69–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–233 

NATIONAL FLOOD INSURANCE PROGRAM 

ADMINISTRATIVE REFORM ACT OF 2017 

JULY 18, 2017.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

[To accompany H.R. 2875] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 2875) to make administrative reforms to the National 

Flood Insurance Program to increase fairness and accuracy and 

protect the taxpayer from program fraud and abuse, and for other 

purposes, having considered the same, report favorably thereon 

without amendment and recommend that the bill do pass. 

PURPOSE AND SUMMARY

Introduced by Representative Nydia Velazquez on June 12, 2017, 

H.R. 2875, the ‘‘National Flood Insurance Program Administrative 

Reform Act of 2017,’’ makes administrative reforms to the National 

Flood Insurance Program to increase fairness and accuracy and 

protect the taxpayer from program fraud and abuse. 

BACKGROUND AND NEED FOR LEGISLATION

GENERAL OVERVIEW

Floods are among the most frequently occurring and costly natural disasters. Most declarations of federal disasters by the Federal 

Emergency Management Agency (FEMA) are related to flooding. 

Yet despite the frequency and severity of losses that result from 

flooding, the private insurance market generally did not provide insurance for flooding; when it did, insurance for flood-related damage can be expensive because the properties most at-risk tend to 

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be highly concentrated geographically and the potential risk of economic losses is extremely high. 

To supplement the availability of flood insurance in the private 

market, Congress, in 1968, created the National Flood Insurance 

Program (NFIP), which is administered by FEMA and provides 

flood insurance to approximately 5.1 million policyholders across 

the country. In exchange for premiums paid by policyholders, NFIP 

makes federally backed flood insurance available to homeowners 

and other property owners (for example, businesses, churches, and 

farmers) in these communities. 

Homeowners with mortgages held by federally regulated lenders 

on property in participating communities identified by FEMA to be 

in Special Flood Hazard Areas are required to purchase flood insurance (mandatory purchase requirement). NFIP coverage limits vary 

by program (regular or emergency) and property type (for example, 

residential or nonresidential). In NFIP’s regular program, the maximum coverage limits for residential policyholders are $250,000 for 

buildings and $100,000 for contents. For commercial policyholders 

(that is, those with policies for nonresidential properties), the maximum coverage limit is $500,000 per building and $500,000 for contents owned by the building owner. There is additional coverage for 

contents owned by the tenants. 

Residents and business owners in over 22,000 participating communities across the United States and its territories are able to 

buy NFIP flood insurance policies through insurance agents and 

companies that participate as third-party administrators in the 

‘‘Write Your Own’’ (WYO) program. The WYO program allows private insurance carriers to issue and service government underwritten and taxpayer backed NFIP policies with no private financial liability from the insurer. Insurance companies that participate 

in the WYO program receive an expense allowance for policies they 

write and the claims they process. In addition, their agents earn 

a commission for the policies they sell. The federal government, 

however, retains responsibility for managing the risk and paying 

claims, as well as covering any litigation costs should a WYO insurer be sued in court. 

Property owners can purchase flood insurance through the NFIP 

only if their communities participate in the NFIP. To participate in 

the NFIP, a community must agree to abide by certain statutory 

provisions intended to mitigate the risk of flooding, such as building codes that require new structures built in floodplains (high-risk 

areas) to be protected against flooding or to be elevated above the 

100-year floodplain. 

As of June 5, 2017, the NFIP has an outstanding debt of $24.6 

billion borrowed from taxpayers, with roughly $1.1 billion available 

cash-on-hand and $5.825 billion remaining of its total temporary 

$30.425 billion Treasury borrowing authority. The NFIP’s debt results primarily from its borrowing to pay claims relating to the 

Gulf Coast hurricanes in 2005 and Superstorm Sandy in October 

2012. This borrowing stems from a structural imbalance in how the 

NFIP measures and prices for risk, resulting in only 46 percent of 

premium dollars collected in 2016 being available for the payments 

of claims. With such a low portion of premiums available to pay 

claims, the pressure on the NFIP to borrow from taxpayers increases. The NFIP’s structural budget crisis has required periodic 

3 

legislation to increase its borrowing authority, the most recent example of which occurred in January 2013 when Congress increased 

the NFIP’s borrowing authority by $9.7 billion—from $20.725 billion to its current $30.425 billion level. 

Superstorm Sandy, which made landfall in October 2012, resulted in $65 billion in damage and destroyed or damaged 650,000 

residential homes. Following the destruction, FEMA paid thousands of flood insurance claims to victims but, reports began to surface that many claims might have been severely underpaid due to 

the submission of false engineering reports. By 2015, there were 

both constituent and media reports that described ‘‘dozens of cases’’ 

where original drafts of engineering reports were either revised or 

deleted in order to understate the extent to which the policyholder 

suffered insured losses, thus lowering payments to flood insurance 

claimants. Policyholders alleged that these practices were widespread. As a result of these practices, insurance companies made 

lower payments than they otherwise should have, causing many 

homeowners to be unable to rebuild their homes. 

Superstorm Sandy resulted in 144,000 claims received by FEMA, 

through the Write Your Own companies, paying approximately $8.4 

billion to policyholders. Because of the concerns regarding certain 

alleged fraudulent practices, FEMA established a task force in February 2015 to expeditiously resolve litigation from the claims involving Superstorm Sandy and offer all policyholders, who believe 

they may have been underpaid, the opportunity to have their 

claims reviewed. As of March 2017, FEMA paid out an additional 

$350 million to policyholders on those claims resulting from the 

Superstorm Sandy claims event. 

H.R. 2875 is a culmination of the lessons learned from FEMA, 

stakeholders, and policymakers during the claims paying process 

responding to Superstorm Sandy. According to the Department of 

Homeland Security’s Inspector General, 

FEMA does not provide adequate oversight of the WYO 

[Write Your Own] program under NFIP. Specifically, 

FEMA is not using the results from its Financial Control 

Plan reviews to make program improvements; is not performing adequate oversight of the SALAE [Special Allocated Loss Adjustment Expenses] reimbursement process; 

and does not have controls to provide proper oversight of 

the appeals process. These conditions exist because FEMA 

does not have adequate guidance, resources, or internal 

controls. As a result of this inadequate oversight, FEMA is 

unable to ensure that WYO companies are properly implementing NFIP and is unable to identify systemic problems 

in the program. Furthermore, without adequate internal 

controls in place, FEMA’s NFIP funds may be at risk for 

fraud, waste, abuse or mismanagement. 

H.R. 2875 addresses concerns which range from the inadequacy 

of mitigation programs, fraudulent statements and claims, lack of 

oversight of the taxpayer-funded litigation practices and costs, the 

need for a more transparent process for claims payments and appeals, and better disclosures. 

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HEARINGS

The Committee on Financial Services’ Subcommittee on Housing 

& Insurance held two hearings examining matters relating to H.R. 

2875 on March 9, 2017 and March 16, 2017. The Committee on Financial Services held a hearing examining matters relating to H.R. 

2875 on June 7, 2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

June 21, 2017 to consider H.R. 2875. The Committee ordered H.R. 

2785 to be reported favorably to the House, without amendment, 

by a recorded vote of 58 yeas to 0 nays (Recorded vote no. FC–64), 

a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 53 yeas to 0 nays (Recorded vote no. FC– 

58), a quorum being present. 

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Insert offset folio 6 here HR233.001
6 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 2875 will make 

administrative reforms to the National Flood Insurance Program to 

increase fairness and accuracy and protect the taxpayer from program fraud and abuse. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 18, 2017. 

Hon. JEB HENSARLING, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2875, the National Flood 

Insurance Program Administrative Reform Act of 2017. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Robert Reese. 

Sincerely, 

MARK P. HADLEY

(For Keith Hall, Director). 

Enclosure. 

7 

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

Summary: Under current law, property owners can buy flood insurance through the National Flood Insurance Program (NFIP). 

Property owners who buy insurance through the NFIP pay annual 

premiums which are deposited into the National Flood Insurance 

Fund (NFIF) and are used to pay flood damage claims submitted 

by policyholders. Those premiums and payments are not subject to 

annual appropriation. 

H.R. 2875 would give NFIP policyholders the option to buy a 

higher level of coverage under the Increased Cost of Compliance 

(ICC) program, which provides payments to property owners to undertake flood mitigation activities following a flood claim. The bill 

also would direct the Federal Emergency Management Agency 

(FEMA) to make several administrative changes to the NFIP related to claims payment determinations, program staffing, and related matters. 

Assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 2875 would cost $11 million over the 

2018–2022 period, mostly for an advisory committee on flood insurance. Enacting the legislation would affect direct spending and revenues; therefore, pay-as-you-go procedures apply. However, because 

any increase in NFIP collections and revenues would be offset by 

increased direct spending, CBO estimates that the net effect on the 

deficit would be negligible. 

CBO estimates that enacting H.R. 2875 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2028. 

H.R. 2875 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would impose no costs on state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary effect of H.R. 2875 is shown in the following table. The costs 

of this legislation fall within budget function 450 (community and 

regional development). 

By fiscal year, in millions of dollars— 

2017 2018 2019 2020 2021 2022 2017–2022 

INCREASES IN SPENDING SUBJECT TO APPROPRIATION a

Estimated Authorization Level ......... 0 3 2 2 2 2 11 

Estimated Outlays ........................... 0 3 2 2 2 2 11 

a H.R. 2875 would have an insignificant effect on direct spending and revenues in each year and over the 2017–2027 period. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

2875 will be enacted near the end of fiscal year 2017 and that the 

necessary amounts will be appropriated each year. 

Spending subject to appropriation 

H.R. 2875 would establish a flood insurance advisory committee, 

which would include members from across the federal government 

and the private sector. The committee would be responsible for reviewing and making recommendations on several different aspects 

of the NFIP. Based on information from FEMA about the resources 

that would be needed for this committee, CBO estimates that imVerDate Sep 11 2014 23:46 Jul 21, 2017 Jkt 069006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR233.XXX HR233
8 

plementing this provision would cost $10 million over the 2018– 

2022 period, mostly for salaries, expenses, and expert advice. 

The bill also would direct the Government Accountability Office 

to complete two studies on the NFIP. The first would analyze the 

policies and practices for adjusting claims for losses under the 

NFIP. The second would analyze how the NFIP handles earth 

movements that stem from flooding, such as landslides, when adjusting claims for losses under the program. Based on the cost of 

similar studies, CBO estimates that completing those studies would 

cost $1 million in 2018. 

Direct spending and revenues 

CBO estimates that enacting H.R. 2875 would have a negligible 

effect on the deficit over the 2018–2027 period. 

ICC Coverage. H.R. 2875 would give NFIP policyholders the option of buying additional ICC coverage, which provides assistance 

to help cover the cost of mitigation activities that will reduce the 

risk of future flood damage to a building. Under current law, when 

a building covered by the NFIP suffers a flood loss and is declared 

to be substantially or repetitively damaged, an ICC insurance policy will provide up to $30,000 to bring the building into compliance 

with state or community floodplain management laws or ordinances. Expected ICC program spending is covered by premium 

payments collected from NFIP policyholders. 

Under the bill, policyholders would have the option to buy up to an additional $30,000 in ICC coverage (making up to $60,000 of 

coverage possible for a single property). Property owners that buy 

additional ICC coverage would pay a surcharge for that coverage 

in an amount determined by FEMA. CBO estimates that any additional spending by the NFIP for extra ICC coverage would be offset 

by the additional collections from property owners who buy such 

coverage; thus, the net effect on direct spending would be negligible. 

Pre-Existing Conditions Pilot Program. The bill would authorize 

FEMA to create a pilot program through December 31, 2022, that 

would allow private insurance companies who partner with FEMA 

to sell and service NFIP policies (known in the program as Write 

Your Own, or WYO, insurance companies) to inspect properties 

with NFIP insurance for pre-existing structural conditions that 

could result in the denial of an NFIP claim. Following an inspection the WYO company would submit a report outlining the presence or absence of any pre-existing structural conditions to the 

property owner and FEMA. 

Under the pilot program, FEMA could impose a surcharge on 

each policy that opts to have an inspection for pre-existing conditions to account for any administrative costs faced by the WYO 

companies to complete those inspections. Because H.R. 2875 gives 

FEMA discretion to set the surcharge at any rate, CBO estimates 

that any additional costs associated with completing those inspections would be offset by additional NFIP collections; thus, the net 

effect on direct spending would be negligible. 

Civil Penalties. H.R. 2875 would bar anyone from making a false 

or misleading statement, production, or submission when adjusting 

a claim for NFIP coverage. The bill would create a civil penalty of 

up to $10,000 per false statement. Civil penalties are recorded in 

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the budget as revenues. CBO estimates that such revenues would 

be insignificant in any year under the bill. Furthermore, any civil 

penalties collected under the bill would be deposited into the NFIF 

and could be spent without further appropriation; thus, the net effect on the deficit would be negligible. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. CBO estimates 

that enacting the bill would have an insignificant effect on direct 

spending and revenues over the 2018–2027 period. 

Increase in long-term direct spending and deficits: CBO estimates that enacting H.R. 2875 would not significantly increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2028. 

Intergovernmental and private-sector impact: H.R. 2875 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would impose no costs on state, local, or tribal governments. 

Estimate prepared by: Federal costs: Robert Reese; Impact on 

state, local, and tribal governments: Rachel Austin; Impact on the 

private sector: Logan Smith. 

Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

One advisory committee within the meaning of section 5(b) of the 

Federal Advisory Committee Act was created within this legislation. Pursuant to the Act, the Committee determines that the functions of the proposed advisory committee are not presently being 

performed by an agency or existing advisory committee. The Committee further determines that such functions cannot be performed 

by enlarging the mandate of an existing advisory committee. The 

advisory committee created by this legislation is as follows: 

Sec. 14. Federal Flood Insurance Advisory Committee. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 2875 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

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DUPLICATION OF FEDERAL PROGRAMS

Pursuant to section 3(c)(5) of rule XIII, the Committee states 

that no provision of H.R. 2875 establishes or reauthorizes a program of the Federal Government known to be duplicative of another Federal program, a program that was included in any report 

from the Government Accountability Office to Congress pursuant to 

section 21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, 115th Cong. (2017), the 

Committee states that H.R. 2875 contains no directed rulemaking. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1. Short title 

This Act may be cited as the ‘‘National Flood Insurance Program 

Administrative Reform Act of 2017’’. 

Sec. 2. Increased Cost of Compliance coverage 

Authorizes the FEMA Administrator to supplement its existing 

Increased Cost of Compliance (ICC) program (which is typically 

mandatory for many policyholders) coverage of up to $30,000 with 

the option of allowing policyholders to purchase additional enhanced ICC coverage of up to $60,000, as priced accordingly by 

NFIP. Like the existing ICC coverage, this enhanced ICC coverage 

would be used to comply with local and State floodplain management requirements by covering the cost of mitigating a building 

that has been substantially or repetitively damaged by floods. Additionally, the allowable uses of ICC coverage would be expanded to 

cover certain pre-disaster mitigation costs for certain at-risk properties identified by State or local governments. 

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

Authorizes the FEMA Administrator to create a pilot NFIP program to authorize Write Your Own (WYO) insurance companies to 

inspect pre-existing structural conditions of insured and pre-insured properties that could result in a denial of a flood insurance 

claim. A report covering any such conditions would be filed with 

the FEMA Administrator to create a pre-disaster baseline of the 

conditions that might affect the resolution of future NFIP claims. 

The NFIP is required to conduct a rigorous study and evaluation 

and report to Congress no later than December 31, 2021 prior to 

the pilot sunset on December 31, 2022. 

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

Flood Insurance Program 

Requires the FEMA Administrator to prohibit false or fraudulent 

statements connected to the preparation, production, or submission 

of claims adjustment or engineering reports. Authorizes the FEMA 

Administrator to develop penalties for such violations, including 

disbarment from participation in the NFIP. 

11 

Sec. 5. Enhanced policyholder appeals process 

Codifies the due process protections for policyholders established 

after Superstorm Sandy by FEMA for individuals wishing to appeal 

a full or partial denial of their NFIP claim by their insurance company, and require FEMA to provide policyholders with a written 

appeal decision that upholds or overturns the decision of the insurer. 

Sec. 6. Deadline for approval of claims 

Requires the FEMA Administrator to make final determinations 

regarding the approval of a claim for payment or disapproval of the 

claim within 90 days of the claim being made. Authorizes the 

FEMA Administrator to extend the 90-day deadline by an additional 15 days when extraordinary circumstances warrant more 

time. 

Sec. 7. Litigation process oversight and reform 

Provides the FEMA Administrator with additional authorities 

and responsibilities for overseeing litigation conducted by WYO insurance companies acting on behalf of the NFIP. Requires the 

FEMA Administrator to ensure WYO litigation expenses are reasonable, appropriate, and cost-effective, with the authority to deny 

any expenses that are contrary to those terms. Gives the FEMA 

Administrator the authority to direct litigation strategy as necessary. 

Sec. 8. Prohibition on hiring disbarred attorneys 

Prohibits the FEMA Administrator from hiring any attorney in 

connection with the program who has been suspended or disbarred. 

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

Requires the FEMA Administrator to align penalties for WYO insurance companies that knowingly underpay claims for losses covered to be commensurate with the NFIP’s penalties applicable to 

overpayment of such claims. 

Sec. 10. Use of technical assistance reports 

Requires the FEMA Administrator to restrict the use of outside 

technical reports by WYO insurance companies and the NFIP direct servicing agents as part of specific NFIP claims investigations 

only to such reports that are final and are prepared in compliance 

with applicable state and federal laws regarding professional licensure and conduct. Defines ‘‘technical assistance report’’ to mean reports created for the purpose of furnishing technical assistance to 

an insurance claims adjuster assigned by NFIP, including those by 

engineers, surveyors, salvors, architects, and certified public accountants. 

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

Requires the FEMA Administrator to create a coverage disclosure sheet for policyholders, which outlines the coverage afforded 

by the NFIP’s standard flood insurance policy, including a description of the type of loss that would be covered, a summary of costs 

12 

associated with the policy, clear communications of the policy’s full 

flood risk determinations. Requires the disclosure to include an acknowledgement of the disclosure by the policyholder and the insurer selling the policy on behalf of the NFIP. 

Sec. 12. Reserve Fund amounts 

Authorizes FEMA to transfer money from the Reserve Fund into 

the NFIP for the purposes of paying future claims. 

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

Requires the FEMA Administrator to ensure the Office of the 

Flood Insurance Advocate has sufficient staffing within 180 days 

after enactment. 

Sec. 14. Federal Flood Insurance Advisory Committee 

Creates a new Technical Insurance Advisory Council consisting 

of federal, state, and local experts to review the NFIP’s insurance 

practices and propose new standards to FEMA. 

Sec. 15. Interagency guidance on compliance 

Twelve months after enactment and every two years thereafter, 

requires that federal banking agencies update the document entitled ‘‘Interagency Questions and Answers Regarding Flood Insurance,’’ which address many flood insurance compliance questions in 

order to understand any conflicts with FEMA requirements or 

other industry practices and limitations. 

Sec. 16. GAO study of claims adjustment practices 

Requires the Comptroller General of the United States to conduct 

a study assessing the policies and practices for adjustment of 

claims for losses under the NFIP to determine whether the current 

system impacts the quality of the claims and adversely impacts policyholders. 

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

movement 

Requires the Comptroller General of the United States to conduct 

a study assessing the treatment of ‘‘earth movement and subsidence caused by flooding’’ on the NFIP and policyholders. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

NATIONAL FLOOD INSURANCE ACT OF 1968 

* * * * * * * 

TITLE XIII—NATIONAL FLOOD INSURANCE 

* * * * * * * 

13 

CHAPTER I—THE NATIONAL FLOOD INSURANCE PROGRAM 

BASIC AUTHORITY

SEC. 1304. (a) To carry out the purposes of this title, the Administrator of the Federal Emergency Management Agency is authorized to establish and carry out a national flood insurance program 

which will enable interested persons to purchase insurance against 

loss resulting from physical damage to or loss of real property or 

personal property related thereto arising from any flood occurring 

in the United States. 

(b) ADDITIONAL COVERAGE FOR COMPLIANCE WITH LAND USE AND

CONTROL MEASURES.— 

(1) AUTHORITY; ELIGIBLE PROPERTIES.—The national flood insurance program established pursuant to subsection (a) shall 

enable the purchase of insurance to cover the cost of implementing measures that are consistent with land use and control measures established by the community under section 

1361 for— 

ø(1)¿ (A) properties that are repetitive loss structures; 

ø(2)¿ (B) properties that are substantially damaged 

structures; 

ø(3)¿ (C) properties that have sustained flood damage on 

multiple occasions, if the Administrator determines that it 

is cost-effective and in the best interests of the National 

Flood Insurance øFund to require compliance with the 

land use and control measures.¿ Fund to require the implementation of such measures; 

ø(4)¿ (D) properties for which an offer of mitigation assistance is made under— 

ø(A)¿ (i) section 1366 (Flood Mitigation Assistance 

Program); 

ø(B)¿ (ii) the Hazard Mitigation Grant Program authorized under section 404 of the Robert T. Stafford 

Disaster Assistance and Emergency Relief Act (42 

U.S.C. 5170c); 

ø(C)¿ (iii) the Predisaster Hazard Mitigation Program under section 203 of the Robert T. Stafford Disaster Assistance and Emergency Relief Act (42 U.S.C. 

5133); and 

ø(D)¿ (iv) any programs authorized or for which 

funds are appropriated to address any unmet needs or 

for which supplemental funds are made availableø.¿; 

(E) properties that have been identified by the Administrator, or by a community in accordance with such requirements as the Administrator shall establish, as at a high 

risk of future flood damage; and 

(F) properties that are located within an area identified 

pursuant to section 1361(e)(1)(A) (42 U.S.C. 4102(e)(1)(A)) 

by a covered community (as such term is defined in paragraph (3) of such section 1361(e)). 

øThe Administrator shall impose a surcharge on each insured of 

not more than $75 per policy to provide cost of compliance coverage 

in accordance with the provisions of this subsection.¿ 

(2) COVERAGE AMOUNT.— 

14 

(A) PRIMARY COVERAGE.—Each policy for flood insurance 

coverage made available under this title shall provide coverage under this subsection having an aggregate liability 

for any single property of $30,000. 

(B) ENHANCED COVERAGE.—The Administrator shall 

make additional coverage available under this subsection, 

in excess of the limit specified in subparagraph (A), having 

an aggregate liability for any single property of up to 

$60,000. 

(3) SURCHARGE FOR COVERAGE.— (A) PRIMARY COVERAGE.—The Administrator shall impose a surcharge on each insured of such amount per policy 

as the Administrator determines is appropriate to provide 

cost of compliance coverage in accordance with paragraph 

(2)(A). 

(B) ENHANCED COVERAGE.—For each flood policy for 

flood insurance coverage under this title under which additional cost of compliance coverage is provided pursuant to 

paragraph (2)(B), the Administrator shall impose a surcharge, in addition to the surcharge under subparagraph 

(A) of this paragraph, in such amount as the Administrator 

determines is appropriate for the amount of such coverage 

provided. 

(4) USE OF CERTAIN MATERIALS.—The Administrator shall require that any measures implemented using amounts made 

available from coverage provided pursuant to this subsection be 

carried out using materials, identified by the Administrator, 

that minimize the impact of flooding on the usability of the covered property and reduce the duration that flooding renders the 

property unusable or uninhabitable. 

(5) CONTINUED FLOOD INSURANCE REQUIREMENT.—The Administrator may require, as a condition of providing cost of 

compliance coverage under this subsection for a property, that 

the owner of the property enter into such binding agreements as 

the Administrator considers necessary to ensure that the owner 

of the property (and any subsequent owners) will maintain 

flood insurance coverage under this title for the property in 

such amount, and at all times during a period having such duration, as the Administrator considers appropriate to carry out 

the purposes of this subsection. 

(c) In carrying out the flood insurance program the Administrator shall, to the maxmium extent practicable, encourage and arrange for— 

(1) appropriate financial participation and risk sharing in 

the program by insurance companies and other insurers, and 

(2) other appropriate participation on other than a risk-sharing basis, by insurance companies and other insurers, insurance agents and brokers, and insurance adjustment organizations, in accordance with the provisions of chapter II. 

* * * * * * * 

NATIONAL FLOOD INSURANCE FUND

SEC. 1310. (a) To carry out the flood insurance program authorized by this title, the Administrator shall establish in the Treasury 

15 

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 

16 

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. 

17 

(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 onsite inspection of the property to determine whether 

such preexisting structural conditions are present; 

(B) upon completion of an investigation or inspection 

pursuant to subparagraph (A) that determines that such a 

preexisting structural condition is present or absent, submit 

a report to the policyholder and Administrator describing 

the condition; and 

(C) impose a surcharge on each policy described in subparagraph (A) in such amount that the Administrator determines is appropriate to cover the costs of investigations 

and inspections performed pursuant to such policies and 

reimburse Write Your Own companies participating in the 

program under this subsection for such costs. 

(3) INTERIM REPORT.—Not later than December 31, 2021, the 

Administrator shall submit a report to the Committee on Financial Services of the House of Representatives and the Committee 

on Banking, Housing, and Urban Affairs of the Senate describing the operation of the pilot program to that date. 

(4) SUNSET.—The Administrator may not provide any policy 

for flood insurance described in paragraph (2)(A) after December 31, 2022. 

(5) FINAL REPORT.—Not later than March 31, 2023, the Administrator shall submit a final report regarding the pilot program under this section to the Committee on Financial Services 

of the House of Representatives and the Committee on Banking, 

Housing, and Urban Affairs of the Senate. The report shall include any findings and recommendations of the Administrator 

regarding the pilot program. 

18 

PAYMENT OF CLAIMS

SEC. 1312. (a) IN GENERAL.—øThe Administrator¿ Subject to 

other provisions of this section, the Administrator is authorized to 

prescribe regulations establishing the general method or methods 

by which proved and approved claims for losses may be adjusted 

and paid for any damage to or loss of property which is covered by 

flood insurance made available under the provisions of this title. 

(b) MINIMUM ANNUAL DEDUCTIBLE.— 

(1) PRE-FIRM PROPERTIES.—For any structure which is covered by flood insurance under this title, and on which construction or substantial improvement occurred on or before December 31, 1974, or before the effective date of an initial flood insurance rate map published by the Administrator under section 1360 for the area in which such structure is located, the 

minimum annual deductible for damage to such structure shall 

be— 

(A) $1,500, if the flood insurance coverage for such structure covers loss of, or physical damage to, such structure 

in an amount equal to or less than $100,000; and 

(B) $2,000, if the flood insurance coverage for such structure covers loss of, or physical damage to, such structure 

in an amount greater than $100,000. 

(2) POST-FIRM PROPERTIES.—For any structure which is covered by flood insurance under this title, and on which construction or substantial improvement occurred after December 31, 

1974, or after the effective date of an initial flood insurance 

rate map published by the Administrator under section 1360 

for the area in which such structure is located, the minimum 

annual deductible for damage to such structure shall be— 

(A) $1,000, if the flood insurance coverage for such structure covers loss of, or physical damage to, such structure 

in an amount equal to or less than $100,000; and 

(B) $1,250, if the flood insurance coverage for such structure covers loss of, or physical damage to, such structure 

in an amount greater than $100,000. 

(c) PAYMENT OF CLAIMS TO CONDOMINIUM OWNERS.—The Administrator may not deny payment for any damage to or loss of property which is covered by flood insurance to condominium owners 

who purchased such flood insurance separate and apart from the 

flood insurance purchased by the condominium association in 

which such owner is a member, based solely, or in any part, on the 

flood insurance coverage of the condominium association or others 

on the overall property owned by the condominium association. 

(d) DEADLINE FOR APPROVAL OF CLAIMS.— 

(1) IN GENERAL.—The Administrator shall provide that, in 

the case of any claim for damage to or loss of property under 

flood insurance coverage made available under this title, a final 

determination regarding approval of a claim for payment or 

disapproval of the claim be made, and notification of such determination be provided to the insured making such claim, not 

later than the expiration of the 90-day period (as such period 

may be extended pursuant to paragraph (2)) beginning upon the 

day on which such claim was made. Payment of approved 

claims shall be made as soon as possible after such approval. 

19 

(2) EXTENSION OF DEADLINE.—The Administrator shall provide that the period referred to in paragraph (1) may be extended by a single additional period of 15 days in cases where 

extraordinary circumstances are demonstrated. The Administrator shall, by regulation, establish criteria for demonstrating 

such extraordinary circumstances and for determining to which 

claims such extraordinary circumstances apply. 

(e) USE OF TECHNICAL ASSISTANCE REPORTS.—When adjusting 

claims for any damage to or loss of property which is covered by 

flood insurance made available under this title, the Administrator 

may rely upon technical assistance reports, as such term is defined 

in section 1312A, only if such reports are final and are prepared in 

compliance with applicable State and Federal laws regarding professional licensure and conduct. 

SEC. 1312A. DISCLOSURE OF TECHNICAL ASSISTANCE REPORTS. 

(a) IN GENERAL.—Notwithstanding section 552a of title 5, United 

States Code, upon request by a policyholder, the Administrator shall 

provide a true, complete, and unredacted copy of any technical assistance report that the Administrator relied upon in adjusting and 

paying for any damage to or loss of property insured by the policyholder and covered by flood insurance made available under this 

title. Such disclosures shall be in addition to any other right of disclosure otherwise made available pursuant such section 552a or any 

other provision of law. 

(b) DIRECT DISCLOSURE BY WRITE YOUR OWN COMPANIES AND DI- RECT SERVICING AGENTS.—A Write Your Own company or direct 

servicing agent in possession of a technical assistance report subject 

to disclosure under subsection (a) may disclose such technical assistance report without further review or approval by the Administrator. 

(c) DEFINITIONS.—For purposes of this section, the following definitions shall apply: 

(1) POLICYHOLDER.—The term ‘‘policyholder’’ means a person 

or persons shown as an insured on the declarations page of a 

policy for flood insurance coverage sold pursuant to this title. 

(2) TECHNICAL ASSISTANCE REPORT.—The term ‘‘technical assistance report’’ means a report created for the purpose of furnishing technical assistance to an insurance claims adjuster assigned by the National Flood Insurance Program, including by 

engineers, surveyors, salvors, architects, and certified public accounts. 

* * * * * * * 

CHAPTER II—ORGANIZATION AND ADMINISTRATION OF 

THE FLOOD INSURANCE PROGRAM 

* * * * * * * 

PART C—PROVISIONS OF GENERAL APPLICABILITY

SERVICES BY INSURANCE INDUSTRY

SEC. 1345. (a) In administering the flood insurance program 

under this chapter, the Administrator is authorized to enter into 

any contracts, agreements, or other appropriate arrangements 

which may, from time to time, be necessary for the purpose of utiVerDate Sep 11 2014 23:46 Jul 21, 2017 Jkt 069006 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\HR233.XXX HR233
20 

lizing, on such terms and conditions as may be agreed upon, the 

facilities and services of any insurance companies or other insurers, 

insurance agents and brokers, or insurance adjustment organizations; and such contracts, agreements, or arrangements may include provision for payment of applicable operating costs and allowances for such facilities and services as set forth in the schedules 

prescribed under section 1311. 

(b) Any such contracts, agreements, or other arrangements may 

be entered into without regard to the provisions of section 3709 of 

the Revised Statutes (41 U.S.C. 5) or any other provisions of law 

requiring competitive bidding and without regard to the provisions 

of the Federal Advisory Committee Act (5 U.S.C. App.). 

(c) The Administrator of the Federal Emergency Management 

Agency shall hold any agent or broker selling or undertaking to sell 

flood insurance under this title harmless from any judgment for 

damages against such agent or broker as a result of any court action by a policyholder or applicant arising out of an error or omission on the part of the Federal Emergency Management Agency, 

and shall provide any such agent or broker with indemnification, 

including court costs and reasonable attorney fees, arising out of 

and caused by an error or omission on the part of the Federal 

Emergency Management Agency and its contractors. The Administrator of the Federal Emergency Management Agency may not hold 

harmless or indemnify an agent or broker for his or her error or 

omission. 

(d) FEMA AUTHORITY ON TRANSFER OF POLICIES.—Notwithstanding any other provision of this title, the Administrator may, 

at the discretion of the Administrator, refuse to accept the transfer 

of the administration of policies for coverage under the flood insurance program under this title that are written and administered by 

any insurance company or other insurer, or any insurance agent or 

broker. 

(e) RISK TRANSFER.—The Administrator may secure reinsurance 

of coverage provided by the flood insurance program from the private reinsurance and capital markets at rates and on terms determined by the Administrator to be reasonable and appropriate, in 

an amount sufficient to maintain the ability of the program to pay 

claims. 

(f) UNDERPAYMENT OF CLAIMS BY WYO COMPANIES.—The Administrator shall establish penalties for companies participating in the 

Write Your Own program knowingly underpaying claims for losses 

covered by flood insurance made available under this title, which 

penalties shall be commensurate, with respect to the amount of the 

penalty, to the penalties applicable to overpayment of such claims 

by a similar amount by such companies. 

* * * * * * * 

SEC. 1349. PENALTIES FOR FRAUD AND FALSE STATEMENTS IN THE 

NATIONAL FLOOD INSURANCE PROGRAM. 

(a) PROHIBITED ACTS.—A person shall not knowingly make a false 

or misleading statement, production, or submission in connection 

with the proving or adjusting of a claim for flood insurance coverage made available under this Act. Such prohibited acts include— 

21 

(1) knowingly forging an engineering report, claims adjustment report or technical assistance report used to support a 

claim determination; 

(2) knowingly making any materially false, fictitious, or 

fraudulent statement or representation in an engineering report, 

claims adjustment report, or technical assistance report to support a claim determination; 

(3) knowingly submitting a materially false, fictitious, or 

fraudulent claim. 

(b) CIVIL ENFORCEMENT.—The Attorney General may bring a civil 

action for such relief as may be appropriate whenever it appears 

that any person has violated or is about to violate any provision of 

this section. Such action may be brought in an appropriate United 

States district court. 

(c) REFERRAL TO ATTORNEY GENERAL.—The Administrator shall 

expeditiously refer to the Attorney General for appropriate action 

any evidence developed in the performance of functions under this 

Act that may warrant consideration for criminal or civil prosecution. 

(d) PENALTIES.— (1) CIVIL MONETARY PENALTY.—Any person who violates subsection (a) shall be subject to a civil penalty of not more than 

$10,000 for each violation, which shall be deposited into the 

National Flood Insurance Fund established under section 1310 

(42 U.S.C. 4017). 

(2) SUSPENSION AND DEBARMENT.—Any person who violates 

subsection (a) shall not be eligible, for a period of not less than 

2 years and not to exceed 5 years, to— 

(A) receive flood insurance coverage pursuant to this title; 

or 

(B) provide services in connection with the selling, servicing, or handling of claims for flood insurance policies 

provided pursuant to this title. 

(3) OTHER PENALTIES.—The penalties provided for in this 

subsection shall be in addition to any other civil or criminal 

penalty available under law. 

SEC. 1350. APPROVAL OF DECISIONS RELATING TO FLOOD INSURANCE 

COVERAGE. 

(a) IN GENERAL.—The Administrator shall establish an appeals 

process to enable holders of a flood insurance policy provided under 

this title to appeal the decisions of their insurer, with respect to the 

disallowance, in whole or in part, of any claims for proved and approved losses covered by flood insurance. Such appeals shall be limited to the claim or portion of the claim disallowed by the insurer. 

(b) APPEAL DECISION.—Upon a decision in an appeal under subsection (a), the Administrator shall provide the policyholder with a 

written appeal decision. The appeal decision shall explain the Administrator’s determination to uphold or overturn the decision of the 

flood insurer. The Administrator may direct the flood insurer to 

take action necessary to resolve the appeal, to include re-inspection, 

re-adjustment, or payment, as appropriate. 

(c) RULES OF CONSTRUCTION.—This section shall not be construed 

as— 

(1) making the Federal Emergency Management Agency or 

the Administrator a party to the flood insurance contract; or 

22 

(2) creating any action or remedy not otherwise provided by 

this title. 

SEC. 1351. OVERSIGHT OF LITIGATION. 

(a) OVERSIGHT.—The Administrator shall monitor and oversee 

litigation conducted by Write Your Own companies arising under 

contracts for flood insurance sold pursuant to this title, to ensure 

that— 

(1) litigation expenses are reasonable, appropriate, and costeffective; and 

(2) Write Your Own companies comply with guidance and 

procedures established by the Administrator regarding the conduct of litigation. 

(b) DENIAL OF REIMBURSEMENT FOR EXPENSES.—The Administrator may deny reimbursement for litigation expenses that are determined to be unreasonable, excessive, contrary to guidance issued 

by the Administrator, or outside the scope of any arrangement entered into with a Write Your Own company. 

(c) LITIGATION STRATEGY.—The Administrator may direct litigation strategy for claims arising under a contract for flood insurance 

sold by a Write Your Own company. 

(d) SUBSTITUTION.—If at any time, the Administrator determines 

there is a conflict of interest between the Write Your Own company 

and the National Flood Insurance Program, or it is in the best interest of the United States, the Administrator may promptly take 

any necessary action to be substituted for the WYO company in any 

action arising out of any claim arising under a contract for flood 

insurance sold by a Write Your Own company. 

SEC. 1352. PROHIBITION ON HIRING DISBARRED ATTORNEYS. 

The Administrator may not at any time newly employ in connection with the flood insurance program under this title any attorney 

who has been suspended or disbarred by any court, bar, or Federal 

or State agency to which the individual was previously admitted to 

practice. 

* * * * * * * 

CHAPTER IV—APPROPRIATIONS AND MISCELLANEOUS 

PROVISIONS 

DEFINITIONS

SEC. 1370. (a) As used in this title— 

(1) the term ‘‘flood’’ shall have such meaning as may be prescribed in regulations of the Administrator, and may include 

inundation from rising waters or from the overflow of streams, 

rivers, or other bodies of water, or from tidal surges, abnormally high tidal water, tidal waves, tsunamis, hurricanes, or 

other severe storms or deluge; 

(2) the terms ‘‘United States’’ (when used in a geographic 

sense) and ‘‘State’’ includes the several States, the District of 

Columbia, the territories and possessions, the Commonwealth 

of Puerto Rico, and the Trust Territory of the Pacific Islands; 

(3) the terms ‘‘insurance company’’, ‘‘other insurer’’ and ‘‘insurance agent or broker’’ include any organization or person 

that is authorized to engage in the business of insurance under 

23 

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 purVerDate Sep 11 2014 23:46 Jul 21, 2017 Jkt 069006 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\HR233.XXX HR233
24 

suant 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; øand¿ 

(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 lowerø.¿; 

(16) the term ‘‘Write Your Own Program’’ means the program 

under which the Federal Emergency Management Agency enters 

into a standard arrangement with private property insurance 

companies to sell contracts for flood insurance coverage under 

this title under their own business lines of insurance, and to 

adjust and pay claims arising under such contracts; and 

(17) the term ‘‘Write Your Own company’’ means a private 

property insurance company that participates in the Write Your 

Own Program. 

(b) The term ‘‘flood’’ shall also include inundation from mudslides 

which are proximately caused by accumulations of water on or 

under the ground; and all of the provisions of this title shall apply 

with respect to such mudslides in the same manner and to the 

same extent as with respect to floods described in subsection (a)(1), 

subject to and in accordance with such regulations, modifying the 

provisions of this title (including the provisions relating to land 

management and use) to the extent necessary to insure that they 

can be effectively so applied, as the Administrator may prescribe 

to achieve (with respect to such mudslides) the purposes of this 

title and the objectives of the program. 

(c) The term ‘‘flood’’ shall also include the collapse or subsidence 

of land along the shore of a lake or other body of water as a result 

of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels, and all of the provisions of this 

title shall apply with respect to such collapse or subsidence in the 

same manner and to the same extent as with respect to floods described in subsection (a)(1), subject to and in accordance with such 

regulations, modifying the provisions of this title (including the 

provisions relating to land management and use) to the extent necessary to insure that they can be effectively so applied, as the Administrator may prescribe to achieve (with respect to such collapse 

or subsidence) the purposes of this title and the objectives of the 

program. 

* * * * * * * 

SECTION 205 OF THE BUNNING-BLUMENAUERBEREUTER FLOOD INSURANCE REFORM ACT OF 2004 

øSEC. 205. APPEAL OF DECISIONS RELATING TO FLOOD INSURANCE 

COVERAGE. 

øNot 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 

25 

decisions, with respect to claims, proofs of loss, and loss estimates 

relating to such flood insurance policy, of— 

ø(1) any insurance agent or adjuster, or insurance company; 

or 

ø(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.). 

ø(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 meanVerDate Sep 11 2014 23:46 Jul 21, 2017 Jkt 069006 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\HR233.XXX HR233
26 

ing 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 disclosure sheet that 

sets forth, in plain language— 

(A) the definition of the term ‘‘flood’’ for purposes of coverage under the policy; 

(B) a description of what type of flood forces are necessary so that losses from an event are covered under the 

policy, including overflow of inland or tidal waves, unusual 

and rapid accumulation or runoff of a surface any source, 

and mudflow; 

(C) a statement of the types and characteristics of losses 

that are not covered under the policy; 

(D) a summary of total cost and amount of insurance 

coverage, and any other information relating to such coverage required to be disclosed under section 1308(l) of the 

National Flood Insurance Act of 1968 (42 U.S.C. 4015(l)); 

(E) a statement that the disclosure sheet provides general 

information about the policyholder’s standard flood insurance policy; 

(F) a statement that the standard flood insurance policy, 

together with the application, endorsements, and declarations page, make up the official contract and are controlling in the event that there is any difference between the information on the disclosure sheet and the information in 

the policy; and 

(G) a statement that if the policyholder has any questions 

regarding information in the disclosure sheet or policy he 

or she should contact the entity selling the policy on behalf 

of the Program, together with contact information sufficient 

to allow the policyholder to contact such entity. 

(2) ACKNOWLEDGMENT SHEET.—Each policy under the National Flood Insurance Program shall include an acknowledgment sheet that sets forth, in plain language— 

(A) a statement of whether or not there is a basement in 

the property to be covered by the policy; 

(B) a statement of whether or not the policy provides coverage for the contents of the property covered by the policy; 

(C) a statement that the standard flood insurance policy, 

together with the application, endorsements, and declaraVerDate Sep 11 2014 23:46 Jul 21, 2017 Jkt 069006 PO 00000 Frm 00026 Fmt 6659 Sfmt 6603 E:\HR\OC\HR233.XXX HR233
27 

tions page, make up the official contract and are controlling in the event that there is any difference between the information on the acknowledgment sheet and the information in the policy; and 

(D) a statement that if the policyholder has any questions 

regarding information in the acknowledgment sheet or policy he or she should contact the entity selling the policy on 

behalf of the Program, together with contact information 

sufficient to allow the policyholder to contact such entity. 

(3) REQUIRED SIGNATURES.—Notwithstanding section 1306(c) 

of the National Flood Insurance Act of 1968 (42 U.S.C. 

4013(c)), a policy for flood insurance coverage under the National Flood Insurance Program may not take effect unless the 

disclosure sheet required under paragraph (1) and the acknowledgment sheet required under paragraph (2), with respect to the 

policy, are signed and dated by the policyholder and the seller 

of the policy who is acting on behalf of the Program. 

* * * * * * * 

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 

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(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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