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37–554 PDF 2007

THE FLOOD INSURANCE REFORM AND

MODERNIZATION ACT OF 2007, H.R. 1682

HEARING

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JUNE 12, 2007

Printed for the use of the Committee on Financial Services

Serial No. 110–38

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

ALBIO SIRES, New Jersey 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

SPENCER BACHUS, Alabama 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

THADDEUS G. McCOTTER, Michigan

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III)

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MAXINE WATERS, California, Chairwoman

NYDIA M. VELA ́ ZQUEZ, New York 

JULIA CARSON, Indiana 

STEPHEN F. LYNCH, Massachusetts 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

WM. LACY CLAY, Missouri 

CAROLYN B. MALONEY, New York 

GWEN MOORE, Wisconsin, 

ALBIO SIRES, New Jersey 

KEITH ELLISON, Minnesota 

CHARLES A. WILSON, Ohio 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

BARNEY FRANK, Massachusetts 

JUDY BIGGERT, Illinois 

STEVAN PEARCE, New Mexico 

PETER T. KING, New York 

PAUL E. GILLMOR, Ohio 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

GEOFF DAVIS, Kentucky 

JOHN CAMPBELL, California 

THADDEUS G. McCOTTER, Michigan 

(V)

C O N T E N T S 

Page 

Hearing held on: 

June 12, 2007 .................................................................................................... 1

Appendix: 

June 12, 2007 .................................................................................................... 49

WITNESSES 

TUESDAY, JUNE 12, 2007

Connor, Edward L., Deputy Assistant Administrator for Insurance, Mitigation 

Directorate, Federal Emergency Management Agency, Department of 

Homeland Security ............................................................................................... 10

Davey, Mark, President and CEO, Fidelity National Insurance Company, 

on behalf of the Property & Casualty Insurers Association of America .......... 33

Malta, Vince, President, Malta and Company, on behalf of the National 

Association of Realtors ......................................................................................... 37

Maune, David F., on behalf of Management Association for Private Photogrammetric Surveyors ......................................................................................... 30

Minkler, Thomas, President, Clark-Mortenson Agency, Inc., on behalf of the 

Independent Insurance Agents and Brokers of America, Inc. .......................... 35

Osman, Paul A., CMF, on behalf of the Association of State Floodplain Managers, Inc. ............................................................................................................. 27

Sumner, Curtis, Executive Director, American Congress on Surveying and 

Mapping ................................................................................................................ 32

APPENDIX 

Prepared statements: 

Carson, Hon. Julia ............................................................................................ 50

Hinojosa, Hon. Ruben ....................................................................................... 51

Connor, Edward L. ........................................................................................... 54

Davey, Mark ...................................................................................................... 64

Malta, Vince ...................................................................................................... 69

Maune, David F. ............................................................................................... 81

Minkler, Thomas .............................................................................................. 89

Osman, Paul A. ................................................................................................. 93

Sumner, Curtis ................................................................................................. 100

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Statement of Eric D. Gerst, Esq. ..................................................................... 103

Hinojosa, Hon. Ruben: 

MAPPS inserts .................................................................................................. 115

Taylor, Hon. Gene: 

Series of articles from The Times-Picayune ................................................... 120

(1)

THE FLOOD INSURANCE REFORM AND 

MODERNIZATION ACT OF 2007, H.R. 1682

Tuesday, June 12, 2007

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 10:17 a.m., in room 

2118, Rayburn House Office Building, Hon. Maxine Waters [chairwoman of the subcommittee] presiding. 

Present: Representatives Waters, Cleaver, Green, Clay, Maloney; 

Biggert, Pearce, Shays, Garrett, and Neugebauer. 

Ex officio present: Representative Bachus. 

Also present: Representatives Hinojosa and Taylor. 

Chairwoman WATERS. Good morning. This hearing of the Subcommittee on Housing and Community Opportunity will come to 

order. 

Good morning, ladies and gentlemen. I’d like to thank the ranking member, Ms. Judy Biggert, and each of the members of the 

Subcommittee on Housing and Community Opportunity for joining 

me for today’s hearing on the Flood Insurance Reform and Modernization Act of 2007, H.R. 1682. 

I would like to start by noting that without objection, we will 

allow Mr. Ruben Hinojosa and Mr. Gene Taylor to be considered 

members of the subcommittee for the duration of this hearing. Also 

without objection, all members’ opening statements will be made a 

part of the record. 

I’m looking forward to hearing from today’s witnesses about H.R. 

1682, the Flood Insurance Reform and Modernization Act of 2007, 

which was introduced by Chairman Frank, and co-sponsored by a 

number of members, including the ranking member, Ms. Biggert, 

and myself. 

Last year, the House passed the Flood Insurance Reform and 

Modernization Act of 2006, H.R. 4973, although the Senate did not 

consider flood insurance reform legislation. 

The bipartisan effort in the House last year to pass major flood 

insurance program reform legislation will be welcome again this 

year, because the issues related to flood insurance reform and modernization, as well as funding, and the National Flood Insurance 

Program that prompted the House to take action last year, have 

not disappeared. 

The National Flood Insurance Act of 1968 established the National Flood Insurance Program (NFIP). 

2

The National Flood Insurance Program provides flood insurance 

to approximately 5.1 million homeowners, renters, and business 

owners in some 20,118 communities, generating $2.3 billion in revenue. The purpose of the Act is to provide insurance for individuals 

living in areas of the country susceptible to flooding. 

The NFIP has two objectives: One, to promote land use decisionmaking; and two, to reduce the cost to government of recovery costs 

related to flooding. 

The purpose of today’s hearing is to focus on H.R. 1682, the 

Flood Insurance Reform and Modernization Act of 2007. 

H.R. 1682 will reform the NFIP administered by the Federal 

Emergency Management Agency—FEMA—of the U.S. Department 

of Homeland Security. 

The bill will significantly reform the NFIP to ensure its continued viability by encouraging broader participation, increasing accountability, eliminating unnecessary Federal subsidies, and updating the Nation’s flood insurance program so that it is consistent 

with the needs of the 21st century. 

H.R. 1682 is born of necessity after the catastrophic hurricanes 

of 2005, Katrina and Rita. The number of claims, 257,539, postKatrina and Rita was unprecedented in the history of the NFIP. 

Many of the weaknesses of the NFIP became self-evident after 

the hurricanes. 

In an effort to make the program more actuarially sound, the bill 

would phase out subsidized rates on vacation homes and second 

homes. 

Also, business owners would be eligible to purchase business 

interruption coverage at actuarial rates to better prepare them to 

meet payroll and other obligations in the event of major storms. 

The bill also updates maximum insurance coverage limits for residential and non-residential properties for the first time since 1994. 

The bill requires accountability and financial responsibility at 

the NFIP. FEMA would be required to report to Congress on the 

financial status of the NFIP and conduct reviews of the Nation’s 

flood maps. Many people contend that the Nation’s flood maps are 

outdated—I think everybody knows that—technologically, and of 

little use to FEMA. 

Disclosure is another important feature of the bill. The bill would 

require that disclosures are made to owners about changes in the 

flood insurance program. 

The bill caps the amount FEMA can raise insurance premiums 

from 10 percent to 15 percent in any given year. 

Most critical is a provision in the bill that increases fines on 

lenders who do not enforce the mandatory flood insurance program 

requirements for those living in a floodplain who hold a federally 

backed mortgage. This will ensure that those who should have 

flood insurance are actually able to obtain the insurance. 

In addition to the major reforms in the bill, the borrowing authority for the NFIP is increased to ensure that all outstanding 

claims and Federal obligations under the program are met. 

The current borrowing authority of the NFIP was last increased 

in March 2006 to $20.775 billion from $18.5 billion in November 

2005. 

3

The NFIP must remain solvent in the years to come. The total 

flood insurance claim payouts alone from the 2005 hurricane insurance are estimated to be around $23 billion. 

I look forward to hearing the testimony of the witnesses on H.R. 

1682, and I would now like to recognize Ranking Member Biggert 

for her opening statement. 

Mrs. BIGGERT. Thank you, Chairwoman Waters, and thank you 

for convening this hearing on H.R. 1682, the FIRM Act, which 

Chairman Frank and I introduced on March 26, 2007. 

During the last two Congresses, this committee held a number 

of hearings and markups on flood insurance and the flood insurance program. 

In the last Congress, the committee considered H.R. 4973, the 

Flood Insurance Reform and Modernization Act of 2006 which the 

House passed by a vote of 416 to 4 on June 27, 2006. The Senate, 

not surprisingly, did not consider that bill, which brings us back to 

the drawing board today. 

Considering that last year’s flood modernization bill enjoyed 

broad bipartisan support, I am pleased that we introduced an almost identical bill this year, and that the committee is considering 

it again. 

20,000 communities across the Nation, including 800 communities in my home State of Illinois, participate in the NFIP. 

Later this morning, we’ll hear from Paul Osman, the certified 

floodplain programs manager for the State of Illinois, who will give 

us the lay of the land with regard to Illinois’ leadership in the area 

of floodplain management and flood mitigation. 

For example, in my congressional district, the residents and leaders of the village of Tinley Park recently proved that a proactive 

approach to flood management can help both the community and 

homeowners. 

Following remapping in the 1990’s, 550 homes in Tinley Park 

were placed in the floodplain and homeowners would have been 

forced to pay an extra $1,000 per year for flood insurance. However, instead of paying higher insurance rates and leaving homes 

vulnerable to floods, the residents of Tinley Park took action. They 

worked on a flood mitigation project, received a revised FEMA approved floodplain map in April of this year, and avoided paying 

higher insurance premiums. 

For the majority of its 39-year history, the NFIP has been a selffunded program. However, flood insurance claims for the 2005 hurricane season have grown to at least $17.6 billion, a total greater 

than all claims from all other year combined. Unless the NFIP is 

reformed soon, the program will face insolvency. 

The FIRM Act would require great accountability and financial 

responsibility from the NFIP. It increases insurance coverage limits 

and the authority of the NFIP to pay claims largely incurred as a 

result of the 2005 hurricane season. 

Maximum coverage limits for residents and contents would increase from $250/$100,000 to $305/$135,000, so businesses and 

churches would see increased coverage limits from $500,000 to 

$670,000. 

The FIRM Act also directs FEMA to develop more comprehensive 

and updated flood maps to reflect more accurately the risk to 

4

homeowners, submit annual financial reports on the NFIP to Congress, and phase out subsidies over time for vacation homes, second 

homes, and non-residential properties. 

It would require that property owners be notified of the availability of flood insurance and escrow for flood insurance. 

The bill also authorizes the NFIP to provide additional living expense coverage for temporary housing immediately after a flood, 

and increases fines on lenders who do not enforce the mandatory 

flood insurance policy for federally backed mortgages in the 100-

year floodplain. 

On March 11, 2007, the Chicago Tribune reported in an article 

titled, quote, ‘‘Debate swirls around flood policy,’’ that—and again, 

I quote—‘‘This could be the year Congress makes some major 

changes to the National Flood Insurance Program or not.’’ I’m hoping for the former. 

I’m confident that this bill will again move through the House 

with bipartisan support, and I’m very hopeful that our Senate colleagues will act on it during this Congress, especially given that 

the 2007 Atlantic hurricane season is predicted to be very active 

and the NFIP expires in 2008. NFIP reform is needed now. 

I look forward to working with my colleagues on this bill. I also 

look forward to hearing from our witnesses about ways to strengthen the FIRM Act so that it’s good for American communities, taxpayers, and homeowners. I yield back the balance of my time. 

Mr. GREEN. [presiding] I thank the gentlelady, and will now recognize Mr. Hinojosa from Texas for 3 minutes. 

Mr. HINOJOSA. Thank you, Mr. Chairman, and Ranking Member 

Biggert. 

I want to thank Chairwoman Waters and Ranking Member 

Biggert for holding this very important and timely hearing on an 

issue that is very important to me and to all the constituents in 

my district, as well as a quarter of a million people in the Rio 

Grande Valley of South Texas, where I come from. 

I look forward to working with the two of you as the committee 

moves forward with consideration of H.R. 1682, the Flood Insurance Reform and Modernization Act of 2007, introduced by Chairman Frank and Ranking Member Biggert earlier this year. 

I commend the two of you for all the work that you have done 

to date to improve housing conditions for many, many residents in 

the United States. I especially want to thank the two of you, again, 

for moving forward with my two rural housing bills on the Housing 

Assistance Council and the Rural Housing and Economic Development program. I am very grateful for that. 

At this point, I ask unanimous consent to submit my entire 

statement for the record, as well as two documents from the Management Association for Private Photogrammetric Surveyors. I 

have them here in my hands, and I think that they would add to 

the record. 

Mr. GREEN. Without objection, it will be done. 

Mr. HINOJOSA. Thank you. 

In light of the devastation caused by Hurricanes Katrina, Rita, 

and Wilma, this committee has held numerous hearings on ways 

to address the massive flooding and wind and surge damage done 

5

to homes and other structures along the coast of the Gulf of Mexico, including Texas, Louisiana, Mississippi, and Florida. 

We have tried to find ways to ensure that the massive flooding 

that occurred in New Orleans does not recur, and that we are able 

to get our dams and levees up to code to certify that they protect 

those living behind them. 

I realize that H.R. 1682 intended to address a number of weaknesses in the National Flood Insurance Program that were exposed 

by the unprecedented 2005 hurricane season, and I support many 

of the provisions included in the bill. However, I must stress that 

there are several provisions in the bill with which I find fault, and 

several provisions that have been left out of the bill that I now 

wish to propose for your consideration. 

My main concern is that FEMA and the Army Corps of Engineers might not be creating very accurate maps. If the mapping is 

being done now, I am concerned that those maps might not be taking into account the fact that some areas will eventually have dams 

and levees that are up to code, including those in my district and 

all along the U.S. border with Mexico. 

I am also concerned that they might not be using the appropriate 

methodology or the most advanced technology to draw those floodplain maps. 

Along those lines, I am very pleased that the Management Association for Private Photogrammetric Surveyors, MAPPS, are testifying here today. 

I agree with them that Section 21 of H.R. 1682 omits language 

regarding map accuracy and the use of modern geospatial technologies and FEMA standards and requirements. I also agree with 

MAPPS that we should consider providing mapping by watershed. 

It would result possibly in much more accurate and less politically 

motivated floodplain maps. 

Madam Chairwoman, while you were gone, I said that I would 

like for the entire statement that I have be included as part of the 

record. 

Chairwoman WATERS. Without objection, such is the order. 

Mr. HINOJOSA. And I will simply close by saying that I would 

hate for us to lose homes because we failed to pass legislation containing requirements that the maps be made using the most up-todate and thorough technology and that we provide— 

Chairwoman WATERS. I thank the gentleman. 

I now recognize Mr. Bachus for 5 minutes. 

Mr. BACHUS. I thank the chairwoman. 

First of all, let me welcome Congressman Gene Taylor to our 

hearing today. Congressman Taylor has dealt firsthand with this 

wind versus water issue: how do we determine whether it is wind 

or water? His constituents have been dealing with this. Also, I 

know he has legislation which will allow citizens along the coast 

to purchase a policy that covers both wind and water. 

I do believe that Katrina has sort of brought this thing into focus 

about where there is an area where you’re exposed to both of those 

conditions, that there ought to be a more efficient way and a fairer 

way for homeowners. 

One of the questions I think this committee has, and this afternoon, the Oversight and Investigations Subcommittee of the FinanVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
6

cial Services Committee, and the Management, Investigations, and 

Oversight Subcommittee of the Homeland Security Committee are 

addressing this. They’re going to have a hearing on wind and 

water. 

And, if we’re to have a comprehensive reform, we’re going to 

have to make—that’s going to be part of the debate, and if we have, 

or offer coverage, if coverage is offered for both of these, is it going 

to be under the National Flood Insurance Program or is it going 

to be privately offered? 

You know, presently, flood insurance is subsidized in many cases, 

is not actuarially sound. 

If we go to a multi-peril policy, where are we going to put the 

rates? The flood insurance program is recovering, but if we have 

another hurricane this year, what happens to rates? 

I know all of these questions about how fast you raise the rates 

to reflect the true cost: if you raise them too fast it causes economic 

hardship in many areas; if you don’t raise them fast enough, you 

underfund the program—all of these things come into play. 

I know the GAO is doing two reports; they’ve been asked for this. 

But I do believe, long-term, because as the chairwoman has said, 

and as Mrs. Biggert has said, many people in Mississippi, particularly, and in New Orleans, were in areas where flood insurance 

wasn’t available, yet their homes were flooded. 

In fact, that’s probably one of the primary reasons that the losses 

have been so staggering, because there were uninsured losses, and 

for many of those people, flood insurance was not available, yet 

their homes were flooded. 

They had wind insurance, so they had the wrong kind of insurance, or there were determinations made that it was water and not 

wind—we’ve all seen those headlines. 

And I do believe that this Congress, before it finally solves this 

whole issue, is going to have to make a determination, at least in 

some areas, whether we offer coverage, as Congressman Taylor 

said, whether we offer coverage—and I won’t speak for him. In fact, 

I would at this time ask unanimous consent to the chairwoman 

that he be allowed to participate in this hearing and ask questions. 

Chairwoman WATERS. That has already been done. 

Mr. BACHUS. Thank you. 

Chairwoman WATERS. Thank you very much. 

Mr. BACHUS. Thank you. 

But I think that this is something that we have to do, as we 

move forward, probably before we do a comprehensive reform of 

this program, that has to be part of it, and without it, I think it’s 

an imperfect reform. 

I yield back the balance of my time. 

Chairwoman WATERS. Thank you very much. 

And at this time, the gentleman that Mr. Bachus was referring 

to, Mr. Gene Taylor, is recognized for 5 minutes. 

Mr. TAYLOR. Thank you, Madam Chairwoman. Thank you very 

much for having this hearing, and I thank Mr. Bachus for his kind 

words. 

Madam Chairwoman, I very much appreciate your willingness to 

improve on the National Flood Insurance Program. 

7

South Mississippi was devastated by Hurricane Katrina, but one 

thing I want our fellow citizens to know is, although I had thousands of complaints about private insurance companies failing to 

pay their claims, there was not a single instance in South Mississippi where citizens said that their Federal flood insurance 

didn’t pay, and that’s something I think is representative of the 

people’s government and the people’s Nation that we ought to be 

proud of, that it did pay their claims. But I do appreciate your willingness to look into raising the amount of coverage that is available. 

As I’m learning firsthand, a quarter of a million dollars doesn’t 

go nearly as far as people thought it would have a few years ago, 

and so raising the rates is important. 

It’s extremely important that the national mapping, to let people 

know of the dangers of flooding, be improved. It’s now, what, 22 

months since the storm and the flood maps have not been released. 

I think that’s unconscionable. I think that our Nation, with the 

technology that’s available, such as mapping from space, it should 

have been done long ago. 

Your concerns that the lending industry should have been warning people that they needed flood insurance are right on the mark. 

There were any number of instances in South Mississippi where 

bankers told people, ‘‘Yes, flood insurance is available, but you 

don’t need it, you’re 20 feet above sea level,’’ only for that person 

to find out that they took 6 feet of water in Hurricane Katrina and 

that their homeowners policy wouldn’t cover it. 

And although we’ll always be grateful for my fellow Members of 

Congress for the money they came up with to help out those people 

who had homeowners insurance, who did flood, and thus the grant 

program came along to help those people up to the amount of 

$150,000 or the amount of the insurance, whichever is less, if we, 

if the Federal flood insurance maps were better, if the program was 

better, maybe we wouldn’t have had to come up with those grants 

at all. Maybe that money would have been available through the 

normal course of business. 

And lastly, I would really hope that this committee and the other 

committees would look into the national write your own program, 

where we hire the private sector to sell the policy. I don’t have a 

problem with that. It saves our Nation administrative costs. 

The conflict of interest comes in when that same company representative is sent out to look at the damage after a hurricane and 

decide whether it was water, which means the taxpayer flood policy 

will pay for it, or it was wind, which means his company, that he 

might own stock in, that he’s probably hoping for a Christmas 

bonus from, that he’s probably hoping for his next promotion, is 

going to pay the claim. 

That is a built-in conflict of interest. I suspected it was, and now 

in Louisiana, there’s actually a lawsuit under the Fraudulent 

Claims Act where people are claiming that billions of dollars of 

costs that should have been attributed to the private sector insurance companies were paid by the National Flood Insurance Program, and these people have introduced a lawsuit hoping to get 

one-third of what is recovered, of funds that should not have been 

spent by our Nation in the first place. 

8

So again, I very much appreciate your willingness to look into 

this. I also appreciate your willingness to look into an all-perils insurance policy, so that people don’t have to stay through the eye 

of the storm with a video camera to determine whether their home 

was destroyed by wind or water. 

If you’ve built it the way you should have, if you’ve paid your policy, you should not have to stick around for the hurricane, to be 

an eyewitness to see how your house was destroyed. If you’ve done 

what you should have done and paid your premiums, if your house 

is gone, if your house is substantially damaged, our Nation will pay 

that policy. 

So thank you very much, Madam Chairwoman, for letting me— 

Chairwoman WATERS. Thank you very much, Mr. Taylor. I will 

now recognize the gentleman from New Jersey, Mr. Garrett, for 2 

minutes. 

Mr. GARRETT. Thank you, Madam Chairwoman, and thank you 

also to Chairman Frank and all the others who have worked so 

hard at putting together this important piece of legislation. 

You know, in 1968, when Congress created the National Flood 

Insurance Program, the NFIP, the intent was providing homeowners who live in floodplains an opportunity to purchase flood insurance from the Federal Government, but at that time, there really wasn’t any other private sector availability for them. 

When it was created after many homeowners had already built 

their homes in flood-prone areas, and before any comprehensive 

maps existed, it was because of this that Congress allowed the 

owners of these properties, otherwise known as pre-FIRM properties, to purchase flood insurance at subsidized rates. 

Over the last 20 years, the NFIP had been largely self-sufficient. 

Obviously, since Katrina, there have been some problems with 

that. 

So in recognition of the need to bolster the NFIP and allow it to 

better offer affordable flood insurance, the chairman has now introduced this legislation. 

This bill, I do believe, marks significant reform to the existing 

program by further updating flood maps, and by increasing the 

phase-in of actuarial rates on vacation homes, and on second 

homes, and on non-residential properties that have in the past 

been subsidized by the program since its inception. 

But even with these significant reforms, there still are a number 

of people on both sides of the debate that feel that other changes 

are necessary. Some people have advocated for a total and immediate withdrawal of the subsidies for all pre-FIRM homes, regardless of when they were purchased. Others believe that is not fair 

to force someone who bought their home assuming one flood insurance rate and then have that rate changed in the middle of their 

mortgage. 

So in an effort to find a compromise between these two sides of 

the spectrum, last year I offered what I called a common-sense 

middle ground amendment, and it passed on the House Floor and 

it passed with Chairman Frank’s support at that time. 

The amendment I offered provided additional resources to the 

flood insurance program in a fair way, and it did not subject curVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
9

rent homeowners of pre-FIRM homes to unanticipated or unplanned increases in their premiums. 

The amendment simply required any purchaser of a pre-FIRM 

primary residential home to pay a phased-in actuary flood insurance pricing using the same phase-in structure that non-residential 

and non-primary homes are currently subject to in this bill and last 

year’s bill, as well. 

So in essence, I believe it was a common-sense approach, a practical approach, and a fair way to bolster the National Flood Insurance Program to provide the citizens the appropriate coverage to 

prepare for future disasters. 

And so, quite frankly, I look forward once again to working closely, as I did last year with Chairman Frank and the ranking members, as well, to move this idea along and this bill, as it moves 

through the process. 

And with that, I yield back the balance of my time. 

Chairwoman WATERS. Thank you very much. 

I’ll recognize the gentleman from Texas, Mr. Al Green, for 2 minutes. 

Mr. GREEN. Thank you, Madam Chairwoman, and I also thank 

the ranking member. 

Madam Chairwoman, I will be concerned about the premium increase. That causes me concern because it looks like it may be substantial in some cases, and we do have low- to moderate-income 

people who live in areas that have been devastated, and of course 

we don’t want to find ourselves having persons who cannot afford 

the flood insurance still remain in areas where they desire to live 

but cannot afford to live there because of lack of insurance. 

I’m also concerned about the number of disputes and claims that 

have not been resolved. My understanding is that a high percentage may have been resolved, but when we look at the empirical 

data, the raw numbers may still be large. So I’d like to know more 

about the number of claims that haven’t been resolved. 

And finally, the role of mediation in the process is important. I’m 

concerned and would like to know how that process is functioning. 

Is the functionality of it such that it is fine as is or do we need 

to tweak it so that we can better serve the persons who eventually 

participate in the process? 

Thank you again, Madam Chairwoman, And I yield back the balance of my time. 

Chairwoman WATERS. Thank you very much. 

I recognize the gentleman from Texas, Mr. Neugebauer. 

Mr. NEUGEBAUER. I thank you, Madam Chairwoman. 

I just want to make a few comments. One is that certainly we 

need to make sure that this fund is actuarially sound and that the 

premiums are based on actuarial data, and I don’t think that 

should just be for second homes and for vacation homes. I think 

that should be for all homes. 

Because basically, we now have a fund that is busted, and we’re 

going to make some improvements to this, and we’re going to raise 

the premiums, but in fact, it owes a debt it probably cannot pay, 

and in fact, that puts the taxpayers in the position of subsidizing 

people who live in some of these flood areas because they are not 

paying premiums that are actuarially sound, and if, long-term, 

10

we’re going to have a flood insurance program, I think it needs to 

be one that makes sense and that the premiums are charged based 

on the potential laws. 

I think the second piece of information, and Mr. Taylor keeps 

bringing this to our attention, but homeowners need to know what 

their coverage is. They need to know that when they buy a policy, 

what they’re covered for, and they don’t need to be then caught in 

the middle of whether this was water or wind. 

And so I look forward to working with the industry, of coming 

up with ways, innovative ways, and I know that the industry is capable of delivering that, of some ways that we can integrate possibly some of the coverage for flood insurance with some of the 

other existing homeowner policies to deliver a better product so 

that people understand what they’re buying and what they’re getting, and so the day they have a loss, they’re not calling their lawyer, they’re calling their insurance agent. So I think we need to 

work in that direction. 

And certainly, as we move forward with this process, I think we 

need to then determine what we’re going to do with the fund in its 

current financial condition, because we’ve now raised the limit on 

it to $20 billion. We’re at the front end of the hurricane season. 

It will take a while for some of these premium increases to be 

put in place, and certainly I think the American taxpayers need to 

know exactly how we plan to deal with this fund and long-term 

make sure that we’re on a track to make it more financially stable. 

And with that, I yield back the balance of my time. 

Chairwoman WATERS. Thank you very much. 

Having exhausted the opening statements of the members of the 

committee, I would like to introduce our first witness. 

Mr. Edward L. Connor is the Deputy Assistant Administrator for 

Insurance for the Federal Emergency Management Agency. 

Mr. Connor, thank you for appearing before the subcommittee 

today, and without objection, your written statement will be made 

a part of the record. 

You will now be recognized for a 5-minute summary of your testimony. 

STATEMENT OF EDWARD L. CONNOR, DEPUTY ASSISTANT ADMINISTRATOR FOR INSURANCE, MITIGATION DIRECTORATE, 

FEDERAL EMERGENCY MANAGEMENT AGENCY, DEPARTMENT OF HOMELAND SECURITY 

Mr. CONNOR. Good morning, Chairwoman Waters, Ranking 

Member Biggert, and members of the subcommittee. 

I do appreciate your opening comments, and there are many 

things that you said today that I certainly do understand and appreciate and the program itself recognizes those needs and those 

desires, and we’ll work toward addressing them. 

I’m Ed Connor, Deputy Assistant Administrator for Insurance for 

the Federal Emergency Management Agency, and I certainly do appreciate the opportunity to appear today before this subcommittee 

to discuss the National Flood Insurance Program. 

This morning, I’ll illustrate how the National Flood Insurance 

Program has moved forward since the 2005 hurricane season, by 

addressing three specific areas: first, the NFIP’s financial status; 

11

second, how the NFIP has operated effectively since enactment of 

the 2004 Flood Insurance Reform Act; and third, opportunities to 

fundamentally strengthen the NFIP’s financial underpinnings. 

The NFIP makes affordable flood insurance available in communities that adopt and enforce measures to reduce vulnerability to 

flooding. From 1968 through 2004, the National Flood Insurance 

Program paid out $15 billion to cover over 1.3 million claims. Hurricane Katrina resulted in claims totalling over $16.3 billion, 

and it’s likely that the 2005 flood insurance costs will be around 

$19.9 billion. That includes interest already paid on borrowing from 

the Treasury. 

Congress has increased the borrowing authority 3 times since 

Katrina to the present limit of 20.775, and that’s been recognized 

by many of you already. 

We’ve borrowed from the Treasury 11 times since Katrina, allowing over 98 percent of 2000 flood claims to be paid, and that translates into more than 180,000 Gulf Coast residents on the road to 

recovery. 

That’s partly due to our partnership with our write your own insurance companies, as well as our claims adjusters and our agents, 

who fulfilled their responsibility to help the NFIP policyholders 

begin rebuilding their lives. With over 5.4 million policies insuring more than $1 trillion in assets, the NFIP collects more than $2 billion annually. Yet we expect interest on our borrowed funds to reach $720 million this year. 

If future claims meet non-catastrophic historical averages, the 

program will need new loans every 6 months to cover its semi-annual interest payments. 

Needless to say, under current loan arrangements, it’s unlikely 

that the NFIP will ever be able to retire its debt. 

Financial matters aside, the NFIP has excelled, particularly 

since the enactment of the 2004 Flood Insurance Reform Act, which 

was instrumental in our ability to help Gulf Coast policyholders 

when they needed it most. 

The NFIP’s summary of coverage and the flood insurance claims 

handbook helped them through the claims process and these documents continue playing a major role in the NFIP’s ability to close 

claims quickly and fairly, and the Reform Act continues to be a catalyst for programmatic success and improvement. 

Since the Reform Act agent training requirements were published in September of 2005, 40 States and the District of Columbia 

have made flood insurance training mandatory for agents who sell 

NFIP coverage. Also, FEMA’s flood insurance claims appeals rule, 

which was adopted, augments the NFIP’s historically high success 

rate of resolving over 99 percent of its claims without litigation. 

And we’re reforming and we’re using the Reform Act funding authorization to address repetitive loss properties, as well. 

The repetitive flood claims program is considering 41 property 

acquisition proposals which will use all of 2007 program funds. 

In fiscal 2006, the first year of the program, $9.8 million was 

awarded for property acquisitions. 

Also, the Flood Mitigation Assistance Program is being effectively carried out by FEMA’s 10 regional offices throughout the Nation. 

12

And finally, our severe repetitive loss pilot program is in its final 

states of development, and we expect to open the first application 

period this summer. 

These mitigation tools are critical components of our efforts to reduce at-risk structures and eliminate the troublesome and costly 

flood/rebuild/flood cycle that residents in the Nation’s flood-prone 

areas have become so familiar with, but we must continue to 

strengthen the program by: one, protecting the program’s integrity; 

two, increasing NFIP participation; three, improving citizens’ understanding of flood risk; and four, reducing risk with proven mitigation practices. 

We should enhance these principles by eliminating discounts on 

pre-FIRM structures, strengthening mandatory purchase requirements, increasing the annual limitation on premium increases, and 

improving the data on flood maps. 

My written testimony offers details and suggestions along with 

particulars on program enhancements related to the 2004 Reform 

Act, and I look forward to considering these matters with you. 

However, there is no quick solution that will allow the program 

to absorb catastrophic loss years like 2005. And we’re concerned 

with more than financial matters. 

Increasing risk awareness among homeowners is one of the 

NFIP’s basic principles. FEMA, through Flood Smart, an aggressive education and outreach campaign, continuously designs and 

upgrades informational strategies to increase the public’s awareness of flood risks and to keep our policyholders informed. 

As our citizens learn more about the risks they face, they do 

more to reduce those risks, and they’ll want to protect their investments, making the Nation’s— 

Chairwoman WATERS. Mr. Connor, we’ve given you an additional 

2 minutes. I’m sorry, you’re going to have to discontinue your testimony at this time so that the panel can get to their questioning. 

[The prepared statement of Mr. Connor can be found on page 54 

of the appendix.] 

Chairwoman WATERS. With that, I’d like to thank you for your 

testimony, and I’d like to begin the question period with several 

issues that I did not hear you discuss. 

Did you read the bill? 

Mr. CONNOR. I did. 

Chairwoman WATERS. So you know what we are attempting to 

do in all aspects of the bill? 

Mr. CONNOR. I do. 

Chairwoman WATERS. You did not reference much of what the 

bill is intended to do. 

Let me just kind of gear in on, what do you think about that portion of the bill that increases fines on lenders who do not enforce 

the mandatory flood insurance policy requirements for those living 

in a floodplain who hold a federally backed mortgage? 

Mr. CONNOR. Well, we support that proposal. 

To the extent that we do get tougher compliance for mandatory 

purchase, and that’s going to ensure that property owners who 

should have flood insurance, who have federally backed mortgages, 

will have it; therefore, the flood insurance policies will increase, 

13

and that lends itself to strengthening the financial status of the 

program. 

Chairwoman WATERS. All right. I was pleased to hear that the 

7-year comprehensive evaluation of the National Flood Insurance 

Program has been completed, and I understand it was just released. 

What do you think are the key findings of and recommendations 

of the evaluation? 

Mr. CONNOR. Well, we’re very excited to look into that, Madam 

Chairwoman. 

Where we are with it right now is we’ve gone through the analysis itself, we’ve come out with over 190 recommendations for the 

program, we’re in the process now of prioritizing those particular 

recommendations and we are building that, incorporating that into 

our planning process so that we can move forward with them. 

There are a number of recommendations in all areas of our program—risk insurance, floodplain management, and mapping—that 

we think have merit, and we intend to move forward on those 

items. 

Chairwoman WATERS. Now, you identified 190 recommendations. 

Do you intend to move forward on all of those? 

Mr. CONNOR. We are prioritizing them now. There are some obviously that a decision will be made that we won’t do anything with. 

There are others that we may have already started moving on already, and so we may want to just speed that process up. And 

there are some, obviously, that we need to move on very quickly. 

Chairwoman WATERS. One of the studies in the evaluation is 

called, ‘‘Assessing the Adequacy of the National Flood Insurance 

Program’s 1 Percent Flood Standard.’’ I assume that is the same 

as what is often referred to as the 100-year flood? 

Mr. CONNOR. That’s correct. 

Chairwoman WATERS. Would you tell me what you think about 

what the study said on this topic and is that something that’s included in your 190 recommendations? Do you have a recommendation on this? 

Mr. CONNOR. I do not have a recommendation at this point, but 

I would like to provide testimony for the record once we get around 

to looking at the details of that particular recommendation. 

Chairwoman WATERS. Given the predictions of more frequent 

and more damaging storms, will this standard for flood damage reduction programs remain useful? 

Mr. CONNOR. I’m sorry, could you repeat your question? 

Chairwoman WATERS. I just talked about the—one of the studies 

of the evaluation program called, ‘‘Assessing the Adequacy of the 

National Flood Insurance Program’s 1 Percent Flood Standard.’’ 

Mr. CONNOR. Yes. 

Chairwoman WATERS. And we agree that is what is referred to 

as the 100-year flood. 

We talked a little bit about, I wanted to know what you thought 

about what the study had to say, and given the predictions of more 

frequent and more damaging storms, will this standard for flood 

damage reduction programs remain useful? 

Mr. CONNOR. Again, that’s something that I’d like to submit for 

testimony for the record after having reviewed—because of the deVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
14

tail and to be sure that I’m accurate in my comment, I would prefer 

to submit testimony for the record. 

Chairwoman WATERS. Another study in the evaluation is entitled, ‘‘The Role of Actuarial Soundness in the NFIP.’’ 

Since this subcommittee is considering legislation which would 

again raise the cap on the borrowing authority for the NFIP, and 

since the program is about $100 billion in debt requiring annual interest payments to the Treasury of about $800 million, I’m very interested in what the evaluation has to say about the role of actuarial soundness. 

I know the program has been actuarially sound during most of 

its history, paying back any Treasury borrowing with interest, except for one brief period that was in the mid-1980’s. 

Does this part of the evaluation really address the problem of 

huge catastrophic losses as they affect actuarial soundness? 

Mr. CONNOR. I think that part of the study will point to the fact 

that we need to, to the extent possible, get the policies actuarially 

rated, and how we do that is a matter of discussion today. 

But clearly, to the extent that we are able to get the full risk premium for the policies that we write, it will certainly bring stability, 

financial stability to the program, that I think that we’re all looking for. 

But again, I will say to you, Madam Chairwoman, that because 

I have not gone through the details of all the recommendations, I’d 

like to be able to provide testimony for the record on those particular issues. 

Chairwoman WATERS. Thank you very much. 

I will now recognize our ranking member, Mrs. Biggert, for 5 

minutes for questioning. 

Mrs. BIGGERT. Thank you, Madam Chairwoman. 

Mr. Connor, in your written statement, you state that one of the 

fundamental mitigation and insurance principles that the mitigation directorate and the NFIP have outlined since the 2005 hurricane season is to increase the NFIP’s participation incentives and 

improve enforcement of the mandatory participation in the program. 

What is FEMA doing to provide incentives to communities and 

potential policyholders to participate in the NFIP? 

Mr. CONNOR. Well, that’s a two-part question. 

With regard to what we are doing for policyholders, to the extent 

that we can make people understand their perception of risk and 

that they are vulnerable to flooding, we have a very aggressive 

marketing campaign which is going out, reaching the Nation, 

reaching property owners, making them understand that just because you may not necessarily be next to a river or a creek, that 

you are still vulnerable to flooding. 

So to the extent that we can get that message out— 

Mrs. BIGGERT. How do you get the message out? Is it through advertising? 

Mr. CONNOR. It’s through an advertising campaign. There are 

print ads, there are television advertisings, and so forth, that are 

coming right into the property owners’ living room continuously, 

through magazines, print ads, and so forth. 

15

With regard to the communities, there are a number of things 

that we have in place. 

The community rating system, which is an incentive program, 

which basically, to the extent that communities join the program 

and they put in a number of mitigation projects and programs, they 

offer discounts to every policyholder who happens to live in that 

particular community. 

And so to the extent that we can also make people aware that, 

from a community perspective, there are incentives available to 

lower your rates, that’s where we get community involvement, and 

that’s how the communities can communicate this to the various 

property owners. 

Mrs. BIGGERT. Do you have any way to check to see if these are 

working? Is this something that you— 

Mr. CONNOR. Well, with regard to getting the word out to the 

policyholders, the property owners, we have experienced over 35 

continuous months of growth in the program, 22 percent. That 

translates into over 1 million policies that have come on the books 

since 2004. 

At the same time, we have retained more than 92 percent of 

those policies, so that’s a pretty good indication that the program 

is growing in that regard. 

With regard to the communities that are joining the program, 

last year we celebrated. Up to 21,000 communities are now part of 

the National Flood Insurance Program, and for years and years 

and years, those numbers have been down somewhere around 

19,000 or 20,000. 

So we do feel like we’re getting traction on that, that the word 

is getting out, and that people understand: one, the perception of 

risk; and two, what they need to do from the standpoint of getting 

discounts and trying to protect their investments. 

Mrs. BIGGERT. Do you think that part of it is, or the recent 

growth is due to your advertising or due to the fact that there were 

the Gulf hurricanes? 

Mr. CONNOR. That’s a fair question. 

I think that when we talk about the growth in the program, you 

really can’t point to any one thing. 

Obviously, the hurricanes from 2004–2005 had a lot to do with 

people understanding that we better do something to protect ourselves, but at the same time, our effort and the efforts to went into 

Flood Smart and the advertising campaign also, I think, connected 

the dots. 

So I think that when you look at it in combination, there are a 

number of things that drove that, but I think the important element, when we talk about growth in the program, is not just how 

many new policies come on the books, but we also need to look at 

the back end. How many are actually staying on the books? 

And that’s a very, very important number, and as I said, that 

number continues to get better at 92 percent. 

Mrs. BIGGERT. And just another question. 

In this bill, we’ve increased the penalties for federally regulated 

lending institutions that don’t comply with their mandatory purchase, regulatory responsibilities, which you also outline in your 

testimony. 

16

Is this enough? What is FEMA doing to improve enforcement of 

the mandatory participation? 

Mr. CONNOR. Well, we don’t really have a lot of authority over 

that, other than the fact that we meet regularly with the Federal 

regulators to make sure that they understand the provisions and 

the nuances of the National Flood Insurance Program. We communicate with them, and essentially, to the extent we can exchange 

data as well. 

So if we have policies that drop off the books, and we can identify 

who the regulatory agency is, we can submit that data to them for 

them to follow up. 

But to answer the first part of your question, I think that anything that we can do relative to making the penalties a little 

stronger, would increase the compliance on the part of the lending 

community to require flood insurance where required. 

Mrs. BIGGERT. Have all of the regulations been written for this? 

Mr. CONNOR. For? 

Mrs. BIGGERT. For enforcement by the regulators? 

Mr. CONNOR. The regulations were written starting back in 1994. 

That’s when it first—the teeth really went into the National Flood 

Insurance Reform Act, so they’ve been out there for a while. 

Mrs. BIGGERT. Okay. All right. Thank you very much. I yield 

back. 

Chairwoman WATERS. Thank you very much. 

I recognize the gentleman from Texas, Mr. Green, for 5 minutes 

for questioning. 

Mr. GREEN. Thank you, Madam Chairwoman. 

Mr. Connor, welcome, and thank you for coming today. 

Sir, you indicate that 99 percent of the claims are processed 

without litigation. 

Mr. CONNOR. That’s correct. 

Mr. GREEN. What percent of that 99 percent was resolved by way 

of mediation? 

Mr. CONNOR. Well, when you say mediation, are you referring to 

the State proposed mediation that— 

Mr. GREEN. Yes. 

Mr. CONNOR. Well, none of it has. 

All of that has—all of those 99 percent claims that have been resolved have been resolved within the National Flood Insurance Program, either through our natural process—if there’s a question or 

an appeal, it can be reviewed by higher-ups, or, you know, there 

could be some appeal process with the individual— 

Mr. GREEN. Then you agree that mediation has a role that it can 

play in this process? 

Mr. CONNOR. I don’t agree to that, no. If you’re referring to the 

mediation that’s being proposed in the legislation— 

Mr. GREEN. Yes. 

Mr. CONNOR. —no, I don’t think that plays a role, by virtue of 

what you initially said, that 99 percent of our claims do close without litigation. 

To the extent that mediation gets involved in the process and 

particularly because it’s going to be non-binding mediation, from 

our perspective, that would slow down the process in terms of getting claims settled quicker. 

17

The other thing that would occur as a result of that is there are 

cost implications that are associated with that, because now you’re 

going to have to get a staff of folks to be at a particular place and 

time whenever there’s a major hurricane or storm to go through 

this mediation process. 

Then thirdly— 

Mr. GREEN. Let me ask this question. 

If we have 99 percent resolved, in raw numbers, how many are 

not resolved? 

Mr. CONNOR. Right now, we have, for Rita, 93 that are unresolved; for Katrina, 2,699. 

Mr. GREEN. 2,699 for Katrina? 

And these that are not resolved, in terms of dollar amounts in 

dispute, do you have that data? What is the amount in dispute 

with these, especially as it relates to Katrina? 

Mr. CONNOR. I don’t have that number, sir, but I would like to 

provide testimony for the record on that particular question. 

Mr. GREEN. And in these disputes, it is your opinion that mediation would not be helpful, with the 2,699? 

Mr. CONNOR. It is our opinion that is the case. 

I’m not sure that these are even in dispute as much as these may 

be cases that involve another kind of coverage, which is increased 

ICC coverage, increased compliance coverage, which probably 

doesn’t kick in until later on in the rebuilding process. 

So I’m not even absolutely certain that these numbers that we’re 

talking about now are necessarily in dispute, but that’s something 

that we can look into. 

Mr. GREEN. Many members of the judiciary find that mediation 

just prior to litigation is a helpful tool. You don’t view it that way, 

I take it? 

Mr. CONNOR. We pretty much feel that with regard to any kind 

of mediation, it’s better to get that done up front as opposed to 

later on in the process. 

Mr. GREEN. Let’s talk about the increase in premiums. 

We have provided for a 10 to 15 percent increase, and my belief 

is that you spoke of a 35 percent increase; is that correct? 

Mr. CONNOR. A 35 percent increase? 

Mr. GREEN. Yes, sir. 

Mr. CONNOR. No. 

Mr. GREEN. What increase would you recommend? 

Mr. CONNOR. I’m not sure what you’re asking me now. In total, 

or just for subsidized, or— 

Mr. GREEN. Our bill provides for a 10 percent increase in the policy rates for any given year. 

Do you have a recommendation? 

Mr. CONNOR. Our recommendation is whatever you can give us, 

sir. Right now, the 10 percent cap pretty much has us locked in, 

in terms of anything that we can do to raise the rates. 

If you’re proposing 15 percent, we would certainly accept that, 

but the bottom line is that to the extent that, if nothing else happens, and if us trying to get the program to be financially sound, 

15 percent increase, most of those premiums are going to go toward 

paying off the debt, paying other program expenses, as well as trying to bill— 

18

Mr. GREEN. I yield back, Madam Chairwoman. Thank you. 

Chairwoman WATERS. Thank you. 

Mr. Neugebauer. 

Mr. NEUGEBAUER. Thank you very much. 

Mr. Connor, what kind of analysis has your agency done to address this issue of you have a fund that, you know, is nearly $20 

billion out of the money; you’re struggling—I think what you—did 

you say the interest was going to be about $700 million a year? 

Mr. CONNOR. That’s correct. 

Mr. NEUGEBAUER. And so what’s the plan? 

Mr. CONNOR. Well, the plan right now, since Katrina, there are 

a number of things we’ve been doing to try to address the financial 

situation that we have. 

One would be, what we were just discussing, is we recognize that 

there’s a 10 percent cap on premium increases, so to the maximum 

extent possible, we’re raising the rates as high as we can, based on 

the ceiling that’s there. That’s one thing we’re doing. 

The other thing that we’re doing is we’re remaining very, very 

aggressive with respect to trying to increase or grow the book of 

business. 

So the program that I talked about before, where we are going 

out and through Flood Smart we’re writing more business, we have 

that 22 percent growth, we have over a million policies, and that 

we’re retaining those policies, to the extent that we remain aggressive, try to get more policies on the book, try to get those policies 

to remain on the book, then those are some of the things that we’re 

doing to get premium revenues in the door and keep it in the door. 

The third thing that we’re doing is we certainly recognized, as we 

looked over the numbers over the last couple of years in terms of 

our expenses and our costs, that there are some elements in the 

way that we compensate the companies with respect to claim handling that we need to tighten up. 

There are certain startup costs that companies incur, and as a 

result of that, when you get high flood or mega-catastrophes like 

you did with Katrina, Rita, and Wilma, then there’s an opportunity 

that those expenses are going to go higher and higher and higher. 

That is something that we need to—we’ve identified and that is 

something that we need to address, and we intend to address that 

with the upcoming arrangement that we have to write your own 

company. 

So that, in and of itself, I think is going to—those three things 

in combination are things that we’re doing now to try to address 

the financial situation in the program. 

But that withstanding, when we’re talking about the kind of debt 

we’re talking about here, those are noble efforts, and we will continue to try to do these things, but again, it will be quite a while 

before we can do anything significant in terms of reducing that 

debt. 

Mr. NEUGEBAUER. You know, in fact, the taxpayers are probably 

on the hook for $20 billion and if another event happened, because 

of our premiums not being actuarially based, there’s another contingent liability out there, so it’s not just that this is an existing 

problem, but it’s a potential future problem. 

19

Just because of the caps that are on the increases, what would 

you say, if we passed a bill today that said let’s make all premiums, vacations homes, primary homes, let’s make them actuarially based, what would be the percentage of increase that most people would be experiencing? 

Mr. CONNOR. You know, what I’d like to do is to provide that testimony for the record, because I’d like to go back and just do an 

analysis on that. 

I wouldn’t want to give a number here or a percentage that 

wouldn’t be accurate. 

Mr. NEUGEBAUER. I would look forward to that, and I think this 

committee would, too. 

I think we really need to know exactly what kind of subsidization 

is going on here for the people who live in those flood-prone areas, 

because, you know, I live in an area that is subject to high winds 

and tornadoes, and so my insurance costs more than for people who 

live in areas that are not subject to those, and so to me, it’s not 

fair that people who live in an area, because they choose to live 

there, should be subsidized in a way that’s—in other words, not 

only am I subsidizing, I’m paying a higher premium for being in 

the area I’m in, but I’m also subsidizing, as an American taxpayer, 

the ability for folks to live in a—I want to move quickly to how do 

you feel like, on mapping, and I know we’re going to hear some testimony on mapping, how do you feel like we’re coming on identifying areas that should be—people should be encouraged to carry 

flood insurance? 

With the technology and the mapping technology we have today, 

are we moving rapidly enough or do we need to move more quickly? 

Mr. CONNOR. Well, you know, based on the reports that I’ve seen, 

it seems to me that we’re right on target in terms of when our plan 

was to get the maps out by the end of the funding period. 

When you talk about areas where people need to have insurance 

but don’t, the first thing that comes to mind with me are residual 

risks, and those are properties that are behind levees and manmade structures, which clearly, because it is not considered what 

we would call today a mandatory purchase requirement, to have insurance in those particular areas, it is something that we would 

certainly encourage, even without legislation, and the reason we 

would do that is when you look at FEMA as an Agency, one of the 

things that we are supposed to be doing is making folks aware of 

the risks that they may be facing, and to the extent that we all 

know now what the dangers are behind levees and other manmade 

structures, to the extent that folks can understand that you are 

certainly vulnerable to flooding, we are certainly encouraging that. 

We encourage folks to purchase flood insurance, even though it’s 

not a requirement at this time. 

Chairwoman WATERS. Thank you very much. 

I recognize the gentleman from Missouri, Mr. Clay, for 5 minutes, for questioning. 

Mr. CLAY. Thank you, Madam Chairwoman. I want to thank you 

for conducting this hearing. 

Mr. Connor, I represent St. Louis, Missouri, which is the confluence of America’s two largest rivers, the Missouri and the Mississippi River. 

20

The mapping provisions of the bill are extremely important, especially when one thinks of the disastrously outdated and inaccurate 

floodplain maps that have been used as standards. 

We have concerns expressed by some on the second panel that 

requiring FEMA to map the 500-year floodplain may delay completion of the 100-year floodplain map update. 

Additionally, concerns are expressed that the digital mapping updates are not necessarily the most accurate updates, and that accuracy should be considered the most important result of the changes. 

What is FEMA’s position on the concern of mapping the 500-year 

floodplain before completion of the 100-year floodplain? 

Mr. CONNOR. Sir, I’d like to again provide testimony for the 

record on that, because I think that we need to take a look at 

where we are and the resources available and I’d like to provide 

that data to you that way. 

It will be detailed data. I’d like to be accurate with it, so I’d like 

to provide testimony for the record. 

Mr. CLAY. Can you shed a little light on whether FEMA agrees 

with the mapping provisions of H.R. 1682 or does FEMA have concerns? Can you shed a little light on that? 

Mr. CONNOR. Again, I would go back to providing the testimony 

for the record, and the reason for that is because there are some 

provisions we like and there are some provisions we don’t, and so 

it’s easier to provide it to you through that means of testimony as 

opposed to try to try to articulate it now. 

Mr. CLAY. You don’t care to elaborate on it now? 

Mr. CONNOR. I prefer not to, sir. 

Mr. CLAY. I thank you, and Madam Chairwoman, I yield back. 

Thank you. 

Chairwoman WATERS. Thank you very much. 

I recognize Congressman Pearce for 5 minutes for questioning. 

Mr. PEARCE. Thank you, Madam Chairwoman. 

Mr. Connor, recently FEMA has released flood maps in Las 

Cruces—my largest county in Southern New Mexico. As many as 

9,000 properties are going to be added to the floodplain there. They 

recently had an open meeting, which was attended with a lot of 

discussion as to whether or not those maps were accurate. 

One of the problems appears to be that some of the levees in the 

surrounding area are partially certified and partially uncertified, 

and it’s my understanding that FEMA won’t allow the properties 

in the certified pieces to have lower insurance rates. 

Can you tell me a little bit about your process and a little bit 

about the circumstance, as much as you might know, or similar circumstances? 

Mr. CONNOR. I would like to again submit that to you through 

testimony for the record, sir, because there are details involved in 

that whole process that is better explained that way. 

Mr. PEARCE. Is it possible to change designations as parts of the 

levees are certified in the area? In other words, this is a process 

that ought to be well-known to your Agency. 

Mr. CONNOR. Yes, sir. 

Mr. PEARCE. That is possible? 

Mr. CONNOR. Yes, sir. 

Mr. PEARCE. So it’s possible that we might get some relief there. 

21

Generally, what drives the redrawing of maps that have been 

pretty stable? 

Mr. CONNOR. Changes in climate, changes in the physical landscape, topography, and the methods. 

Mr. PEARCE. Now, as you look at the Nation as a whole, how 

many times have you reissued floodplain maps and found those to 

be inaccurate? 

Of the two circumstances that we’ve looked at, Carlsbad, New 

Mexico, and also Alamagordo, New Mexico, we have found inaccuracies in the FEMA work, and they have gone back and redone 

it for a third time. 

Is that unusual or is there a high rate of reaccomplishing, redrawing of maps after an attempt like this one? 

Mr. CONNOR. I think that’s one of the things we need to go back 

and get some data on and provide that to you, through testimony 

for the record, sir. 

Mr. PEARCE. In the underlying bill, on Page 3, there is a description of a low-priced premium, a $112 premium, for places that are 

low to moderate risk. 

How many places in New Mexico would qualify as low to moderate risk? 

Mr. CONNOR. I don’t know off the top of my head, but I can surely get that information for you. 

What we’re talking about is a preferred risk policy that we normally would write in areas that are not considered high risk areas, 

but again, I can get that information to you, provide it for the 

record. 

Mr. PEARCE. We were talking about the 500-year floodplain. 

What’s the Agency’s internal position on that, the 500-year floodplain to help draw in? 

I was listening, and I may have missed it, but I did not hear you 

include that suggestion in your increased revenues. Mr. 

Neugebauer was asking how you’re going to solve the problem of 

$21 billion worth of—basically about $1 billion a year in premiums. 

Mr. CONNOR. Yes. I think again this is one of the responses I 

would like to provide as testimony for the record because again, 

there are varying opinions in terms of how we approach that, sir. 

Mr. PEARCE. Just for the record, I would tell you that the position of those who would increase to a 500-year floodplain, that 

would include almost everyone in New Mexico, they have an average income of about $25,000 a year. So everybody in New Mexico 

would be paying for those $335,000 houses on the Gulf that get 

torn up time after time. 

Those are second homes, they are vacation homes. It is particularly egregious that we would consider the 500-year floodplain to 

cure a problem with a fund that does not appear to be functioning 

properly, and to come and tag heavy burdens on people who will 

never have those $300,000 houses, they will never live on the coast, 

they will never have the benefits, and yet they are paying for those 

people who are, just is something that really should be thought 

about quite a lot, in my opinion. 

I see my time has about elapsed. I’ll yield back. 

Thank you, Madam Chairwoman. 

Chairwoman WATERS. Thank you very much. 

22

I’m going to call on Mr. Shays next. 

Mr. Connor, did you not anticipate some of these questions before 

coming over here to this committee? 

Mr. CONNOR. I did anticipate some of them, Madam Chairwoman. It’s just that on some of these questions that are being 

asked, they are detail oriented, and I want to make sure that I give 

an accurate response. 

Chairwoman WATERS. Well, I know, and I appreciate that, but I 

think our members on both sides of the aisle have been pressing 

about the 500-year floodplain issue, and the cost to, you know, our 

constituents, and I keep hearing it coming up over and over again. 

I sure wish I could get at least a feel from you about what you 

think about that. What does your Agency think about that? 

Mr. Shays, 5 minutes for questioning. 

Mr. SHAYS. Thank you for appearing before us. 

I wrestle with this issue; 7 of my 17 towns are on the coast. 

In principle, I don’t think taxpayers should be subsidizing people 

who build in places they shouldn’t build, but what I wrestle with 

is that there are some areas where you have continual flooding, 

and then you have some areas that are on the coast and they’re 

on a floodplain, and they don’t have continual flooding. They may 

have not had it for decades and decades. 

How do we sort out the difference between people who are just 

simply in the line of fire, every few years they seem to have to rebuild a home, and those who are not in the line of fire? 

Mr. CONNOR. Well, this is something that we’re dealing with 

through the severe repetitive loss program, whereby we are identifying some of these properties that have repeated losses, and to the 

extent possible, we’re trying to identify these properties and 

through acquisition programs either purchase those homes or suggest mitigation projects that would lessen their ability to be damaged. 

And this is all handled through a special program, through our 

direct program. It’s not handled through the write your own program at all. We’ve taken it from the write your own program. It’s 

all handled through a contractor that we’re using to manage that 

entire process. 

Mr. SHAYS. Some of my constituents have jumbo loans, but 

they’re only able to ensure up to a certain amount, and yet again, 

they are not in an area where there has been hardly any flooding. 

Maybe I believe 1930, there was something. 

How do we address that issue? 

Mr. CONNOR. For people who want more coverage, is that what 

your question is? 

Mr. SHAYS. They have jumbo loans. They have very large loans, 

and they’re only insured up to a certain amount that doesn’t come 

close to covering the potential loss. 

The way that you get around that is, the maximum that we 

would offer those particular property owners is $350,000, but in the 

private sector, there is what would be called an excess policy. 

Could you address the last issue that I’d like to ask, and that is 

the transferring of costs by insurance companies from the area 

where they were liable to flood, insurance where we’re liable, and 

then, you know, soak the government? 

23

Mr. CONNOR. You’re talking about claims? Are you speaking 

about claims? 

Mr. SHAYS. I’m talking about wind versus water. 

Mr. CONNOR. Yes. 

There have been a number of discussions on that particular 

issue, and I feel pretty confident that the claims adjusters that 

we’re using through the write your own program are basically placing the liability where it ought to be, and that’s with the write your 

own companies. 

Now, that leads to, well how do you know that? 

There are a number of very rigorous oversight processes that we 

have in place to make sure that the companies are performing as 

they should. These processes include a number of different audits. 

There are reinspection audits that take place immediately after 

a flooding event, where these general adjusters will, from the National Flood Insurance Program, will go on site and they will take 

random samples of adjusting or claims to make sure that they’re 

being adjusted correctly. 

There are also operational reviews that occur every 3 years with 

all the write your own companies where staff of FEMA will actually go on site to the companies, pull the files, look at them, look 

at the documentation, to ensure that— 

Mr. SHAYS. Let me just quickly interrupt you, because I get the 

gist of it. 

Mr. CONNOR. Yes, sir. 

Mr. SHAYS. Just walk me through one last point. 

If people down South are having huge flooding, how is that impacting people up North who may not be? 

Mr. CONNOR. How are they affecting people up North? 

Mr. SHAYS. Right. Do the rates up North go up as well? 

Mr. CONNOR. No. 

Mr. SHAYS. Okay. 

Mr. CONNOR. No. This is—the rates for the National Flood Insurance Program are universal rates, so in other words, it’s not like 

in the normal insurance industry where— 

Mr. SHAYS. So they do? In other words if you’re trying to capture 

more down South, everybody up North is having to pay for it? Correct? 

Mr. CONNOR. That’s correct. 

Mr. SHAYS. So it’s not based on conditions district-wide. Thank 

you. 

Mr. CONNOR. It’s based on the mapping, sir, not on necessarily 

the territory or experience. 

Chairwoman WATERS. Thank you very much. 

I’m going to call on the gentleman from Mississippi, Mr. Taylor, 

and I would hope Mr. Taylor, in your line of questioning, the problem or the concerns about the private insurance companies—you’ve 

talked to me a lot about that. You might want to, if you have 

time— 

Mr. TAYLOR. Sure. Thank you, Madam Chairwoman. 

Mr. Connor, I’m very much interested in subpoenaing the records 

of a conversation held between Mr. Maurstad and, according to the 

Times-Picayune New Orleans paper today, 300 insurance company 

representatives, insurance agents and Gulf Coast insurance comVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
24

missioners on September 7, 2005, at which point he, in speaking 

to these people, mentioned that he had already had conference calls 

with the largest insurance companies in the flooded areas. 

The reason I would like that, Madam Chairwoman, is because I 

think if we go back to testimony of about a month ago when Mr. 

Maurstad came before this committee, he said something to the effect of, ‘‘Well, I told them if there was wind and water, go ahead 

and pay the flood,’’ which leads to a problem with the United 

States Federal Code, because under the national write your own 

policy, the primary relationship between the write your own company, private industry, and the Federal Government will be one of 

a fiduciary nature, i.e., to ensure that any taxpayer funds are accounted for and appropriately expended. 

To quote, ‘‘The entire responsibility of providing a proper adjustment for both combined wind and water claims and flood alone 

claims is the responsibility of the write your own company.’’ 

Now, that’s out of the U.S. Code 44 CFR 62.23. 

What’s interesting is that on September 13th, apparently based 

on this conversation with Mr. Maurstad, State Farm Insurance 

Company sent out, and I’m quoting, ‘‘Where wind acts concurrently 

with flooding to cause damage to the insured property, coverage for 

the loss exists only under the flood coverage.’’ 

So here we have the United States Code calling for a proper adjustment of the claim, letting State Farm say go out and this much 

was wind, they pay that much, if this much is water, you pay that 

much over here. But State Farm apparently, based on a conversation with Mr. Maurstad, turns around and says, if there’s wind and 

water, stick it all to the taxpayers. 

So I understand your concerns, but I’d also remind you that in 

my case, I’ve been a resident of that home for 28 years, with never 

a drop of water. Within 200 yards of me was a 200-year-old brick 

mansion that had been there for 200 years. The day after Katrina, 

it was a pile of bricks. 

The third thing I would like the gentleman to comment on is that 

I’m having trouble believing that you’ve done a proper following up 

of adjudicating these claims, and I’m particularly troubled by one 

report that says that your Agency really only has about 40 employees, that you’ve actually turned around to an outfit called Computer Science Corporation and hired about 170 of them on a contract basis, and so you are in effect hiring contractors to see if the 

contractors that you have hired to adjudicate the claim have been 

fair with you. 

And I don’t think, again, going back to these gentlemen’s concerns that the taxpayers are being bilked, that you guys are doing 

that very well, the oversight on behalf of the taxpayer. 

Lastly, I would like to submit for the record a series of articles 

that have appeared in the Times-Picayune, the New Orleans paper, 

within the past month, pointing out very serious allegations where 

the citizens were asked to pay claims that should have been paid 

for by a private insurance company. 

In one instance, a couple submitted a $38,000 bill for the contents of their home, only to be compensated to the tune of about 

$139,000 for their home, and it turns out that Allstate actually 

25

padded the bill by $100,000. It was not in the couple’s handwriting; 

it was a typed memo from Allstate. 

There are instances, again, published reports in the Times-Picayune, where properties received $95,000 checks, $200,000 checks 

on properties that never flooded, where there was just wind damage. 

And so I do share the gentlemen’s concern, number one, because 

I believe in the flood insurance program. I know how important it 

is. But if it’s not properly run, then you do play into the hands of 

those people who would like to do away with it. 

I recognize that 52 percent of all Americans live in coastal America, that 52 percent of all Americans, whether it’s Connecticut, New 

Jersey, Mississippi, or California are at risk of some type of ocean 

or rain or flood event. I got here and helped pay for the Iowa floods 

and didn’t bat an eye when it came to that bailout. So we do help 

all of the people in this country. 

But your important program is in jeopardy if it’s not properly 

managed, so I would like the gentleman— 

Chairwoman WATERS. Without objection, the articles will be submitted for the record. 

And we will now let— 

Mr. NEUGEBAUER. Madam Chairwoman, I ask unanimous consent to grant the gentleman an additional 2 minutes. 

Chairwoman WATERS. Without objection, it is so ordered. 

Mr. TAYLOR. I thank the gentleman. 

Mr. Connor, I’ve laid some challenges at you. I’d like to hear your 

response. 

Mr. CONNOR. Well, first of all, I appreciate you bringing those to 

our attention, and we certainly are aware of the newspaper articles 

and the examples that you have presented, and we’re looking into 

each one of those to find out what exactly did happen. 

But one of the things that I need to assure you of in this subcommittee is this. 

To the extent that—we do have oversight, and I’ll get to that in 

a second. But to the extent that we do determine that there has 

been a lack of proper performance on the part of a write your own 

company in terms of this claims process, there are things that we 

will do to fix it. 

Mr. TAYLOR. Can I back up? 

Was there a meeting on September 7th between Director 

Maurstad and over 100 people from the insurance industry? 

Mr. CONNOR. I would have to check to see on that, and I’ll provide that for the record. 

Mr. TAYLOR. Second question. 

How many employees do you have and how many people that 

run this important program are contract employees from CSC? 

Mr. CONNOR. We have, in claims, we have about maybe no more 

than 15 or 20, but we also hire CSC, which is a contractor that 

we’ve hired for years, that also helps us, supports us with regard 

to dealing with the write your own and flood insurance matters. 

Mr. TAYLOR. So you really do have contractors checking to see if 

other contractors are defrauding our country? 

26

Mr. CONNOR. I don’t know about the last part of that, and I need 

to check on that part, but we do use a contractor, CSC, as a support for our program, because we do have such small staff. 

Mr. TAYLOR. Last point. 

Our Nation was very kind to the people of Mississippi with the 

homeowner grants for people who had homeowners insurance but 

who flooded and didn’t get paid. 

One of the provisions of that, though, was that in order for you 

to be compensated, those folks had to buy flood insurance from now 

on. 

Mr. CONNOR. Right. 

Mr. TAYLOR. What steps are being taken to follow up to see that 

is actually happening, that someone just doesn’t buy a policy for 1 

year and let it lapse, and get the best of both worlds? Because 

again, I understand these gentlemen’s concerns. We don’t want 

people gaming the system. 

Mr. CONNOR. Well, based on the 1994 Reform Act where it was 

required that in order to get disaster assistance, the prerequisite 

is that you have to purchase flood insurance, what generally happens is, I don’t think there’s anything in place to make sure they 

maintain it until, of course, there’s another flooding event in that 

particular area, and that flood policy was not maintained, then 

they would be denied additional disaster assistance. That’s pretty 

much the check on that. 

But there is nothing that we have internally to ensure that those 

people who got flood insurance as a result of disaster assistance 

maintain it. 

The only way that I am aware that it comes to the forefront— 

Mr. TAYLOR. Mr. Connor, I really think you need to fix that. A 

deal is a deal. If we’re going to help these people out, then they 

need to keep their end of the bargain. 

Thank you, Madam Chairwoman. 

Chairwoman WATERS. Thank you very much. 

The gentleman mentioned that CSC is it, your contractor you’ve 

had for years, is this a competitive bid? 

Mr. CONNOR. Yes. 

Chairwoman WATERS. And they win every time? 

Mr. CONNOR. For the last few years, yes. 

Chairwoman WATERS. How many years? 

Mr. CONNOR. I’d have to check on how many years. 

[Mr. Connor did not provide any further information for the 

record.] 

Chairwoman WATERS. Okay. The Chair notes that some members may have additional questions for this gentleman, which they 

may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 

days for members to submit written questions to the witness and 

to place their responses in the record. 

This panel is now dismissed, and you have mentioned today that 

you would respond to many of the questions that have been asked. 

Mr. TAYLOR. Madam Chairwoman? 

Chairwoman WATERS. Yes. 

Mr. TAYLOR. Again, I appreciate your generosity. 

27

I would request that the committee subpoena the records of that 

meeting between Director Maurstad and the insurance industry 

that occurred on September the 7, 2005, and any additional phone 

calls that occurred between the director and the heads of the large 

insurance corporations, either immediately prior or immediately 

after that. 

Chairwoman WATERS. Thank you. The Chair will take that into 

consideration. 

Thank you very much. 

I will now call the second panel. 

I think that we have a special guest that our ranking member 

would like to introduce. 

Mrs. BIGGERT. Thank you, Madam Chairwoman. 

It’s my pleasure to introduce Paul Osman, who is the floodplain 

programs manager for the Illinois Department of Natural Resources, Office of Water Resources. 

He coordinates the Federal, State, and local floodplain development regulations as well as the National Flood Insurance Program 

for over 1,000 Illinois communities. He also assists with the coordination of floodplain mapping, flood disaster response, and flood 

mitigation activities in Illinois. 

And prior to joining IDNR, Mr. Osman was a resource conservationist with the Soil Conservation Service and served 3 years with 

the U.S. Peace Corps in Kenya. So we’re happy to welcome him 

today. 

Chairwoman WATERS. Thank you very much. 

Our second witness is Mr. David Maune, Ph.D., CP, CFM, on behalf of the Management Association for Private Photogrammetric 

Surveyors. 

Our third witness is Mr. Curt Sumner, executive director, American Congress on Surveying and Mapping. 

Our fourth witness is Mr. Mark Davey, president and CEO, Fidelity National Insurance Company, on behalf of the Property and 

Casualty Insurers Association of America. 

Our fifth witness is Mr. Thomas Minkler, president of the ClarkMortenson Agency, Incorporated, on behalf of the Independent Insurance Agents & Brokers of America, Incorporated. 

And our final witness is Mr. Vince Malta, president, Malta & 

Company, Incorporated, on behalf of the National Association of 

Realtors. 

Without objection, your written statements will be made part of 

the record. 

You will now be recognized for a 5-minute summary of your testimony. 

We’ll start with Mr. Paul Osman. 

STATEMENT OF PAUL A. OSMAN, CMF, ASFPM CO-CHAIR, INSURANCE COMMITTEE, FLOODPLAIN PROGRAMS MANAGER, 

STATE OF ILLINOIS, ON BEHALF OF THE ASSOCIATION OF 

STATE FLOODPLAIN MANAGERS, INC. 

Mr. OSMAN. Thank you. 

I’d like to thank Chairwoman Waters and Ranking Member 

Biggert for inviting the Association of State Floodplain Managers 

to testify today. 

28

It’s an honor for me to represent the Association of State Floodplain Managers and over 11,000 of my colleagues from all 50 States 

in the Nation who work day out and day in to reduce flood losses. 

My name is Paul Osman, and I’m the floodplain program managers for the State of Illinois. For nearly 20 years, I’ve worked 

alongside thousands of local officials to reduce flood losses. 

I’d like to take just a minute to briefly tell you about floodplain 

management in Representative Biggert’s and my State. Illinois has 

the largest inland system of rivers, lakes, and streams in the entire 

Nation. Our borders are formed by major rivers. We have the Mississippi on the west, the Ohio on the south, the and Wabash on the 

east. We also have the Illinois River. We also lay claim to Mr. 

Clay’s Missouri River, because the confluence is just across the 

State line. 

Over two-thirds of the water in the Nation drains through Illinois, so if it snows hard in Saskatchewan, or rains heavily in Pittsburgh, we know that at a certain point, Illinois is going to flood. 

Despite these challenges, I’m proud to say that Illinois is a national 

leader in floodplain management. We have very strong State and 

local regulations to prevent new flood-prone development. Only appropriate open space uses, such as baseball fields and soccer fields 

and such are allowed in the most flood-prone areas. 

We also have a heavy reliance on FEMA and State mitigation 

programs to reduce or eliminate those existing flood-prone properties. We’ve purchased nearly 5,000 flood-prone properties. 

Prior to the 1993 flood, Illinois was ranked number 5 in the Nation for flood losses. Today, we’re ranked number 20, and we continue to drop further on that list every year. We take floodplain 

management very seriously in Illinois. 

State and local officials rely on the National Flood Insurance 

Program’s three-leg stool of mapping, regulations, and insurance to 

reduce flood losses. 

State and local officials are the Federal Government’s partners 

in implementing flood reduction programs and coordinating the National Flood Insurance Program. 

We’re the first on site during a flood. We see the tears and broken hearts after the flood. And we work tirelessly to enforce floodplain regulations, to encourage the purchase of flood insurance, and 

to make sure that future flooding will not cause increased damages. 

The time has come, however, to allow State and local officials to 

take on more responsibility for floodplain management. 

The NFIP should be a program that enables State and locals, 

rather than one that shifts the responsibility for floodplain management back up to the Federal Government. 

Therefore, we support any effort to enable State and local governments to take a leadership role in their own flood reduction destiny. 

H.R. 1682 includes a number of provisions that will help State 

and local officials reduce flood losses. We support this legislation 

that will, over time, improve the financial stability of the NFIP, although we have a few recommended changes for your consideration. 

29

The ASFPM supports providing the NFIP with sufficient borrowing authority to meet its current needs. 

First and foremost, we urge the committee to forgive the debt. 

We feel it’s important to ensure that flood insurance premiums 

on primary residences remain affordable to allow greater coverage 

and to reduce any reliance on taxpayer funded disaster assistance. 

However, we also strongly support the movement toward actuarial rates and the phase-in of actuarial rates on non-primary residences and non-residential structures. 

ASFPM supports imposing mandatory purchase on flood insurance in areas that are subject to what we call residual risk. These 

are areas behind levees, floodwalls, flood control dams, those sorts 

of things. I only need mention the word New Orleans. 

Rather than yet another study, we urge that mandatory purchase be implemented directly and that State and local entities 

work together with FEMA to identify these residual risk areas. 

Just last week, I was at a community on the Ohio River that was 

protected by a certified levee. This entire community lies 10 feet 

below the flood elevation, yet the floodplain maps show absolutely 

no flood risk whatsoever. 

When I checked that community, only three people in this community carried a flood insurance policy, and that’s despite the fact 

that this levee had 10 years of successive failed inspection reports. 

The levee was in deplorable condition. 

These residual risk areas need to be identified. Residents need 

to know that the flood risk exists, and insurance coverage needs to 

be made mandatory in these areas to better protect the residents. 

As a followup, we support the bill’s outreach grant proposal. 

However, again, this should not be a federally led effort, but rather 

federally encouraged and supported. 

Outreach efforts should be the responsibility of State and local 

officials who have a far greater awareness of specific needs. 

The proposed language in H.R. 1682 bypasses the State officials 

who are responsible for floodplain management. 

ASFPM strongly agrees that flood mapping must have continued 

long-term support. Flood mapping is one of the primary components of this bill. 

The funding level increase and the time extension provided by 

the bill will allow for continued flood mapping and risk identification at a very basic level. We are particularly pleased to see the 

proposal to re-establish the technical mapping advisory council. 

Nearly 3 years ago, new grant programs aimed at repetitive loss 

properties were authorized by the Federal Reform Act of 2004. Unfortunately, we’re still awaiting regulations for the program to be 

released by the Department of Homeland Security. 

ASFPM endorses extending the program and allowing them to 

operate for the full 5 years as originally envisioned. 

Lastly, with your busy schedules, many of you may not have noticed, but just 2 weeks ago, a record flood took place on the Missouri River. Most of the media coverage was limited to a few column inches on the back page of local newspapers. A major flood 

passed almost without notice. 

30

There’s a reason for that. In 1993, FEMA-supported mitigation 

projects bought out many of the most flood-prone areas along the 

Missouri River. The remaining residents bought flood insurance. 

Strict floodplain regulations have kept new development from 

going back into those areas. Now when flooding occurs in properties that are properly regulated, they become non-events. 

When the NFIP and local floodplain management officials are 

working together as envisioned, we don’t hear a word about it. It 

doesn’t make the news. 

The NFIP is working, but it needs your help to keep it working 

correctly. 

With a few minor improvements, this bill will help it work better. 

Thank you. 

[The prepared statement of Mr. Osman can be found on page 93 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. David Maune. 

STATEMENT OF DAVID F. MAUNE ON BEHALF OF MANAGEMENT ASSOCIATION FOR PRIVATE PHOTOGRAMMETRIC 

SURVEYORS (MAPPS) 

Mr. MAUNE. Madam Chairwoman, and members of the subcommittee, my name is Dave Maune and I am testifying today on 

behalf of MAPPS, a national trade and professional association of 

over 160 of the Nation’s leading mapping firms. 

We appreciate this opinion to comment on H.R. 1682 and other 

issues related to the flood mapping and the National Flood Insurance Program. We believe H.R. 1682 is a good start in addressing 

reforms within the NFIP. 

In addition, MAPPS recommends a series of additional reforms 

we believe will help make the program run more efficiently, and 

more importantly, will ensure accurate mapping data reaches those 

entities and individuals impacted every day. 

First, where needed, FEMA should collect accurate ground elevation data using the best technology to meet accuracy requirements in FEMA’s guidelines and specifications. 

FEMA routinely uses LiDar data whenever such data are available. In many cases, the FEMA lead determines that the best use 

of FEMA’s budget is to focus on the hydrologic and hydraulic modeling and production of flood hazard maps, so FEMA usually uses 

the best available elevation data provided by the U.S. Geological 

Survey, NOAA, the Army Corps of Engineers, individual States, or 

others, but that data sometimes does not meet FEMA’s own accuracy guidelines. 

To address this issue, MAPPS endorses the National Academy’s 

proposal of elevation for the Nation, which is needed by virtually 

every Federal agency and State, and not just FEMA. 

Elevation for the Nation also has many major advantages in 

helping homeowners to recognize their true flood risk based on the 

elevation of their homes rather than their location within or outside special flood hazard areas. 

We also recommend the inclusion of private sector topographic 

mapping professionals in the re-established technical mapping adVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00036 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
31

visory council so that commercial, professional expertise is brought 

to the table. 

We support legislation to provide FEMA with access to the Census Bureau’s master address file, the MAF, so that maps are available with important address information when street networks are 

obliterated as they were in New Orleans during Katrina. 

We believe there is a need for FEMA to place new emphasis on 

flood risk based on the variable elevations of houses, and thus we 

recommend a national structures inventory. 

Katrina has also exposed a need for a national levee inventory 

and mapping of areas vulnerable to flooding if a levee or other flood 

control structure fails, and we support a goal of eliminating paper 

products by 2010. 

In my written testimony, I have included other recommendations 

that a task force of MAPPS has developed. We commend them all 

to the committee’s attention. 

Let me close on one note. Current, accurate elevation data is not 

only needed by FEMA, but by dozens of Federal, State, and local 

agencies. Elevation data is not solely a FEMA need, and it should 

not be solely a FEMA solution. 

FEMA is but one of many whose needs are not fully satisfied by 

the best available topographic data, and FEMA’s map modernization funding was never intended to solve this portion of a nationwide problem. 

FEMA effectively uses the best available topographic data, but it 

does not have the mission or funding to provide base mapping for 

our country. 

Part of the problem is the budget process at OMB, but it is also 

a challenge due to the authorizing committee and appropriations 

committee structure here in Congress. 

It is neither practical nor feasible to fund the entire elevation for 

the Nation requirement through the FEMA map modernization 

program. 

We have a difficult fact to accept, that either FEMA will sometimes produce flood risk maps that are not as accurate as they 

could or should be, or we provide additional funding to FEMA beyond the $400 million annual authorization of appropriations and 

other Federal agencies for the acquisition of new topographic data 

for selected floodplains when existing data are inaccurate or out of 

date. 

OMB must develop a plan, approved and funded by Congress, so 

that FEMA, U.S. Geological Survey, and other map production and 

geospatial data user agencies receive the resources needed to assure that the Nation has the current accurate mapping that is 

needed to protect property, enhance our environment, save tax dollars, and ensure sustained economic growth. 

This concludes my testimony. I’ll be happy to answer any questions when the time comes. 

[The prepared statement of Mr. Maune can be found on page 81 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. Curt Sumner. 

32

STATEMENT OF CURTIS SUMNER, EXECUTIVE DIRECTOR, 

AMERICAN CONGRESS ON SURVEYING AND MAPPING 

Mr. SUMNER. Chairwoman Waters, and members of the committee, thank you for the opportunity to speak today. 

My name is Curt Sumner, and I am the executive director of the 

American Congress on Surveying and Mapping. 

We are a nonprofit professional association comprised of geodesists, surveyors, cartographers, and other geospatial practitioners. 

We have affiliates in all 50 States. 

Since prior to World War II, the diversity of our membership has 

been used by Congress and Federal agencies to seek advice on 

areas within our expertise. 

We’re comprised of educators in colleges and universities, as well 

as people in varying levels of government service, and professionals 

who are licensed to help their fellow citizens do things they can’t 

do for themselves, and that puts us directly in line with people who 

are affected by flood maps. 

One of the things that we’ve done recently is work with FEMA 

to develop something called a certified floodplain surveyor program, 

through which we assist those who believe there may be mistakes 

in determining them to be within the flood zones, to file letters of 

map amendment or letters of map amendment related to fill. 

ACSM supports the intent of H.R. 1682, and we believe that 

there are a few areas about which we might like to speak that are 

within our areas of expertise. 

We also welcome the opportunity to work with staff to address 

these issues, as you further your findings. 

Section 21 calls for updating the maps and maintaining the 

maps. We would like to propose that updating not simply be 

digitizing. Digitizing outdated maps is of no benefit. In fact, it 

could be detrimental, by allowing people to misunderstand the data 

they are getting. 

Sometimes digitized data is given more value than mapped data 

or old map data, and if it is wrong information, it certainly can be 

harmful. 

The bill also has language which would require new mapping. 

We believe the mapping should be geo-referenced, it should be created using technological advancements that are available to us, 

and a minimum set of standards that would ensure consistency of 

the mapping across jurisdictional lines. 

Sometimes when mapping is to be done in a particular jurisdiction, the local jurisdiction may have influence on the mapping in 

terms of the elevation data that is used, and not use uniform data 

which has been accepted by all the Federal agencies. 

The bill shouldn’t prohibit local government from moving forward 

to do mapping that they deem to be appropriate nor should it prohibit the local government from not mapping areas that are likely 

to be undeveloped, such as swamplands, State and national forests, 

or other preserved areas. 

Again, we believe the bill should have express language which 

establishes and authorizes a maintenance program. Timely maintenance of the updated maps is very important. 

Another stipulation in the bill is a requirement to show the 500-

year floodline. We think the language should be included in the bill 

33

that would allow local jurisdictions to map to something called, ‘‘future conditions.’’ 

Future conditions takes into account proposed or anticipated development that may occur over time, and can oftentimes provide a 

better picture of what may occur and wherein property could be in 

harm’s way in terms of flooding. 

We, too, applaud the reestablishment of the technical mapping 

advisory council. 

We feel that it’s impact in its former state was very important 

in getting to where we are today with flood mapping, and we believe the reinstatement should be permanent, and clearly it should 

have representation from the mapping and surveying community. 

We also believe that the cooperating technical partners program, 

which was begun after the TMAC ended, should have representation. 

This particular program establishes partnerships with State, 

local, and regional organizations toward the development of modernized maps and plays an important role. 

In conclusion, I’d like to thank the committee again for allowing 

me to speak and I will be happy to answer questions that you may 

have for me. 

[The prepared statement of Mr. Sumner can be found on page 

100 of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. Mark Davey. 

STATEMENT OF MARK DAVEY, PRESIDENT AND CEO, FIDELITY 

NATIONAL INSURANCE COMPANY, ON BEHALF OF FIDELITY 

NATIONAL INSURANCE COMPANY AND THE PROPERTY & 

CASUALTY INSURERS ASSOCIATION OF AMERICA 

Mr. DAVEY. Chairwoman Waters, Ranking Member Biggert, and 

members of the subcommittee, my name is Mark Davey and I am 

president and CEO of Fidelity National Insurance Company. 

Fidelity National is a write your own flood insurance partner 

with the National Flood Insurance Program. We are the largest 

writer of flood insurance, facilitating the purchasing and servicing 

of approximately one out of every five policies sold through the program. 

Fidelity National is also a member of the Property and Casualty 

Insurers Association of America, a trade association representing 

over 1,000 insurers. PCI member companies represent more than 

40 percent of all property and casualty insurance underwritten in 

the United States. 

Thank you for the opportunity to appear before you today. 

As events of 2004 and 2005 have shown, the devastation caused 

by hurricanes and floods can impact millions of lives. Even today, 

those hardest hit continue to recover from past events. 

Scientists and meteorologists tell us we will continue to see more 

frequent and severe storms for at least another decade. 

The NFIP is a necessary public policy response to the uninsurable peril of flood and should be continued. 

As currently structured, the program does not provide the level 

of protection needed by consumers. It has not achieved the breadth 

of participation needed for the program to achieve its ultimate benVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
34

efit. In order to better prepare for future catastrophes, program reforms are required. 

Fidelity National and the PCI support proposals intended to 

achieve these goals, many of which are contained in H.R. 1682. We 

believe this bill is important to property owners, insurers, the government, and our Nation. We support its passage, with some suggested changes. 

We believe there are several key issues which must be addressed 

to make the NFIP more responsive to purchasers, and more fiscally 

responsible, as well as to ensure that the properties built or rebuilt 

are protected against future loss. 

There are 12 key reforms that should be part of any legislation 

to change the program, and thanks to the authors of the bill, we 

are pleased to see most of them are contained in H.R. 1682. 

We encourage Congress to forgive the outstanding debt incurred 

by the NFIP resulting from Hurricane Katrina and other recent 

events. 

Just to service the current debt levels, the NFIP will need new 

loans approximately every 6 months to cover the annual interest 

alone. It is unlikely that the NFIP will ever be able to retire this 

debt. 

We need to ensure that the NFIP has the ability to access funds 

when needed without constantly coming back to Congress to increase its borrowing authority, as was necessary in 2005 and 2006. 

This needlessly slows the claims paying process at a time when 

flood victims need it most. 

The current program expires on September 30, 2008. The program should be reauthorized on a long-term basis. 

In order to reduce litigation, which significantly raises operational costs for all stakeholders, including the Federal Government, Congress should affirm Federal court jurisdiction over all 

disputes relating to procurement of a policy and adjustment of 

claims under the NFIP. 

The program should include revised and enhanced mitigation efforts, such as adoption of a strong, statewide minimum building 

code. These new codes must contemplate all types of loss, not just 

flooding. 

Legislation reforming the program should provide additional Federal funds to expedite completion of the map modernization initiative. 

The program should expand the mandatory purchase requirement to include additional properties at risk 

In addition to those properties currently defined as residing in 

special flood hazard areas, properties which have sustained a flood 

loss, are located behind a levee or other protective barrier, or are 

located within a specified distance from major bodies of water 

should be required to purchase flood insurance. 

The maximum coverage limits should be increased above the current $250,000/$200,000 limit for residential property to accommodate increasing construction costs. 

The program should include some provision for additional living 

expenses and business interruption. 

The standard residential flood insurance policy should be revised 

to make it more consistent with standard homeowners policy forms. 

35

The non-residential coverage forms should more closely emulate 

traditional property insurance. 

FEMA should modify its disaster assistance procedures to ensure 

that those with flood insurance who are seeking disaster assistance 

are prioritized ahead of those who have elected not to purchase 

flood insurance. 

The program should encourage lenders to establish facilities for 

escrowing flood insurance premiums outside special flood hazard 

areas. 

The program should continue to provide educational materials 

and resources such as those provided by floodsmart.gov. 

We are pleased to see that the majority of these reforms are addressed, at least in some way, in H.R. 1682, being discussed by this 

subcommittee. 

We commend the chairwoman and the members of this subcommittee for holding this hearing to move this program forward. 

It has been mentioned in the past, but it should be reinforced. 

The National Flood Insurance Program provides important catastrophic protection for our Nation’s property owners. 

While it needs reform and modernization, we are encouraged by 

the direction of this legislation. We stand ready and willing to work 

with Chairwoman Waters, Ranking Member Biggert, this subcommittee, and Congress to refine and obtain passage of this bill 

during the 110th Congress. 

Thank you. 

[The prepared statement of Mr. Davey can be found on page 64 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Mr. Minkler. 

STATEMENT OF THOMAS MINKLER, PRESIDENT, CLARKMORTENSON AGENCY, INC., ON BEHALF OF THE INDEPENDENT INSURANCE AGENTS AND BROKERS OF AMERICA, 

INC. 

Mr. MINKLER. Thank you, and good afternoon, Chairwoman Waters, Ranking Member Biggert, and members of the subcommittee. 

My name is Tom Minkler, and I’m pleased to be here today on 

behalf of the Independent Insurance Agents & Brokers of America 

to present our association’s perspective on efforts to reform the National Flood Insurance Program. 

I’m the president of the Clark-Mortenson Agency, headquartered 

in Keene, New Hampshire, a regional insurance agency with 8 locations and 55 employees in New Hampshire and Vermont. I also 

serve as the chairman of IIABA’s government affairs committee. 

As the sales force of the NFIP and the conduits between the program, the companies, and the consumers, IIABA is uniquely positioned to see the vast benefits that the NFIP provides to people 

and places that have been hit by a natural disaster. 

With the private insurance industry largely unable to underwrite 

flood insurance because of the catastrophic nature of these disasters, the NFIP is virtually the only way for people to protect 

against the loss of their home or business due to floods. 

36

Since 1968, the NFIP has saved disaster assistance money and 

provided a more reliable system of payments for people whose 

properties have suffered from flood damage. 

It’s also important to note that for almost 2 decades, up until the 

2005 hurricane season, no taxpayer money had been used to support the NFIP. Rather, the NFIP was able to support itself using 

funds from premiums it collected every year. 

Despite the historical success of the NFIP, the 2005 hurricane 

season and the recent weather patterns across the country have 

proven no program is perfect. 

In my home State of New Hampshire, there have been 8 federally declared disasters from flooding in the last 10 years. This increased flooding activity in such a short period of time has highlighted some of the deficiencies of the program and has strained 

government resources. 

For this reason, the IIABA strongly supports Chairman Frank 

and Representative Biggert’s legislation, H.R. 1682, the Flood Insurance Reform and Modernization Act of 2007. 

In particular, the Big I is especially supportive of efforts to modernize the NFIP by increasing maximum coverage limits and by including, at the option of the consumer, the purchase of business 

interruption coverage, additional living expense, replacement cost 

coverage for contents, and basement coverage. 

The modernization of coverages will hopefully have three positive 

effects on the NFIP as a whole. 

First, it will allow consumers to more adequately insure their 

properties and valuables against the true risks. This will in turn 

make the NFIP a more attractive product for consumers, thereby 

increasing participation in the program, and finally, as optional 

coverages that are sold at actuarial rates, the modernization will 

result in an NFIP that is closer to being on an actuarially sound 

footing. 

The inclusion of optional business income interruption insurance 

coverage is particularly crucial to Big I members and the commercial customers. For property insurance policies, business interruption coverage provides protection against the loss of profits and 

continued fixed expenses resulting from an interruption in commercial activities. 

Optional business interruption coverage will provide stability to 

small businesses and to the local economies in the areas affected 

by the flood damage. 

Another provision in the legislation which we strongly support is 

the inclusion of the option to purchase additional living expenses. 

This provision will provide consumers with greater security during the often bewildering post-flood period and will do so on an actuarial basis as opposed to relying solely on FEMA grants and assistance. 

Also among our recommendations, and present in the legislation, 

is the proposed increase in the maximum coverage limits. 

The NFIP maximum coverage limits have not been increased 

since 1994. The current maximum limits are caught in time, and 

they do not provide reasonable financial relief for policyholders facing a complete rebuilding process. 

37

An increase in the maximum coverage limits will better allow 

both individuals and commercial businesses to insure against the 

damages that massive flooding can cause and we’re grateful that 

this increase was included. 

Finally, the increase in the NFIP’s borrowing authority has been 

an important issue for independent insurance agents and brokers. 

Despite the three borrowing authority increases passed by the 

109th Congress, the NFIP likely will not have enough funds to pay 

all outstanding claims without another increase. The increasing of borrowing authority to $21.5 billion, as proposed by this legislation, is vital to ensure the continued payout of 

promised monies to consumers and the IIABA applauds the committee for its efforts to ensure that the U.S. Government delivers 

on its promise. 

Additionally, we ask that the committee consider whether it may 

be appropriate to eliminate the incurred NFIP debt resulting from 

Hurricane Katrina. It’s estimated that the NFIP will need to pay 

as much as $900 million a year to the U.S. Treasury in interest 

payments alone, which represents nearly half of the annual premium. 

The long-term survival of this program may require Congress to 

consider eliminating this debt and the resulting interest payments. 

In conclusion, the IIABA firmly believes that the Flood Insurance 

Reform and Modernization Act of 2007 is critical towards ensuring 

long-term stability of the NFIP and toward making it more actuarially sound, to the benefit of consumers and taxpayers. 

In particular, we strongly support your efforts to increase the 

maximum coverage limits and to provide the optional coverages of 

business interruption insurance and additional living expenses. 

I thank the committee for giving me the opportunity to express 

the views of the IIABA on this important program. 

[The prepared statement of Mr. Minkler can be found on page 89 

of the appendix.] 

Chairwoman WATERS. Thank you very much. 

Our final witness will be Mr. Vince Malta. 

STATEMENT OF VINCE MALTA, PRESIDENT, MALTA AND COMPANY, ON BEHALF OF THE NATIONAL ASSOCIATION OF REALTORS 

Mr. MALTA. Thank you, Chairwoman Waters, Ranking Member 

Biggert, and members of the subcommittee, for your invitation to 

present the views of the National Association of Realtors on H.R. 

1682. 

My name is Vince Malta, and I’m a Realtor from San Francisco, 

California, where I’m the owner of Malta & Company. Our firm 

handles real property sales and manages over 300 residential rental units. 

I was the 2006 president of the California Association of Realtors 

and I currently serve as vice chair of NAR’s public policy coordinating committee. 

As the leading advocate for home ownership, affordable housing, 

and private property rights, NAR supports the efforts of the Committee on Financial Services to reform the National Flood Insurance Program. 

38

The NFIP is of critical importance to communities across the 

country. The National Association of Realtors believes that reforming the program to ensure its long-term viability, financial stability, and actuarial soundness is essential. 

NAR supports many provisions in H.R. 1682, including the following: Increasing the NFIP borrowing authority; increasing available coverage; addressing mitigation and repetitive losses; and 

building public awareness. 

NAR would like to see the GAO study in Section 18 expanded to 

include renters, because they, too, are at risk and eligible to purchase flood insurance. 

NAR, however, has significant concerns regarding the following 

three provisions that I would like to focus on this afternoon: First, 

proposed changes to the mapping program; second, elimination of 

subsidies for non-residential properties and non-primary residences; and third, the new notification requirements in Section 9. 

NAR is concerned that the requirements in Section 21, to map 

the 500-year floodplain, may lead to delays in the current task at 

hand, which is updating the 100-year floodplain maps. 

The ongoing update of the 100-year maps should be completed 

before any effort to map the 500-year floodplain is begun. 

In addition, NAR believes that the technical mapping advisory 

council established in Section 21 should include a real estate professional. 

A real estate professional would be able to provide the perspectives of map users, including home owners, and potential home 

buyers, and explain how these maps impact real estate transactions. 

NAR strongly opposes Section 4, which calls for phasing out subsidies for non-primary residences and non-residential properties. 

As a matter of fairness, properties built under the same circumstances and facing identical flooding risks should not be 

charged different premiums. 

Although limiting subsidies on non-primary residences makes for 

a great sound bite, there may be significant unintended consequences for renters, potential home buyers, neighborhoods, and 

communities. 

The average subsidized policyholder pays more into the NFIP 

system than do non-subsidized properties, roughly $720 in premiums annually, as opposed to the average non-subsidized actuarially rated policy premium of about $350 per year. 

NAR is concerned that eliminating subsidies would result in 

higher premiums, increase the cost of rental housing, and could 

lead to increased delinquencies, foreclosures, and reduced property 

values for both rental units and owner occupied homes. Some properties could see premiums increase fourfold or more. 

There’s a limit to the amount that insurance can increase before 

people are either forced to sell their house or go without insurance. 

NAR believes that the great majority of residential rental property owners would be hard pressed to absorb a cost increase of 

$1,100 or more in annual premiums. 

Consequently, the increased cost of flood insurance would be 

passed on through rent increases to tenants, creating a hardship 

39

and housing affordability problem for low- and fixed-income home 

renters. 

Another issue that needs to be considered is what happens when 

a non-primary residence is sold and then becomes a primary residence. Apparently, there is no tracking presently. 

NAR supports increasing the visibility of the NFIP. We believe 

that renter notification requirements in Section 9, though well-intended, will not achieve its intended goal. In order to build the 

level of awareness of the NFIP, we believe that a broader public 

awareness campaign is in order. 

Residential property managers have indicated that while the 

type of brochure proposed in Section 9 is most likely to be overlooked amongst the rental paperwork, a well-designed public 

awareness campaign would not suffer from this shortcoming. 

In addition to supporting reforms to the National Flood Insurance Program, the National Association of Realtors strongly encourages Congress to enact a comprehensive natural disaster policy 

to mitigate exposure to the risks of natural disaster and foster the 

availability and affordability of property insurance for homeowners 

and commercial property owners. 

Thank you again for this invitation to present the views of NAR 

on H.R. 1682. We stand ready to help you enact meaningful reforms to the National Flood Insurance Program, and will be glad 

to answer any questions you may have. 

[The prepared statement of Mr. Malta can be found on page 69 

of the appendix.] 

Chairwoman WATERS. Thank you very much, witnesses. 

Without objection, your written statements will be made a part 

of the record. 

I thank you for your testimony, all of you. Your testimony was 

very useful as we revisit the issue of flood insurance reform, and 

I certainly have a few questions I’d like to ask, and I’m sure my 

colleagues do, as well. 

First of all, I’d like to go to Mr. Osman. You talked about the 

States playing a bigger role in decision making about flood insurance and flood management. 

Could you be more specific? Are you talking more about being 

able to eliminate the possibility that development and building 

would be accomplished in certain areas? What are you referring to? 

Mr. OSMAN. The NFIP, as written, provides a base standard of 

regulations for development in floodplain areas, and a lot of States 

and a lot of communities have gone above and beyond those. 

It’s estimated that, again, one of the things you don’t hear, one 

of the successes of the NFIP is over $1 billion per year is saved 

from flood losses through these regulations. 

A lot of communities in the States have gone above and beyond 

those FEMA-based minimum standards and have more restrictive 

regulations. 

We talked about the 500-year flood plain. A lot of communities 

require construction of another foot or 2 feet on top of the base 100-

year flood elevation, another level of protection. 

And FEMA rewards communities who go above and beyond 

through the CRS, which provides discounted flood insurance premiums to those communities. 

40

So yes, the States and local communities need to take a more aggressive stance towards regulating floodplain above and beyond the 

FEMA minimums. 

Chairwoman WATERS. And you’re saying that you’re prohibited 

from doing that now? 

Mr. OSMAN. Oh, no. Not prohibited. But just recognize the 

floodplains and regulate them appropriately. 

Chairwoman WATERS. Does everyone agree with that? Any disagreement with that? 

[No response.] 

Chairwoman WATERS. All right. Let me turn to Mr. Davey. 

Do you or did you insure the Gulf Coast region? 

Mr. DAVEY. For flood insurance? 

Chairwoman WATERS. Yes. 

Mr. DAVEY. Yes, we did, substantially. 

Chairwoman WATERS. And could you describe the claims that 

you have had to cover since Hurricane Katrina and Rita? 

Mr. DAVEY. Well, it was a rather life changing event for myself 

and for our organization. As Katrina approached, there was a lot 

of prayer that took place that it wouldn’t hit New Orleans or a populated coastline. 

After it hit, I personally got on an airplane, flew to Houston, 

Texas, rented a motor home, and was in Katrina a day after it happened. We started surveying, assessing the damage, assessing accessibility, staging our adjusting staff to provide what areas what 

accessible, where they could come, where they could not come, and 

just trying to get an immediate response to the event. 

Chairwoman WATERS. I’d like you to describe your exposure. 

What did you have to pay out? 

Mr. DAVEY. We processed—on behalf of the National Flood Insurance Program, we processed approximately 65,000 claims for the 

event. 

Chairwoman WATERS. And 65,000 claims amounted to about how 

much in dollars and cents? 

Mr. DAVEY. In excess of $4 billion. 

Chairwoman WATERS. In excess of $4 billion. 

Could you also describe to me how you handled this very, very 

troubling area of wind versus water and flood? How do you you 

handle that, and what is your understanding about the NFIP’s responsibility? 

Mr. DAVEY. We’re unique in the industry. We have 200 insurance 

underwriters who are dedicated exclusively to the Federal flood 

program. That operation runs completely separate from our at-risk 

division. 

We had roughly 800 homeowners’ claims as a result of the event. 

Those claims were administered out of our offices in Omaha, Nebraska, and Jacksonville, Florida. 

Our flood claims were exclusively handled out of our St. Petersburg office, where have, as I said, approximately 200 people to 

manage that book of business. We increased our staff to approximately 350 inside employees, as we worked through those claims. 

The two policies of insurance are separate contracts. The claims 

administration is completely separate for those two, for the flood 

and the other. There isn’t any communication as to, in our organiVerDate 0ct 09 2002 19:09 Sep 14, 2007 Jkt 037554 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 K:\DOCS\37554.TXT HFIN PsN: TERRIE
41

zation, and I’m speaking only on behalf of the company which I 

represent. 

Chairwoman WATERS. Yes. 

Mr. DAVEY. I’m not speaking on behalf of the PCI or the industry. 

Our claims are handled exclusively by each one of those divisions, and there isn’t any communication, and each policy is evaluated for the coverage that it affords. The risk is examined. 

We did examine every risk at that juncture, from what was flood 

damage, what was covered under the flood policy, and again, out 

of 65,000 claims, we had a very limited homeowners’s exposure affected by this event. 

So the vast majority of the circumstances, we were only handling 

the flood side of the equation, and when we did participate in both, 

it was two separate claims files, two separate adjustors, and no 

communication between the two. 

Chairwoman WATERS. Very interesting. 

I will now recognize the ranking member, Mrs. Biggert. 

Mrs. BIGGERT. Thank you, Madam Chairwoman. 

The question of the debt forgiveness has come up, and I guess 

the question is, if there is another event such as 2005, and the hurricanes such as Katrina, and let’s say that the debt was forgiven, 

would we be right back in the place that we are now, with the huge 

borrowing that the NFIP has to make? 

Mr. Osman, you had said something about that in your written 

testimony. 

Mr. OSMAN. Is the question do we support the debt forgiveness? 

Mrs. BIGGERT. Yes, and, well, do you support the debt forgiveness, and number two, if there is another disaster such as Hurricane Katrina and the others, would then the NFIP be back in the 

same position, of having to borrow again to pay off the claims? 

Mr. OSMAN. I think it’s important to realize the fact that again 

the successes the NFIP worked is envisioned for 38 years, and the 

2005 hurricane season was a bit of an anomaly, at least hopefully 

it was, which put us into the debt. 

I think with some of the movement that FEMA is making towards premium increases, policy retention, policy increases, those 

sort of things, hopefully we’ll recognize the fact that that’s what we 

need to, you know, to face through these kind of future catastrophes, should they happen. Hopefully, they won’t. 

Mrs. BIGGERT. So what you’re saying is that probably because of 

these new innovations, that it wouldn’t be the same, there wouldn’t 

have to be the borrowing by the NFIP? 

Mr. OSMAN. Hopefully, but it’s hard to forecast what’s going to 

happen. 

Mrs. BIGGERT. I know. 

Mr. Minkler, would you agree with that? 

Mr. MINKLER. Yes, Congresswoman, I think our concern is the 

overall viability and sustainability of the program, and the consideration of elimination of the debt, along with going to a more actuarial based rating system, would go a long way in that effort. 

Mrs. BIGGERT. Mr. Davey, would you agree with that? 

Mr. DAVEY. If you look at the coastlines and examine the exposures and the population density in several areas, I don’t think 

42

it’s—we will, at some juncture, perhaps not encounter something 

on the same level as Katrina. 

If the area that’s affected is not protected by levees, the water 

can escape, and we don’t have nearly the financial cost to repair 

those structures that are initially flooded, where the water is allowed to subside. But there are areas across the country, the St. 

Petersburg area, where we could see devastating destruction. 

I’m fully in favor of bringing up not only the rate levels on secondary homes and other homes to the actuarial—to a real actuarial 

rate level, but across the country, because if you look at the percentage of owner occupied homes versus rental versus seasonal, if 

we can bring the entire program’s rate level up to an actuarially 

sound basis, we’re far better off than trying to raise, while we artificially hold down the rates for owner occupied homes, and then try 

to make up the difference on the backs of those other properties. 

I think the program is far better off if we work to bring all rates 

to an actuarially sound basis. 

Mrs. BIGGERT. Thank you. 

Mr. Sumner, do you know how much it would cost and how long 

it would take for LiDAR to—for the entire Nation to satisfy 

FEMA’s specifications? Maybe this is for Mr. Maune. 

Mr. SUMNER. It’s probably better for Dave. 

Mrs. BIGGERT. Okay. 

Mr. MAUNE. Yes, I would put a price tag of $400 million on acquiring LiDAR for the Nation, but that should not be borne by 

FEMA. That would solve a national problem for USGS, NOAA, the 

Army Corps of Engineers, the Bureau of Land Management, the 

Forest Service—everybody. 

Mrs. BIGGERT. Thank you. 

Mr. MAUNE. And it would take about 5 years. 

Mrs. BIGGERT. Thank you. 

And then, Mr. Osman, you talked about the mitigation, the repetitive loss properties, and there were grant programs to address 

that, and by the Flood Insurance Reform Act of 2004, and then you 

say that we’re still waiting for regulations for the program to be 

released by the Department of Homeland Security. 

Why is that taking so long? 

Mr. OSMAN. I’m not sure I can answer that question. I think Mr. 

Connor was asked that question earlier. 

But there are repetitive loss— 

Mrs. BIGGERT. I don’t think he replied. 

Mr. OSMAN. Some of those programs are in effect now, and there 

is—those rules are due out any time, we’re told. 

But repetitive loss properties, they are a problem nationwide, 

and they have been addressed aggressively since the 1993 flood 

when a lot of these mitigation programs came into effect. 

One of the things that was mentioned was the regulation, the 50 

percent rule, and a lot of communities have adopted cumulative 

clauses where the point of the property reaches 50 percent damage 

from cumulative events, and mitigation programs come into effect. 

So there has been a strong effort to address repetitive loss programs. 

Mrs. BIGGERT. Thank you. 

43

And Madam Chairwoman, I have a question for you. Do you 

know when we expect to mark up this bill? 

Chairwoman WATERS. Would you help me, staff? When have we 

targeted this for markup? Before the end of the month. 

Mrs. BIGGERT. Thank you very much, and I yield back. 

Chairwoman WATERS. You’re welcome. 

The gentleman from Texas, Mr. Green. 

Mr. GREEN. Thank you, Madam Chairwoman, and thank you, 

members of the panel, for being with us today. 

Mr. Malta, I’d like to start with you, if I may. 

You mentioned the unintended consequences of phasing out the 

non-residential aspect of this, and you spoke very briefly on primary residences and then those that are secondary perhaps becoming primary as a result. 

Do you have any additional thoughts on this, please? 

Mr. MALTA. Well, yes. 

Who would monitor, let’s say if you were to exclude one, and 

then who would monitor when someone is living there as their primary residence and when it no longer is, so that someone could 

still obtain coverage? So we think that it’s really not workable. 

Obviously, there is no tracking system in place, as we heard earlier, and so we feel it is very important. Flood waters do not distinguish between people who are using a home as their primary residence or not, or commercial versus residential properties. 

And it would pose a tremendous financial burden on a lot of 

these communities where these subsidies have existed for 40 years. 

Mr. GREEN. And what about renters? You mentioned that briefly, 

also—many properties are rental properties, and how would they 

be impacted? 

Mr. MALTA. Well, renters would be impacted because property 

owners probably would not absorb the increase in costs, and they 

would try to pass those costs on to renters. 

Many of these properties are already low- to moderate-income 

rentals. The fallacy is that they’re all beach properties, they’re tremendous mansions. That’s not the case. So this would affect renters, a great deal. 

Mr. GREEN. Let me move to the gentleman who represents the 

Big I. And I have a question. 

We’ve talked about having persons actually pay who are in the 

targeted areas of floodplains, let them pay the costs of the burden 

of having repairs or replacement, making it actuarially sound. 

What will that cost a typical person if we do this? 

Mr. MINKLER. Congressman, I don’t have the exact figure. A 

broad statement would be actuarially there will be an increased 

cost for those. 

Mr. GREEN. Do you think it would double what persons are paying now? Could it triple what persons are paying now? 

Mr. MINKLER. I’m sorry, I don’t have an answer for you. 

Mr. GREEN. Does someone else on the panel have some intelligence to share with us on this? Double, triple? 

[No response.] 

Mr. GREEN. Is it safe to say that it would—I believe you’re getting something whispered to you. 

Mr. MINKLER. I am. Thank you. 

44

Mr. GREEN. Okay. 

Mr. MINKLER. The point was made that the increase would be 

optional to the policyholder or the landowner, building owner, 

above and beyond the standard amount, so the replacement cost 

factor would probably not be a direct multiple of whatever they’re 

paying for the base policy. 

That still doesn’t get you the answer that you’re looking for, I 

know, but it would not be a direct correlation of the two times, 

three times, that type of thing. 

Mr. GREEN. Mr. Malta, do you have some intelligence on this? 

Mr. MALTA. Well, our intelligence said that the costs would increase 2 to 3 times. It would be—they are right now—it’s about 35 

percent of the cost, if they were to be actuarialized. 

So our data indicates 21⁄2 to 3 times. 

Mr. GREEN. Would this in some way impact the economic status 

of people who will stay in these areas? Will we find that these 

areas could only be affordable to certain people and perhaps not affordable to others? 

Mr. MALTA. That’s our concern, and that’s why we believe that 

you should look very hard at this before you proceed in excluding 

them. 

Mr. GREEN. Any of the insurance folk like to comment on that? 

Mr. DAVEY. Is your question regarding bringing the base program rates to an actuarially sound level, or just the non-owner-occupied units? 

Mr. GREEN. Well, let’s talk about both. 

Mr. DAVEY. If you’re going to bring the program to an actuarially 

sound level, and you’re going to rate those properties as they are 

exposed, for example— 

Mr. GREEN. And phase out the—have only the primary residences. 

Mr. DAVEY. And you have only the primary residences? 

Mr. GREEN. Right. 

Mr. DAVEY. There are going to be vast swings in the amount, 

what’s deemed an actuarially sound rate for somebody living in 

Key West, Florida, versus an actuarially sound rate for somebody 

living on Long Island, New York, based on your catastrophic wind 

models and your various modeling techniques that they may employ to see what the potential damageability of an area is— 

Mr. GREEN. Because my time is running out, let me just move 

to another point that I haven’t heard us discuss in any great detail. 

We seem to associate this with the Gulf Coast area, and I understand why, but if we find reason to do this along the Gulf Coast, 

will this not also impact other areas where they have other types 

of disasters? Is this going to be the genesis of things to come in 

other areas? 

For example, right now, we’re talking about hurricanes, but 

there are some places where they have tornadoes, and there are 

other places where they have earthquakes. 

So we’re just focusing right now on one area, but you do concede 

that we could decide that people living in Tornado Alley should not 

have the opportunity to have the benefit of disaster insurance or 

at least impact their insurance as well? 

Insurance folks? 

45

Mr. DAVEY. My comments are strictly related to flood. An actuarially sound rate for somebody in a hurricane, in a substantially 

hurricane, Gulf Coastal area will be much different than an actuarially sound rate for somebody, for example, in Cape Cod, Massachusetts, where the probability of a hurricane making landfall 

there is less, is much diminished. 

So I think if you look at this and you bring this and you work 

toward bringing it to an actuarially sound basis across the country, 

I don’t think that the rate will be the same, and that’s one of the 

things. The burden, if you convert this program to an actuarially 

sound basis, will be borne for the most part through rates for those 

who are in the greatest area of incident, and less so from those people that are not. 

Mr. GREEN. Thank you. 

I yield back, Madam Chairwoman. 

Chairwoman WATERS. Thank you very much. 

Mr. Cleaver, for 5 minutes. 

Mr. CLEAVER. Thank you, Madam Chairwoman. 

Actually, I only have one question, I guess one-and-a-half, based 

on what my colleague just asked. 

Mr. Davey, do you support all-peril insurance? I realize that’s not 

the subject of this hearing. But my colleague, Mr. Taylor, of course, 

has a bill on that, and I’m just curious. 

Mr. DAVEY. I do not. I recognize that there are some areas in the 

United States where there is what could best be defined as an insurance crisis. There’s a complete lack of availability of the product 

at a rate level that’s acceptable to the general population in those 

areas today. 

Is the National Flood Insurance Program the vehicle to provide 

that? I’m not in a position to comment on that. 

Mr. CLEAVER. I’ll leave that to my colleague. 

One final question for me, and this is out of curiosity. 

What would be the cause for interest in national flood insurance 

by the real estate industry? 

Mr. Malta? 

Mr. MALTA. Well, Congressman, because this is a program that 

exists to fill the void where the private sector cannot, and if people 

cannot get insurance, they cannot buy a home if it’s contingent 

upon a loan, they cannot sell property in a given area, so it fills 

a void, and that’s why we’re concerned. 

Mr. CLEAVER. I yield to my colleague from Mississippi. 

Mr. TAYLOR. I thank the gentleman for his questions. 

Mr. Malta, I’d like to follow up. 

I was obviously very pleased to see, towards the tail end of your 

testimony, where your organization has come out for a comprehensive natural perils insurance, seeing as how that I’m convinced that 

the half of America who lives in coastal America, the half of the 

Realtors, the half of the homebuilders, the half of the mortgage 

lenders, and the half of the homeowners are, on a State-by-State 

basis, waking up and finding themselves with 300, 400, or 500 percent increases in their premiums, if they can get the coverage, and 

that it has caused a delay on people building houses, buying 

houses. 

46

I’m told in my State that the cost per unit of a new apartment complex is $300 a month, even for a renter. 

So it does affect everyone, and I’m obviously pleased to see your 

organization come out for something. 

On the specifics, I was wondering if your organization has looked 

at H.R. 920, which I have introduced, along with Ms. Waters, Mr. 

Cleaver, and several other members of the Gulf Coast delegation. 

I was curious if your organization has looked at that and would be 

willing to support that, which would be all natural perils insurance, as an option on your national flood insurance policy, given 

the new Democratic rules, which call for pay-as-you-go. It would 

not be taxpayer subsidized. It would have to be done in a way that 

the premiums match any potential losses that you— 

Mr. MALTA. The National Association of Realtors has no position 

on that bill presently, but we have many members who are very 

much concerned in the coastal areas that you’re talking about, regarding the concerns that your bill addresses. 

Mr. TAYLOR. Mr. Malta, the reason I bring this up is that obviously everyone recognizes something has to happen. 

You have an extremely powerful lobby called the insurance in- dustry, that dumped $25 million in the last election cycle on congressional candidates, and about that much on the last presidential 

race, mostly towards the President. 

And so having watched this town for a while, it’s a pretty safe 

bet that nothing happens unless some organizations like the homebuilders, like the Realtors, like the mortgage lenders, those people 

who are losing the most, will weigh in on behalf of something specific. 

I don’t see much happening when people talk in generalities. I 

see a lot of things happen up here when people get specific behind 

an idea or a bill. 

And so I would make this request, that if you have any reservations about the specific provisions of H.R. 920, if the Realtors could 

get back to us about what they would like to see changed, I would 

welcome that, as a primary sponsor of the bill, and I would think 

the other co-sponsors would, as well, because it is a crisis. It’s 

something that has to be addressed. 

It very much affects the people in my State; it very much affects 

52 percent of all Americans. 

And just like the flood insurance program was started to fill a 

void that the private sector chose not to fill at a reasonable cost, 

I think we’re realized after Katrina that there’s another void out 

there that needs to be filled, and I see government is in the business of filling voids that the private sector chooses not to or chooses 

not to at a reasonable rate. 

Mr. MALTA. Madam Chairwoman, may I respond? 

Chairwoman WATERS. Yes, you may. 

Mr. MALTA. The National Association of Realtors will get back to 

you on your bill. Okay? And we do support a comprehensive natural disaster policy. So we would welcome that, and we would work 

with Congress on that in the future. 

Mr. TAYLOR. Closing thoughts, Mr. Malta. And that would be 

that one quarter of this Congress has passed this by, and that if 

we want to do something during this Congress, we would certainly 

47

hope for a timely response on the part of your organizations and 

the other organizations. 

Thank you, Madam Chairwoman. 

Chairwoman WATERS. Thank you very much. 

Members, you have been, to our witnesses, you’ve been extremely 

helpful, and I almost feel as if we need another session with you, 

because there are some other proposals that are coming forth. 

Before you leave, Mr. Osman, do you know how many States 

have some kind of disaster insurance programs—flood insurance or 

other kinds of programs—in existence now? 

Mr. OSMAN. I can only tell you that 20,000-plus communities nationwide all over the country participate in the National Flood Insurance Program. 

As far as States which have higher regulatory standards, I can 

only estimate that maybe half of the States have higher standards 

that go above and beyond FEMA’s minimums, and again, that’s a 

guess. 

Chairwoman WATERS. I was distracted for a minute, and I did 

not hear everybody’s response to an all-perils insurance idea or 

concept. 

Does everyone agree that there should be something to take care 

of flood, wind, earthquake, and all of the other disasters in a more 

comprehensive way that would be available to everybody? Any 

thoughts? 

You don’t have to answer this, but if you have any thoughts, 

could you tell me quickly what they are? 

[No response.] 

Chairwoman WATERS. No thoughts. 

All right. Thank you very much. We appreciate your participation today. We will make sure that your testimony is a part of the 

record. 

This panel is dismissed. 

Okay. Let’s see. The written statement of the Consumer Federation of America will be made part of the record of this hearing, as 

will the New Orleans Times-Picayune editorial entitled, ‘‘Where is 

the Outrage?’’

The Chair also notes that the hearing record will remain open 

for 5 days to allow for the submission by members of additional 

materials. 

With that, the hearing is adjourned. Thank you. 

[Whereupon, at 12:41 p.m., the hearing was adjourned.] 

(49)

A P P E N D I X

June 12, 2007

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