The House passed a bill Thursday that would authorize state insurance commissioners to approve flood insurance policies for Fannie Mae, Freddie Mac and other federally backed mortgages.
The bill, which was co-sponsored by Reps. Dennis Ross, R-Fla., and Patrick Murphy, D-Fla., passed on a 419-0 vote.
"Passage of this bipartisan bill means more consumer choice, more market competition and more product innovation. And consumers for the first time will be able to shop for a flood policy that fits their particular needs," said Rep. Edward Royce, R-Calif., during debate on the bill earlier in the week.
The Flood Insurance Market Parity and Modernization Act cleared the House Financial Services Committee on March 2 by a unanimous vote of 53-0.
The bill clarifies that state insurance regulators have the same authority and discretion to regulate private flood insurance as they have to regulate other insurance products and markets.
The Ross-Murphy bill would allow homeowners insured by the National Flood Insurance Program to switch to a private flood policy and retain the right to get their NFIP policy back again if they are dissatisfied with private insurance. The legislation essentially grandfathers a homeowner's federal flood insurance rate provided there is no lapse in insurance coverage.
"I want to be clear that the issues surrounding flood insurance are difficult and complicated, and there are differences of opinion as to how much of a role private insurance can play. This bill threads that needle," said Rep. Michael Capuano, D-Mass., during debate on the bill.
"This bill says we all agree that there is more role for private insurance and we should remove any barriers that might be there so that people can be better served and have better competition. I think this bill does a pretty good job doing that "
A similar private flood insurance bill, co-sponsored by Senators Dean Heller, R-Nev., and Jon Tester, D-Mont., is pending in the Senate Banking Committee.
"I want to thank Congressman Ross and Congressman Murphy for their hard work and effort," said Heller in a statement. "Now, I encourage all my colleagues in the Senate to build off this momentum and support this legislation in order to pass this bill into law this Congress," he added.
During the House debate, Ross said the Reinsurance Association of America, National Multifamily Housing Council, National Apartment Association, National Taxpayers Union, American Insurance Association, National Association of Realtors and Mortgage Bankers Association support the legislation.
"For many, the NFIP offers the only source of coverage that meets federally related mortgage requirements and protects properties in the 100 year floodplain," NAR President Tom Salomone said. "This legislation will help foster a vibrant private flood insurance market while giving consumers the flexibility to return to the NFIP at a reasonable cost if they choose to," he said following the vote on the flood bill.