On Thursday, March 16, the House Committee on Financial Services passed H.R. 4973, the Flood Insurance Reform and Modernization Act of 2006. The bill makes significant reforms to the National Flood Insurance Program (NFIP) including:

• Increasing borrowing authority to $25 billion,
• Phasing in actuarial rates for subsidized vacation homes, second homes, and non-residential properties,
• Increasing the coverage limits for residential flood insurance policies from $250,000 (structure) and $100,000 (contents) to $335,000/$135,000; coverage on non-residential properties would increase from $500,000 to $670,000,
• Increasing the amount FEMA can raise premiums annually from 10% to 15%,
• Requiring lenders to provide notice on good faith estimates that flood insurance is available to all homeowners (not just those in a floodplain), and notice of the availability of escrow for flood insurance,
• Extending the pilot program for mitigation of severe repetitive loss properties, and
• Requiring FEMA to conduct a thorough review of the nation's flood maps (including mapping the 500-year floodplain) and report to Congress.

In related news, President Bush is expected to sign a bill, S. 2275, that would increase the borrowing authority of the NFIP from $18.5 Billion to $20.775 Billion. Without this additional borrowing authority, the program would run out of money next week and be unable to pay claims. Fiscal conservatives in the House of Representatives and Senate have stated that they would not dsupport any further increases in borrowing authority without significant reforms to the NFIP.