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Odds of US flood insurance reform looking up after bipartisan first step

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Odds of US flood insurance reform looking up after bipartisan first step

House Democrats are looking to bipartisanship as the secret ingredient to pass a long-term overhaul of the National Flood Insurance Program that has eluded Congress since 2017.

The program, known as NFIP, covers more than 5 million homeowners and is the main source of flood insurance in the U.S. Since it is offered and managed by the Federal Emergency Management Agency, NFIP requires Congress to authorize its funding. But since Hurricane Katrina struck the southern U.S. in 2005, Congress has struggled to reform NFIP to adapt to more frequent and severe flood events.

But now, House Financial Services Chair Maxine Waters, D-Calif., appears to be starting with broad buy-in from Republicans who have asked to be involved in the legislative process. Waters hosted a hearing on March 13 that began with soliciting input from influential Republican members such as Minority Whip Steve Scalise of Louisiana and Sean Duffy of Wisconsin — a bipartisan gesture absent from recent attempts to salvage the program.

"I really hope we can all work together toward a strong bipartisan bill that gives homeowners more certainty, instead of continuing on a path of short-term extensions that the program has experienced since October 2017," Scalise said in prepared remarks.

A week before the hearing, Waters released a four-part working draft of a bill reauthorizing the program for five years. Included in the draft is a wish list of items long championed by the chair and her Democratic colleagues.

The draft, as written, forgives all of the debt accumulated by the program, removes surcharges by FEMA to pay administrative expenses, provides income-based premium discounts and establishes a pilot program for communities to purchase small group-like flood insurance plans.

During the hearing, Republicans offered suggestions that prominent Democrats welcomed.

Rep. Blaine Luetkemeyer, R-Mo., suggested that NFIP utilize a more robust reinsurance program than it currently does to offload more risk private reinsurance companies. Rep. Lacy Clay, D-Mo. and chairman of a subcommittee tasked with insurance industry oversight, pledged to include reinsurance language into a final bill.

"I like my colleague Luetkemeyer's suggestion that it works in all other forms of insurance," Clay said in an interview. "It will probably take some convincing on my side of the aisle, but I don't see why we couldn't make the effort to save the taxpayers some dollars."

This is not the first time Democrats have worked with Republicans on reforming NFIP. In 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act, which allowed the program to offload risk through reinsurance contracts and partnerships with private companies to offer policies. It also secured five years of reauthorization.

House Republicans were able to pass a bill in late 2017 with little Democratic support when the GOP controlled the lower chamber, but in the Senate, garnering bipartisan support for a partisan bill looked bleak to clear the 60-vote threshold to avoid a filibuster. As a result, the pattern of short-term reauthorizations continued.

NFIP has been reauthorized 10 times without changes for a few months at a time, and sometimes for a few weeks at a time, since 2017 when the program's authorization expired. Lawmakers debated over what to do with the billions of dollars of debt, whether to allow more private companies to offer policies, what flood mitigation procedures to require and how to approach surcharges that disproportionately affect lower-income homeowners.

Former housing and insurance subcommittee ranking member Emanuel Cleaver, D-Mo., took a more cautious tone, pointing out the still-toxic political environment and sticking points that remain with Republicans.

"We're apart on a few things," Cleaver said in an interview. "But there is a very real desire on the part of the chair to [pass] a flood bill. I have not heard anybody say they want an 11th [short-term extension]. I think that would be sinful."

Cleaver said Republicans' top item, allowing the private sector to control the program, is unlikely to cruise through negotiations with House Democrats. That fact could foreshadow a more difficult path for the bill in the GOP-controlled Senate.

But Waters said her caucus was willing to negotiate everything in her draft, including the top-ticket item of debt forgiveness.

"There are some concerns, but both sides of the aisle understand how important it is to get this reauthorization," Waters told reporters as she left the hearing.