5) Final report.--Not later than March 31, 2025, 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.''.
SEC. 3. PENALTIES FOR FRAUD AND FALSE STATEMENTS IN THE NATIONAL FLOOD
INSURANCE PROGRAM.
Part C of chapter II of the National Flood Insurance Act of 1968 (42
U.S.C. 4081 et seq.) is amended by adding at the end the following new
section:
``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,
fictitious, or fraudulent 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 that results in a
wrongful denial or substantial payment error of flood insurance
coverage; and
``(3) knowingly submitting a materially false, fictitious, or
fraudulent claim that results in wrongful payment of flood
insurance coverage.
``(b) Definition.--For purposes of this section, the term `knowingly'
means having actual awareness of the prohibitions under this part and
acting deliberately in violation of such prohibitions.
``(c) Administrative Remedy.--Prior to any legal action being taken
related to this section, all administrative remedies shall be
exhausted.
``(d) Rule of Construction.--This section shall not be construed--
``(1) to prevent the Federal Government from bringing action
against a company or individual under applicable statutes,
including the False Claims Act; and
``(2) as creating any action, private right of action, or
remedy not otherwise provided by this title or under Federal
law.
``(e) State action.--Any person found to have violated subsection (a)
shall be referred to the appropriate and relevant State licensing
agency by the Attorney General.''.
SEC. 4. ENHANCED POLICYHOLDER APPEALS PROCESS RIGHTS.
(a) Establishment.--Part C of chapter II of the National Flood
Insurance Act of 1968 (42 U.S.C. 4081 et seq.), as amended by the
preceding provisions of this Act, is further amended by adding at the
end the following new section:
``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 decisions, with respect to the disallowance, in
whole or in part, of any claims for losses covered by flood insurance.
Such appeals shall be limited to the claim or portion of the claim
disallowed.
``(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, modify, or overturn the decision. The
Administrator may direct the Write Your Own company to take action
necessary to resolve the appeal, to include re-inspection, re-
adjustment, or payment, as appropriate.
``(c) Deadline for Appeals Decision.-- The Administrator shall issue
an appeals decision pursuant to subsection (b) not later than the
expiration of the 120-day period beginning upon the day on which the
Administrator acknowledges receipt of a request by the policyholder to
pursue an appeal of the initial determination regarding approval,
disapproval, or amount of payment by the Administrator. In cases where
extraordinary circumstances, as established by regulation, are
demonstrated, the 120-day period may be extended by additional
successive periods of 30 days.
``(d) Administrative Remedy.--A policyholder shall exhaust all
administrative remedies, including submission of disputed claims to
appeal under subsection (a), prior to commencing legal action on a
disputed claim.
``(e) 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.
``(f) Policyholder Litigation.--This section shall not be construed
to prevent a policyholder from bringing legal action against the
Federal Emergency Management Agency or a Write Your Own company
following the exhaustion of all administrative remedies and pursuant to
applicable statute.''.
(b) Maintenance of Litigation Rights.--Section 1341 of the National
Flood Insurance Act of 1968 (42 U.S.C. 4072) is amended by adding after
the period at the end the following: ``For purposes of this section,
the time from which the Administrator has acknowledged receipt of a
request by the policyholder to pursue an appeal of the initial
determination regarding approval, disapproval, or amount of payment by
the Administrator until the Administrator mails a final determination
of such appeal shall not be considered towards the one year statute of
limitation under this Act. However, this section shall not be construed
as creating any action or remedy not otherwise provided by this
title.''.
(c) Repeal.--Section 205 of the Bunning-Bereuter-Blumenauer Flood
Insurance Reform Act of 2004 (42 U.S.C. 4011 note) is hereby repealed.
SEC. 5. DEADLINE FOR APPROVAL OF CLAIMS.
(a) In General.--Section 1312 of the National Flood Insurance Act of
1968 (42 U.S.C. 4019) is amended--
(1) in subsection (a), by striking ``The Administrator'' and
inserting ``Subject to other provisions of this section, the
Administrator''; and
(2) by adding at the end the following new subsection:
``(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, an
initial 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 120-day period (as such period
may be extended pursuant to paragraph (2)) beginning upon the
day on which the policyholder submits a signed proof of loss
detailing the damage and amount of the loss. Payment of
approved claims shall be made as soon as possible after such
approval.
``(2) Extension of deadline.--The Administrator shall--
``(A) provide that the period referred to in
paragraph (1) may be extended by additional successive
periods of 30 days in cases where extraordinary
circumstances are demonstrated; and
``(B) establish, by regulation, criteria for
demonstrating such extraordinary circumstances.''.
(b) Applicability.--The amendments made by subsection (a) shall apply
to any claim under flood insurance coverage made available under the
National Flood Insurance Act of 1968 (42 U.S.C. 4001 et seq.) pending
on the date of the enactment of this Act and any claims made after such
date of enactment.
SEC. 6. LITIGATION PROCESS OVERSIGHT AND REFORM.
(a) In General.--Part C of chapter II of the National Flood Insurance
Act of 1968 (42 U.S.C. 4081 et seq.), as amended by the preceding
provisions of this Act, is further amended by adding at the end the
following new section:
``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) Joint Defense.--
``(1) Authority.--The Administrator and the Write Your Own
companies may enter into, and operate under, a joint defense
agreement for any claim or lawsuit, or multiple claims or
lawsuits, arising under a contract of flood insurance.
``(2) Free flow of information.--Under such joint defense
agreement, there may be the free flow of information between
the Write Your Own companies, the Administrator, the United
States Department of Justice, and legal counsel for the Write
Your Own companies for the purpose of litigation coordination
and to allow the Administrator to perform oversight
responsibility of such litigation.
``(3) Arrangement.-- Such joint defense agreement may be
included in the Arrangement between the Administrator and the
Write Your Own companies.
``(4) Regulations.--The Administrator may issue rules or
regulations or provide such formal guidance as the
Administrator considers necessary and appropriate in order to
further such joint defense agreement with the Write Your Own
companies.''.
(b) Implementation.--The Administrator of the Federal Emergency
Management Agency shall initiate compliance with section 1351(c) of the
National Flood Insurance Act of 1968, as added by the amendment made by
subsection (a) of this section, not later than the expiration of the
12-month period beginning on the date of the enactment of this Act.
SEC. 7. PROHIBITION ON HIRING DISBARRED ATTORNEYS.
Part C of chapter II of the National Flood Insurance Act of 1968 (42
U.S.C. 4081 et seq.), as amended by the preceding provisions of this
Act, is further amended by adding at the end the following new section:
``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.''.
SEC. 8. TECHNICAL ASSISTANCE REPORTS.
(a) Use.--Section 1312 of the National Flood Insurance Act of 1968
(42 U.S.C. 4019), as amended by the preceding provisions of this Act,
is further amended by adding at the end the following new subsection:
``(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.''.
(b) Disclosure.--The National Flood Insurance Act of 1968 is amended
by inserting after section 1312 (42 U.S.C. 4019) the following new
section:
``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.''.
SEC. 9. IMPROVED DISCLOSURE REQUIREMENT FOR STANDARD FLOOD INSURANCE
POLICIES.
(a) In General.--Section 100234 of the Biggert-Waters Flood Insurance
Reform Act of 2012 (42 U.S.C. 4013a) is amended by adding at the end
the following new subsections:
``(c) Disclosure of Coverage.--
``(1) Disclosure sheet.--Each policy under the National Flood
Insurance Program shall include a standard disclosure sheet
that is produced by the Administrator 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 acknowledging that a standard flood
insurance policy does not cover basement improvements,
such as finished walls, floors, and ceilings, or
personal property kept in a basement;
``(D) a statement acknowledging a standard flood
insurance policy does not include coverage for personal
property, but such coverage may be purchased, for some
personal property contained in a basement, as well as
personal belongings contained elsewhere in the
dwelling;
``(E) a statement of the other types and
characteristics of losses that are not covered under
the policy;
``(F) a statement that the disclosure sheet provides
general information about the policyholder's standard
flood insurance policy;
``(G) a statement that the standard flood insurance
policy, together with the 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;
``(H) a statement that, if the policyholder has any
questions regarding information in the disclosure sheet
or policy, the policyholder 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; and
``(I) any other information that the Administrator
determines will be helpful to policyholder in
understanding flood insurance coverage.
``(2) Acknowledgment sheet.--Each policy application under
the National Flood Insurance Program shall include an
acknowledgment sheet on which the policyholder shall
affirmatively--
``(A) acknowledge that the policyholder received the
disclosure sheet required under paragraph (1);
``(B) accept or decline coverage for personal
property;
``(C) accept or decline other optional coverage that
may be available;
``(D) acknowledge the policyholder's understanding
that the standard flood insurance policy, together with
the 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
``(E) acknowledge that the policyholder has been
provided and has reviewed a summary, which may be the
policy declarations page, of the total cost, amount and
extent of insurance coverage provided under the policy.
``(d) Rule of Construction.--This section shall not be construed to
void or alter the coverage terms of the underlying standard flood
insurance policy and the corresponding endorsements. In the event that
the customer does not affirmatively acknowledge the requirements under
subsection (c)(2), a Write Your Own company may still issue the policy
on behalf of the National Flood Insurance Program under such terms.''.
(b) Repeals.--Sections 202 and 203 of the Bunning-Bereuter-Blumenauer
Flood Insurance Reform Act of 2004 (42 U.S.C. 4011 note) are hereby
repealed.
SEC. 10. RESERVE FUND AMOUNTS.
Section 1310 of the National Flood Insurance Act of 1968 (42 U.S.C.
4017) is amended by adding at the end the following new subsection:
``(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).''.
SEC. 11. SUFFICIENT STAFFING FOR OFFICE OF FLOOD INSURANCE ADVOCATE.
(a) In General.--Section 24 of the Homeowner Flood Insurance
Affordability Act of 2014 (42 U.S.C. 4033) is amended by adding at the
end the following new subsection:
``(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.''.
(b) Timing.--The Administrator of the Federal Emergency Management
Agency shall take such actions as may be necessary to provide for full
compliance with section 24(c) of the Homeowner Flood Insurance
Affordability Act of 2014, as added by the amendment made by subsection
(a) of this section, not later than the expiration of the 180-day
period beginning on the date of the enactment of this Act.
SEC. 12. FEDERAL FLOOD INSURANCE ADVISORY COMMITTEE.
Section 1318 of the National Flood Insurance Act of 1968 (42 U.S.C.
4025) is amended to read as follows:
``SEC. 1318. FEDERAL FLOOD INSURANCE ADVISORY COMMITTEE.
``(a) Establishment.--There is established an advisory committee to
be known as the Federal Flood Insurance Advisory Committee (in this
section referred to as the `Committee').
``(b) Membership.--
``(1) Members.--The Committee shall consist of--
``(A) the Administrator of the Federal Emergency
Management Agency (in this section referred to as the
`Administrator'), or the designee thereof; and
``(B) additional members appointed by the
Administrator or the designee of the Administrator, who
shall include--
``(i) three representatives of Write Your Own
companies;
``(ii) one individual who served in the past,
or is currently serving, as an insurance
regulator of a State, the District of Columbia,
the Commonwealth of Puerto Rico, Guam, the
Commonwealth of the Northern Mariana Islands,
the Virgin Islands, American Samoa, or any
federally-recognized Indian tribe;
``(iii) one representative of the financial
or insurance sectors who is involved in risk
transfers, including reinsurance, resilience
bonds, and other insurance-linked securities;
``(iv) one actuary with demonstrated high-
level knowledge of catastrophic risk insurance;
``(v) two insurance agents or brokers with
demonstrated experience with the sale of flood
insurance under the National Flood Insurance
Program, one of whom shall have demonstrated
expertise in the challenges in insuring low-
income communities;
``(vi) one insurance claims specialist;
``(vii) one representative of a recognized
consumer advocacy organization; and
``(viii) one representative from an academic
institution who has demonstrated expertise in
insurance.
``(2) Qualifications.--In appointing members under paragraph
(1)(C), the Administrator shall, to the maximum extent
practicable, ensure the membership of the Committee has a
balance of members reflecting geographic diversity, including
representation from areas inland or with coastline identified
by the Administrator as at high risk for flooding or as areas
having special flood hazards.
``(c) Duties.--The Administrator shall submit, and the Committee
shall review and make recommendations on, matters related to the
insurance aspects of the National Flood Insurance Program, including
ratemaking, technology to administer insurance, risk assessment,
actuarial practices, claims practices, sales and insurance delivery,
compensation and allowances, the public-private partnership under the
Write Your Own arrangement, general best insurance practices, and any
significant changes proposed to be made regarding the operation of the
National Flood Insurance Program.
``(d) Chairperson.--The members of the Committee shall elect one
member to serve as the chairperson of the Committee (in this section
referred to as the `Chairperson').
``(e) Compensation.--Members of the Committee shall receive no
additional compensation by reason of their service on the Committee.
Members may be reimbursed by the Federal Government for travel
expenses, including per diem in lieu of subsistence, at rates
consistent with rates authorized for employees of Federal agencies
under subchapter 1 of chapter 57 of title 5, United States Code, while
away from home or regular places of business in performance of service
for the Committee.
``(f) Meetings and Actions.--
``(1) In general.--The Committee shall meet not less
frequently than twice each year at the request of the
Chairperson or a majority of its members, and may take action
by a vote of the majority of the members in accordance with the
Committee's charter.
``(2) Initial meeting.--The Administrator, or a person
designated by the Administrator, shall request and coordinate
the initial meeting of the Committee.
``(g) Transparency; FACA.--To the greatest extent possible, the
Committee shall operate in a transparent manner that adheres to the
requirements of the Federal Advisory Committee Act, with the exception
that the Committee shall be permitted to freely communicate both during
and between meetings under paragraph (f) in a confidential manner to
discuss non-public information regarding the operations of the National
Flood Insurance Program and other sensitive and non-public issues. If
such communication occurs, the Committee shall, to the greatest extent
possible, report a summary of such discussions in an appropriate public
manner.
``(h) Staff of FEMA.--Upon the request of the Chairperson, the
Administrator may detail, on a nonreimbursable basis, personnel of the
Federal Emergency Management Agency to assist the Committee in carrying
out its duties.
``(i) Powers.--In carrying out this section, the Committee may hold
hearings, receive evidence and assistance, provide information, and
conduct research, as it considers appropriate.
``(j) Reports to Congress.--The Administrator, on an annual basis,
shall report to the Committee on Financial Services of the House of
Representatives, the Committee on Banking, Housing, and Urban Affairs
of the Senate, and the Office of Management and Budget on--
``(1) the recommendations made by the Committee;
``(2) actions taken by the Federal Emergency Management
Agency to address such recommendations to improve the insurance
aspects of the national flood insurance program; and
``(3) any recommendations made by the Committee that have
been deferred or not acted upon, together with an explanatory
statement.
``(k) Rule of Construction.--This section shall not be construed to
eliminate or alter any requirement on the Administrator associated with
the notification or consultation of specified individuals or groups of
individuals as required elsewhere by statute.''.
SEC. 13. INTERAGENCY GUIDANCE ON COMPLIANCE.
The Federal entities for lending regulation (as such term is defined
in section 3(a) of the Flood Disaster Protection Act of 1973 (42 U.S.C.
4003(a))), in consultation with the Administrator of the Federal
Emergency Management Agency, shall update and reissue the document
entitled ``Interagency Questions and Answers Regarding Flood
Insurance'' not later than the expiration of the 12-month period
beginning on the date of the enactment of this Act and not less
frequently than biennially thereafter.
SEC. 14. GAO STUDY OF CLAIMS ADJUSTMENT PRACTICES.
The Comptroller General of the United States shall conduct a study of
the policies and practices for adjustment of claims for losses under
flood insurance coverage made available under the National Flood
Insurance Act, which shall include--
(1) a comparison of such policies and practices with the
policies and practices for adjustment of claims for losses
under other insurance coverage;
(2) an assessment of the quality of the adjustments conducted
and the effects of such policies and practices on such quality;
(3) identification of any incentives under such policies and
practices that affect the speed with which such adjustments are
conducted; and
(4) identification of the affects of such policies and
practices on insureds submitting such claims for losses.
Not later than the expiration of the 18-month period beginning on the
date of the enactment of this Act, the Comptroller General 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 regarding the findings and conclusions of the
study conducted pursuant to this section.
SEC. 15. GAO STUDY OF FLOOD INSURANCE COVERAGE TREATMENT OF EARTH
MOVEMENT.
The Comptroller General of the United States shall conduct a study of
the treatment, under flood insurance coverage made available under the
National Flood Insurance Act, of earth movement and subsidence,
including earth movement and subsidence caused by flooding, which shall
include--
(1) identification and analysis of the effects of such
treatment on the National Flood Insurance Program and insureds
under the program;
(2) an assessment of the availability and affordability of
coverage in the private insurance market for earth movement and
subsidence caused by flooding;
(3) an assessment of the effects on the National Flood
Insurance Program of covering earth movement and subsidence
caused by flooding; and
(4) a projection of the increased premiums that would be
required to make coverage for earth movement losses actuarially
sound and not fiscally detrimental to the continuation of the
National Flood Insurance Program.
Not later than the expiration of the 18-month period beginning on the
date of the enactment of this Act, the Comptroller General 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 regarding the findings and conclusions of the
study conducted pursuant to this section.
SEC. 16. DEFINITIONS.
(a) National Flood Insurance Act of 1968.--Subsection (a) of section
1370 of the National Flood Insurance Act of 1968 (42 U.S.C. 4121(a)) is
amended--
(1) in paragraph (14), by striking ``and'' at the end;
(2) in paragraph (15), by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following new paragraphs:
``(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) Biggert-Waters Flood Insurance Reform Act of 2012.--Subsection
(a) of section 100202 of the Biggert-Waters Flood Insurance Reform Act
of 2012 (42 U.S.C. 4004(a)) is amended by striking paragraph (5) and
inserting the following new paragraph:
``(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)).''.
Purpose and Summary
H.R. 3111, The National Flood Insurance Program
Administrative Reform Act of 2019, makes numerous improvements
to the administration of claims arising out of the Program,
drawing on the lessons learned from Superstorm Sandy. H.R. 3111
ensures that policyholders better understand the terms of their
flood insurance policies, improves the appeals and litigation
process, and prohibits and penalizes fraud and fraudulent
statements in the claims process, among other reforms.
Background and Need for Legislation
In late October 2012, Superstorm Sandy made landfall in the
United States, resulting in more than 144,000 National Flood
Insurance Program (NFIP) policyholders submitting notices of
flood loss. The NFIP paid out more than $8.4 billion in flood
claims with an average paid loss of $64,331.\1\ Multiple issues
with the claims handling process arose in the handling of these
claims, which the H.R. 3111 seeks to address.
---------------------------------------------------------------------------
\1\Testimony of Roy Wright, Housing and Insurance Subcommittee,
Committee on Financial Services, Flood Insurance Reform: FEMA's
Perspective. Thursday, March 9, 2017.
---------------------------------------------------------------------------
First, some Sandy victims were unfairly denied policy
proceeds based on ``pre-existing conditions'' of the structure,
or in some cases, ``earth movement''. In response, the H.R.
3111 would create a 5-year pilot program to voluntarily inspect
pre-existing structural conditions of insured and pre-insured
properties and report to Congress within three years. The H.R.
3111 would also require a GAO study on flood insurance coverage
treatment of earth movement.
Second, many Sandy victims dissatisfied with their claim
amount filed an administrative appeal with the Federal
Emergency Management Agency (FEMA) or a lawsuit in U.S.
District Court but ran into issues with these appeals
processes. For example, a March 2016 DHS IG report found that
FEMA's appeals process offered little opportunity for the
policyholder to explain their grievances.\2\ The report
explains that FEMA would essentially either agree with the
write-your-own (WYO) company\3\ on the denial of the claim, or
return the claim to the company that originally denied it for
reevaluation. The report also found that there is little
incentive for the WYO companies to minimize litigation costs
because FEMA ultimately covers the cost of any litigation
expenses that arise within the scope of FEMA's relationship
with the WYO. The H.R. 3111 would make a number of changes in
response to these issues including: (1) Codifying an enhanced
policyholder appeals process established by FEMA for
individuals appealing a full or partial denial of their claim;
(2) requiring the Administrator to make final determinations of
claims within 120 days of filing; (3) requiring the
Administrator to monitor and oversee litigation conducted by
the WYOs to ensure that expenses are reasonable, appropriate,
and cost-effective, and that WYOs comply with guidance and
procedures related to litigation; (4) prohibiting the hiring of
disbarred attorneys; and (5) requiring a GAO study on claims
adjustment practices.
---------------------------------------------------------------------------
\2\Office of the Inspector General Report entitled, ``FEMA Does Not
Provide Adequate Oversight of Its National Flood Insurance Write Your
Own Program, March 2016, available at https://www.oig.dhs.gov/assets/
Mgmt/2016/OIG0916-47-Mar16.pdf
\3\WYO companies are insurance companies that contract with FEMA to
administer NFIP policies.
---------------------------------------------------------------------------
Third, in the aftermath of Sandy, there were multiple
allegations of engineering reports that were fraudulently
altered to deny certain payments without any explanation to the
policyholder. One high profile instance of this is Raimey v.
Wright National Flood Insurance Company in which the Court
found that this case ``exposed reprehensible gamesmanship by a
professional engineering company that unjustly frustrated
efforts by two homeowners to get fair consideration of their
claims.''\4\ The In response, the H.R. 3111 would prohibit
false or fraudulent statements in connection with the
preparation, production, or submission of claims adjustment or
engineering reports.
---------------------------------------------------------------------------
\4\In re Hurricane Sandy Cases (Raimey v. Wright National Flood
Insurance Co.) (E.D.N.Y. November 7, 2014).
---------------------------------------------------------------------------
The H.R. 3111 also seeks to ensure that policyholders
better understand the terms of their flood insurance policies
by: (1) requiring the Administrator to create a coverage
disclosure sheet for policyholders detailing the coverage
offered and other terms; (2) requiring sufficient staffing for
the Office of the Flood Insurance Advocate; and (3) creating 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.
Finally, the H.R. 3111 would require the updating and
publication of interagency guidance to assist with lender
compliance.
Section-by-Section Analysis
Section 1. Short title
This section provides that the Act may be cited as the
``National Flood Insurance Program Administrative Reform Act of
2019''.
Sec. 2. Pilot program for properties with pre-existing conditions
This section amends section 1311 of the National Flood
Insurance Act of 1968 by adding a new subsection (c), which
authorizes the creation of a pilot program to inspect pre-
existing structural conditions of insured and pre-insured
properties and report to Congress no later than December 31,
2023 prior to the pilot sunset on December 31, 2024.
Sec. 3. Penalties for fraud and false statements
This section amends the National Flood Insurance Act of
1968 by adding a new section 1349, which prohibits false or
fraudulent statements in connection with the preparation,
production, or submission of claims adjustment or engineering
reports and allows the Administrator to set penalties for such
statements.
Sec. 4. Enhanced policyholder appeals process
This section amends the National Flood Insurance Act of
1968 by adding a new section 1350, which codifies the due
process protections established after Superstorm Sandy by FEMA
for individuals appealing a full or partial denial of their
claim.
Sec. 5. Deadline for approval of claims
This section amends section 1312 of the National Flood
Insurance Act of 1968 by adding a new subsection (d), which
requires the FEMA Administrator to make an initial
determination regarding the approval of a claim for payment or
disapproval of the claim within 120 days of the claim being
made. The Administrator may extend the deadline by an
additional 30 days when extraordinary circumstances warrant
more time.
Sec. 6. Litigation process oversight and reform
This section amends the National Flood Insurance Act of
1968 by adding a new section 1351, which provides the FEMA
Administrator with authority and responsibility for overseeing
litigation conducted by WYOs and requires that WYO litigation
expenses are reasonable, appropriate, and cost effective, and
provides the FEMA Administrator with the authority to deny any
expenses that are contrary to those terms.
Sec. 7. Prohibition on hiring disbarred attorneys
This section amends the National Flood Insurance Act of
1968 by adding a new section 1352, which clarifies that the
FEMA Administrator is prohibited from hiring any attorney who
has been suspended or disbarred.
Sec. 8. Technical assistance reports
This section further amends section 1312 of the National
Flood Insurance Act of 1968 by adding a new subsection (e) and
also adds a new section 1312A to Act, which together require
the FEMA Administrator to restrict the use of outside technical
reports by WYOs and the NFIP direct servicing agent as part of
NFIP claims investigations only to such reports that are final
and are prepared in compliance with applicable state and
federal laws on licensure and conduct.
Sec. 9. Improved disclosure requirement for standard flood insurance
policies
This section amends section 100234 of the Biggert-Waters
Flood Insurance Reform Act of 2012 by adding new subsections
(c) and (d), which require the FEMA Administrator to create a
coverage disclosure sheet for policyholders detailing the
coverage offered, type of loss covered, costs associated with
the policy, clear communication of full flood risk and require
the disclosure to include an acknowledgment of the disclosure
by the policyholder and the insurer selling the policy.
Sec. 10. Reserve Fund amounts
This section amends section 1310 of the National Flood
Insurance Act of 1968 by adding a new subsection (g), which
authorizes FEMA to transfer money from the Reserve Fund for the
purpose of paying future claims.
Sec. 11. Sufficient staffing for office of flood insurance advocate
This section amends section 24 of the Homewoner Flood
Insurance Affordability Act of 2014 by adding a new subsection
(e), which requires the FEMA Administrator to ensure the Office
of the Flood Insurance Advocate has sufficient staffing within
180 days after enactment.
Sec. 12. Federal Flood Insurance Advisory Committee
This section amends section 1318 of the National Flood
Insurance Act of 1968, providing a substitute text which
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. 13. Interagency guidance on compliance
This section requires that twelve months after enactment
and every two years thereaftore that federal banking agencies
update the document entitled, ``Interagency Questions and
Answers Regarding Flood Insurance,'' which addresses many flood
insurance compliance questions in order to understand any
conflcits with FEMA requirements or other industry practices
and limitations.
Sec. 14. GAO study of claims adjustment practices
This section requires a GAO study assessing the policies
and practices for adjustment of claims losses under the NFIP to
determine whether the current system impacts the quality of the
claims and adversely impacts policyholders.
Sec. 15. GAO study of flood insurance coverage treatment of earth
movement
This section requires the GAO to study the treatment of
``earth movement and subsidence caused by flooding'' on the
NFIP and policyholders.
Sec. 16. Definitions
This section adds certain definitions to the National Flood
Insurance Act of 1968 and the Biggert-Waters Flood Insurance
Reform Act of 2012.
Hearings
For the purposes of section 103(i) of H. Res. 6 for the
116th Congress, the Committee on Financial Services held a
hearing to consider H.R. 3111 entitled ``Preparing for the
Storm: Reauthorization of the National Flood Insurance
Program'' on March 13, 2019. Testifying before the Committee
was Maria Cox Lamm, South Carolina Department of Natural
Resources, on behalf of the Association of State Flood Plain
Managers; Christopher Heidrick, Heidrick & Company Insurance
and Risk Management Services, LLC, on behalf of the Independent
Insurance Agents and Brokers of America; Velma Smith, Senior
Officer, The Pew Charitable Trusts; Mabel Guzman, Broker,
@properties, on behalf of the National Association of Realtors;
Collin O'Mara, President and CEO, National Wildlife Federation,
on behalf of the SmarterSafer Coalition; Raymond J. Lehmann,
Director of Finance, Insurance and Trade Policy, R Street
Institute. A number of members of the House of Representatives
also testified, including The Honorable Sean P. Duffy, Member
of Congress; The Honorable Garret Graves, Member of Congress;
The Honorable Blaine Luetkemeyer, Member of Congress; The
Honorable Frank Pallone, Member of Congress; The Honorable Bill
Pascrell, Member of Congress; and The Honorable Steve Scalise,
Member of Congress.
Committee Consideration
The Committee on Financial Services met in open session on
June 12, and ordered H.R. 3111 to be reported favorably to the
House with an amendment in the nature of a substitute by a vote
of 58 yeas and 0 nays, a quorum being present.
Committee Votes and Roll Call Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following roll call votes occurred during the Committee's
consideration of H.R. 3111.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the Committee's oversight findings and recommendations are
reflected in the descriptive portions of this report.
Statement of Performance Goals and Objectives
Pursuant to clause (3)(c) of rule XIII of the Rules of the
House of Representatives, the goals of H.R. 3111 are to ensure
that the administration of claims under the National Flood
Insurance Program are improved.
New Budget Authority and CBO Cost Estimate
Pursuant to clause 3(c)(2) of rule XIII of the Rules of the
House of Representatives and section 308(a) of the
Congressional Budget Act of 1974, and pursuant to clause
3(c)(3) of rule XIII of the Rules of the House of
Representatives and section 402 of the Congressional Budget Act
of 1974, the Committee has received the following estimate for
H.R. 3111 from the Director of the Congressional Budget Office:
U.S. Congress,
Congressional Budget Office,
Washington, DC, September 18, 2019.
Hon. Maxine Waters,
Chairwoman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Madam Chairwoman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3111, the National
Flood Insurance Program Administrative Reform Act of 2019.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Jon Sperl.
Sincerely,
Phillip L. Swagel,
Director.
Enclosure.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
H.R. 3111 would direct the Federal Emergency Management
Agency (FEMA) to make several administrative changes to the
National Flood Insurance Program (NFIP) related to
determinations for paying claims, processing timelines, and
other matters. The costs of administering the NFIP are covered
by annual appropriations. The premiums that property owners pay
for flood insurance and payments for claims are classified as
direct spending.
Assuming appropriation of the necessary amounts, CBO
estimates that implementing H.R. 3111 would cost $16 million
over the 2020-2024 period, mostly to cover the costs of
processing appeals of denied claims and an advisory committee
on flood insurance. The costs of the legislation (detailed in
Table 1) fall within budget function 450 (community and
regional development).
TABLE 1.--ESTIMATED INCREASES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 3111
----------------------------------------------------------------------------------------------------------------
By fiscal year, millions of dollars--
------------------------------------------------------------------------
2019 2020 2021 2022 2023 2024 2019-2024
----------------------------------------------------------------------------------------------------------------
Estimated Authorization................ 0 4 3 3 3 3 16
Estimated Outlays...................... 0 4 3 3 3 3 16
----------------------------------------------------------------------------------------------------------------
H.R. 3111 would change the process for policyholders to
appeal claims that have been denied. Under current law,
policyholders with a denied claim who subsequently file suit
against their insurance carrier cannot appeal the denial of
that claim.\1\H.R. 3111 would require policyholders to
administratively appeal denied claims before filing suit
against their carrier or FEMA, and would pause the one-year
statute of limitations on filing suit while FEMA considers an
administrative appeal. The bill also would require FEMA to
issue a decision within 120 days of the policy holder filing an
appeal. Consequently, CBO expects that the number of appeals
filed would increase significantly and that FEMA's appeals
branch would require additional resources to process that
higher number of appeals in a timely manner. Using information
from FEMA about the number of appeals filed under current law,
CBO estimates that the cost to handle the increased number of
appeals would be $2 million a year over the 2020-2024 period.
Those costs would be for an additional nine employees and for
contract support.
---------------------------------------------------------------------------
\1\Under the NFIP, Private insurance companies issue and service
most policies purchased by policyholders and receive a fee from the
FEMA for administering those services. The NFIP covers the actuarial
risk of paying claims.
---------------------------------------------------------------------------
H.R. 3111 also would establish a flood insurance advisory
committee, to include members from the federal government and
the private sector. The committee would be responsible for
reviewing and making recommendations on several different
aspects of the NFIP. Using information from FEMA about the
costs of operating a similar committee, CBO estimates that
implementing this provision would cost about $1 million per
year over the 2020-2024 period for staff, consultants, travel,
and other expenses.
The bill would direct the Government Accountability Office
to complete two studies on the NFIP. Based on the cost of
similar studies, CBO estimates that those studies would cost $1
million in 2020.
Finally, H.R. 3111 would authorize FEMA to create a pilot
program through the end of 2024 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 and to provide that information to the
property owner and FEMA.
FEMA would impose a surcharge on each policy to account for
any administrative costs faced by the WYO companies to complete
those inspections. Thus, the net effect on direct spending
would be negligible because any additional costs associated
with completing those inspections would be offset by additional
NFIP collections.
The CBO staff contact for this estimate is Jon Sperl. The
estimate was reviewed by H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 3111.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when the committee has included in
its report a timely submitted cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act.
Unfunded Mandate Statement
Pursuant to Section 423 of the Congressional Budget and
Impoundment Control Act (as amended by Section 101(a)(2) of the
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee
adopts as its own the estimate of federal mandates regarding
H.R. 3111, as amended, prepared by the Director of the
Congressional Budget Office.
Advisory Committee
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Application of Law to the Legislative Branch
Pursuant to section 102(b)(3) of the Congressional
Accountability Act, Pub. L. No. 104-1, H.R. 3111, as amended,
does not apply to terms and conditions of employment or to
access to public services or accommodations within the
legislative branch.
Earmark Statement
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 3111 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as described in clauses 9(e), 9(f), and 9(g) of rule
XXI.
Duplication of Federal Programs
Pursuant to clause 3(c)(5) of rule XIII of the Rules of the
House of Representatives, the Committee states that no
provision of H.R. 3111 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.
Changes to Existing Law
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, H.R. 3111, as reported, are shown as follows:
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
* * * * * * *
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,
2023, 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, 2024.
(5) Final report.--Not later than March 31, 2025,
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, an initial 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 120-day period (as such
period may be extended pursuant to paragraph (2))
beginning upon the day on which the policyholder
submits a signed proof of loss detailing the damage and
amount of the loss. Payment of approved claims shall be
made as soon as possible after such approval.
(2) Extension of deadline.--The Administrator
shall--
(A) provide that the period referred to in
paragraph (1) may be extended by additional
successive periods of 30 days in cases where
extraordinary circumstances are demonstrated;
and
(B) establish, by regulation, criteria for
demonstrating such extraordinary circumstances.
(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.
* * * * * * *
[advisory committee
[Sec. 1318. (a) The Administrator shall appoint a flood
insurance advisory committee without regard to the provisions
of title 5, United States Code, governing appointments in the
competitive service, and such committee shall advise the
Administrator in the preparation of any regulations prescribed
in accordance with this title and with respect to policy
matters arising in the administration of this title, and shall
perform such other responsibilities as the Administrator may,
from time to time, assign to such committee.
[(b) Such committee shall consist of not more than fifteen
persons and such persons shall be selected from among
representatives of--
[(1) the insurance industry,
[(2) State and local governments,
[(3) lending institutions,
[(4) the homebuilding industry, and
[(5) the general public.
[(c) Members of the committee shall, while attending
conferences or meetings thereof, be entitled to receive
compensation at a rate fixed by the Administrator but not
exceeding $100 per day, including traveltime, and while so
serving away from their homes or regular places of business
they may be allowed travel expenses, including per diem in lieu
of subsistence, as is authorized under section 5703 of title 5,
United States Code, for persons in the Government service
employed intermittently.]
SEC. 1318. FEDERAL FLOOD INSURANCE ADVISORY COMMITTEE.
(a) Establishment.--There is established an advisory
committee to be known as the Federal Flood Insurance Advisory
Committee (in this section referred to as the ``Committee'').
(b) Membership.--
(1) Members.--The Committee shall consist of--
(A) the Administrator of the Federal
Emergency Management Agency (in this section
referred to as the ``Administrator''), or the
designee thereof; and
(B) additional members appointed by the
Administrator or the designee of the
Administrator, who shall include--
(i) three representatives of Write
Your Own companies;
(ii) one individual who served in
the past, or is currently serving, as
an insurance regulator of a State, the
District of Columbia, the Commonwealth
of Puerto Rico, Guam, the Commonwealth
of the Northern Mariana Islands, the
Virgin Islands, American Samoa, or any
federally-recognized Indian tribe;
(iii) one representative of the
financial or insurance sectors who is
involved in risk transfers, including
reinsurance, resilience bonds, and
other insurance-linked securities;
(iv) one actuary with demonstrated
high-level knowledge of catastrophic
risk insurance;
(v) two insurance agents or brokers
with demonstrated experience with the
sale of flood insurance under the
National Flood Insurance Program, one
of whom shall have demonstrated
expertise in the challenges in insuring
low-income communities;
(vi) one insurance claims
specialist;
(vii) one representative of a
recognized consumer advocacy
organization; and
(viii) one representative from an
academic institution who has
demonstrated expertise in insurance.
(2) Qualifications.--In appointing members under
paragraph (1)(C), the Administrator shall, to the
maximum extent practicable, ensure the membership of
the Committee has a balance of members reflecting
geographic diversity, including representation from
areas inland or with coastline identified by the
Administrator as at high risk for flooding or as areas
having special flood hazards.
(c) Duties.--The Administrator shall submit, and the
Committee shall review and make recommendations on, matters
related to the insurance aspects of the National Flood
Insurance Program, including ratemaking, technology to
administer insurance, risk assessment, actuarial practices,
claims practices, sales and insurance delivery, compensation
and allowances, the public-private partnership under the Write
Your Own arrangement, general best insurance practices, and any
significant changes proposed to be made regarding the operation
of the National Flood Insurance Program.
(d) Chairperson.--The members of the Committee shall elect
one member to serve as the chairperson of the Committee (in
this section referred to as the ``Chairperson'').
(e) Compensation.--Members of the Committee shall receive
no additional compensation by reason of their service on the
Committee. Members may be reimbursed by the Federal Government
for travel expenses, including per diem in lieu of subsistence,
at rates consistent with rates authorized for employees of
Federal agencies under subchapter 1 of chapter 57 of title 5,
United States Code, while away from home or regular places of
business in performance of service for the Committee.
(f) Meetings and Actions.--
(1) In general.--The Committee shall meet not less
frequently than twice each year at the request of the
Chairperson or a majority of its members, and may take
action by a vote of the majority of the members in
accordance with the Committee's charter.
(2) Initial meeting.--The Administrator, or a
person designated by the Administrator, shall request
and coordinate the initial meeting of the Committee.
(g) Transparency; FACA.--To the greatest extent possible,
the Committee shall operate in a transparent manner that
adheres to the requirements of the Federal Advisory Committee
Act, with the exception that the Committee shall be permitted
to freely communicate both during and between meetings under
paragraph (f) in a confidential manner to discuss non-public
information regarding the operations of the National Flood
Insurance Program and other sensitive and non-public issues. If
such communication occurs, the Committee shall, to the greatest
extent possible, report a summary of such discussions in an
appropriate public manner.
(h) Staff of FEMA.--Upon the request of the Chairperson,
the Administrator may detail, on a nonreimbursable basis,
personnel of the Federal Emergency Management Agency to assist
the Committee in carrying out its duties.
(i) Powers.--In carrying out this section, the Committee
may hold hearings, receive evidence and assistance, provide
information, and conduct research, as it considers appropriate.
(j) Reports to Congress.--The Administrator, on an annual
basis, shall report to the Committee on Financial Services of
the House of Representatives, the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the Office of
Management and Budget on--
(1) the recommendations made by the Committee;
(2) actions taken by the Federal Emergency
Management Agency to address such recommendations to
improve the insurance aspects of the national flood
insurance program; and
(3) any recommendations made by the Committee that
have been deferred or not acted upon, together with an
explanatory statement.
(k) Rule of Construction.--This section shall not be
construed to eliminate or alter any requirement on the
Administrator associated with the notification or consultation
of specified individuals or groups of individuals as required
elsewhere by statute.
* * * * * * *
CHAPTER II--ORGANIZATION AND ADMINISTRATION OF THE FLOOD INSURANCE
PROGRAM
* * * * * * *
Part B--Government Program With Industry Assistance
* * * * * * *
adjustment and payment of claims and judicial review
Sec. 1341. In the event the program is carried out as
provided in section 1340, the Administrator shall be authorized
to adjust and make payment of any claims for proved and
approved losses covered by flood insurance, and upon the
disallowance by the Administrator of any such claims, or upon
the refusal of the claimant to accept the amount allowed upon
any such claim, the claimant, within one year after the date of
mailing of notice of disallowance or partial disallowance by
the Administrator, may institute an action against the
Administrator on such claim in the United States district court
for the district in which the insured property or the major
part thereof shall have been situated, and original exclusive
jurisdiction is hereby conferred upon such court to hear and
determine such action without regard to the amount in
controversy. For purposes of this section, the time from which
the Administrator has acknowledged receipt of a request by the
policyholder to pursue an appeal of the initial determination
regarding approval, disapproval, or amount of payment by the
Administrator until the Administrator mails a final
determination of such appeal shall not be considered towards
the one year statute of limitation under this Act. However,
this section shall not be construed as creating any action or
remedy not otherwise provided by this title.
* * * * * * *
Part C--Provisions of General Applicability
* * * * * * *
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, fictitious, or fraudulent 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 that results in a wrongful denial or
substantial payment error of flood insurance coverage;
and
(3) knowingly submitting a materially false,
fictitious, or fraudulent claim that results in
wrongful payment of flood insurance coverage.
(b) Definition.--For purposes of this section, the term
``knowingly'' means having actual awareness of the prohibitions
under this part and acting deliberately in violation of such
prohibitions.
(c) Administrative Remedy.--Prior to any legal action being
taken related to this section, all administrative remedies
shall be exhausted.
(d) Rule of Construction.--This section shall not be
construed--
(1) to prevent the Federal Government from bringing
action against a company or individual under applicable
statutes, including the False Claims Act; and
(2) as creating any action, private right of
action, or remedy not otherwise provided by this title
or under Federal law.
(e) State action.--Any person found to have violated
subsection (a) shall be referred to the appropriate and
relevant State licensing agency by the Attorney General.
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 decisions, with respect to
the disallowance, in whole or in part, of any claims for losses
covered by flood insurance. Such appeals shall be limited to
the claim or portion of the claim disallowed.
(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, modify, or overturn the decision. The Administrator may
direct the Write Your Own company to take action necessary to
resolve the appeal, to include re-inspection, re-adjustment, or
payment, as appropriate.
(c) Deadline for Appeals Decision.-- The Administrator
shall issue an appeals decision pursuant to subsection (b) not
later than the expiration of the 120-day period beginning upon
the day on which the Administrator acknowledges receipt of a
request by the policyholder to pursue an appeal of the initial
determination regarding approval, disapproval, or amount of
payment by the Administrator. In cases where extraordinary
circumstances, as established by regulation, are demonstrated,
the 120-day period may be extended by additional successive
periods of 30 days.
(d) Administrative Remedy.--A policyholder shall exhaust
all administrative remedies, including submission of disputed
claims to appeal under subsection (a), prior to commencing
legal action on a disputed claim.
(e) 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.
(f) Policyholder Litigation.--This section shall not be
construed to prevent a policyholder from bringing legal action
against the Federal Emergency Management Agency or a Write Your
Own company following the exhaustion of all administrative
remedies and pursuant to applicable statute.
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) Joint Defense.--
(1) Authority.--The Administrator and the Write
Your Own companies may enter into, and operate under, a
joint defense agreement for any claim or lawsuit, or
multiple claims or lawsuits, arising under a contract
of flood insurance.
(2) Free flow of information.--Under such joint
defense agreement, there may be the free flow of
information between the Write Your Own companies, the
Administrator, the United States Department of Justice,
and legal counsel for the Write Your Own companies for
the purpose of litigation coordination and to allow the
Administrator to perform oversight responsibility of
such litigation.
(3) Arrangement.-- Such joint defense agreement may
be included in the Arrangement between the
Administrator and the Write Your Own companies.
(4) Regulations.--The Administrator may issue rules
or regulations or provide such formal guidance as the
Administrator considers necessary and appropriate in
order to further such joint defense agreement with the
Write Your Own companies.
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.
* * * * * * *
----------
BUNNING-BEREUTER-BLUMENAUER FLOOD INSURANCE REFORM ACT OF 2004
* * * * * * *
TITLE II--MISCELLANEOUS PROVISIONS
* * * * * * *
[SEC. 202. SUPPLEMENTAL FORMS.
[(a) In General.--Not later than 6 months after the date of
enactment of this Act, the Director shall develop supplemental
forms to be issued in conjunction with the issuance of a flood
insurance policy that set forth, in simple terms--
[(1) the exact coverages being purchased by a
policyholder;
[(2) any exclusions from coverage that apply to the
coverages purchased;
[(3) an explanation, including illustrations, of
how lost items and damages will be valued under the
policy at the time of loss;
[(4) the number and dollar value of claims filed
under a flood insurance policy over the life of the
property, and the effect, under the National Flood
Insurance Act of 1968 (42 U.S.C. 4001 et seq.), of the
filing of any further claims under a flood insurance
policy with respect to that property; and
[(5) any other information that the Director
determines will be helpful to policyholders in
understanding flood insurance coverage.
[(b) Distribution.--The forms developed under subsection
(a) shall be given to--
[(1) all holders of a flood insurance policy at the
time of purchase and renewal; and
[(2) insurance companies and agents that are
authorized to sell flood insurance policies.
[SEC. 203. ACKNOWLEDGEMENT FORM.
[(a) In General.--Not later than 6 months after the date of
enactment of this Act, the Director shall develop an
acknowledgement form to be signed by the purchaser of a flood
insurance policy that contains--
[(1) an acknowledgement that the purchaser has
received a copy of the standard flood insurance policy,
and any forms developed under section 202; and
[(2) an acknowledgement that the purchaser has been
told that the contents of a property or dwelling are
not covered under the terms of the standard flood
insurance policy, and that the policyholder has the
option to purchase additional coverage for such
contents.
[(b) Distribution.--Copies of an acknowledgement form
executed under subsection (a) shall be made available to the
purchaser and the Director.]
* * * * * * *
[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) the use of cost of compliance coverage under
section 1304(b) of the National Flood Insurance Act of
1968 (42 U.S.C. 4011(b)) in connection with flood
insurance policies;
[(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).
* * * * * * *
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
standard disclosure sheet that is produced by the
Administrator 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 acknowledging that a
standard flood insurance policy does not cover
basement improvements, such as finished walls,
floors, and ceilings, or personal property kept
in a basement;
(D) a statement acknowledging a standard
flood insurance policy does not include
coverage for personal property, but such
coverage may be purchased, for some personal
property contained in a basement, as well as
personal belongings contained elsewhere in the
dwelling;
(E) a statement of the other types and
characteristics of losses that are not covered
under the policy;
(F) a statement that the disclosure sheet
provides general information about the
policyholder's standard flood insurance policy;
(G) a statement that the standard flood
insurance policy, together with the
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;
(H) a statement that, if the policyholder
has any questions regarding information in the
disclosure sheet or policy, the policyholder
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; and
(I) any other information that the
Administrator determines will be helpful to
policyholder in understanding flood insurance
coverage.
(2) Acknowledgment sheet.--Each policy application
under the National Flood Insurance Program shall
include an acknowledgment sheet on which the
policyholder shall affirmatively--
(A) acknowledge that the policyholder
received the disclosure sheet required under
paragraph (1);
(B) accept or decline coverage for personal
property;
(C) accept or decline other optional
coverage that may be available;
(D) acknowledge the policyholder's
understanding that the standard flood insurance
policy, together with the 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
(E) acknowledge that the policyholder has
been provided and has reviewed a summary, which
may be the policy declarations page, of the
total cost, amount and extent of insurance
coverage provided under the policy.
(d) Rule of Construction.--This section shall not be
construed to void or alter the coverage terms of the underlying
standard flood insurance policy and the corresponding
endorsements. In the event that the customer does not
affirmatively acknowledge the requirements under subsection
(c)(2), a Write Your Own company may still issue the policy on
behalf of the National Flood Insurance Program under such
terms.
* * * * * * *
----------
HOMEOWNER FLOOD INSURANCE AFFORDABILITY ACT OF 2014
* * * * * * *
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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