To require the use of replacement cost value in determining the premium rates for flood insurance coverage under the National Flood Insurance Act, and for other purposes.
Bill: H.R.3415 | Sponsor: Rep. Luetkemeyer, Blaine (R-MO)
Policy area: Finance and Financial Sector

Summary:
This bill directs the Federal Emergency Management Agency (FEMA) to incorporate the replacement cost value of a structure insured under the National Flood Insurance Program of 1968 in its consideration of chargeable premium rates.
FEMA must conduct a study regarding risk rating redesign utilizing replacement cost and report the findings to Congress.

To require the use of replacement cost value in determining the premium 
 rates for flood insurance coverage under the National Flood Insurance 
                      Act, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. USE OF REPLACEMENT COST IN DETERMINING PREMIUM RATES.

    (a) Study of Risk Rating Redesign Flood Insurance Premium Rating 
Options.--
            (1) Study.--The Administrator of the Federal Emergency 
        Management Agency shall conduct a study to--
                    (A) evaluate insurance industry best practices for 
                risk rating and classification, including practices 
                related to replacement cost value in premium rate 
                estimations;
                    (B) assess options, methods, and strategies for 
                including replacement cost value in the Administrator's 
                estimates under section 1307(a)(1) of the National 
                Flood Insurance Act of 1968 (42 U.S.C. 4014(a)(1));
                    (C) provide recommendations for including 
                replacement cost value in the estimate of the risk 
                premium rates for flood insurance under such section 
                1307(a)(1);
                    (D) identify an appropriate methodology to 
                incorporate replacement cost value into the 
                Administrator's estimates under such section 
                1307(a)(1); and
                    (E) develop a feasible implementation plan and 
                projected timeline for including replacement cost value 
                in the estimates of risk premium rates for flood 
                insurance made available under the National Flood 
                Insurance Program.
            (2) Report.--
                    (A) Requirement.--Not later than the expiration of 
                the 12-month period beginning on the date of the 
                enactment of this Act, the Administrator shall submit 
                to the Committee on Financial Services of the House of 
                Representatives and the Committee on Banking, Housing, 
                and Urban Affairs of the Senate a report that contains 
                the results and conclusions of the study required under 
                paragraph (1).
                    (B) Contents.--The report submitted under 
                subparagraph (A) shall include--
                            (i) an analysis of the recommendations 
                        resulting from the study under paragraph (1) 
                        and any potential impacts on the National Flood 
                        Insurance Program, including cost 
                        considerations;
                            (ii) a description of any actions taken by 
                        the Administrator to implement the study 
                        recommendations; and
                            (iii) a description of any study 
                        recommendations that have been deferred or not 
                        acted upon, together with a statement 
                        explaining the reasons for such deferral or 
                        inaction.
    (b) Use of Replacement Cost Value in Premium Rates; 
Implementation.--
            (1) Estimated rates.--Paragraph (1) of section 1307(a) of 
        the National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)(1)) 
        is amended, in the matter preceding subparagraph (A), by 
        inserting after ``flood insurance'' the following: ``, which 
        shall incorporate replacement cost value, and''.
            (2) Chargeable rates.--Subsection (b) of section 1308 of 
        the National Flood Insurance Act of 1968 (42 U.S.C. 4015(b)) is 
        amended, in the matter preceding paragraph (1), by inserting 
        after ``Such rates'' the following: ``shall incorporate 
        replacement cost value and''.
            (3) Effective date.--The amendments under paragraphs (1) 
        and (2) of this subsection shall be made upon the expiration of 
        the 12-month period beginning on the date of the enactment of 
        this Act.
            (4) Applicability and phase-in.--The Administrator of the 
        Federal Emergency Management Agency shall apply the amendments 
        under paragraphs (1) and (2) to flood insurance coverage made 
        available under the National Flood Insurance Act of 1968 for 
        properties located in various geographic regions in the United 
        States such that--
                    (A) over the three-year period beginning upon the 
                expiration of the period referred to in paragraph (3) 
                of this subsection, the requirement under such 
                amendments shall be gradually phased in geographically 
                throughout the United States as sufficient information 
                for such implementation becomes available; and
                    (B) after the expiration of such period referred to 
                in subparagraph (A), such amendments shall apply to all 
                flood insurance coverage made available under the 
                National Flood Insurance Act of 1968.
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