This report examines legislative efforts in Congress to delay the gradual phase-out of subsidized flood insurance premiums, which is required under Sections 100205 and 100207 of P.L. 112-141 , the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012. This new law extended the authorization for the National Flood Insurance Program (NFIP) for five years, through September 30, 2017, while requiring significant program reforms affecting flood insurance, flood hazard mapping, and floodplains management. The law also produced widespread policy concerns about affordability and, more broadly, the feasibility of balancing program solvency concerns against the marketability of actuarial full-risk rates policies that now consider the elevation or height of the structure. After a brief discussion of the circumstances surrounding the nation's increasing exposure to flood risk that led to changes in the NFIP's premium rate structure, the report examines the NFIP's rate-making process, including the elevation rating components required to rate policies, and summarizes key relevant rate structure reform and solvency provisions required by the Biggert-Waters Act. The report focuses specifically on key relevant differences between Sections 100205 and 100207 of the Biggert-Waters Act that affect the transition of subsidized rates for certain properties to risk premium rates, more commonly known as full-risk or actuarial rates. It also examines the Homeowner Flood Insurance Affordability Act of 2014 ( S. 1926 ) that passed the Senate on January 31, 2014, H.R. 3370 (the legislative substitute bill), and Section 572 of the FY2014 Consolidated Appropriations Act ( P.L. 113-76 ) that President Barack Obama signed into law on January 17, 2014. In 1968, after several decades of continuous effort to control flood losses with flood control infrastructure (primarily levees), Congress enacted the National Flood Insurance Act of 1968 to establish a federal program to identify and communicate flood hazards and risks and to offer flood insurance to property owners and businesses in communities that agree to adopt flood mitigation measures (i.e., land use planning and construction standards). Currently, the NFIP has about 5.6 million policies providing over $1.2 trillion in coverage in almost 22,000 communities in 56 states and jurisdictions that participate in the program. The program collects about $3.5 billion in annual premium revenue. According to FEMA, the program saves the nation an estimated $1.6 billion annually in flood losses avoided because of the NFIP's building and floodplain management regulations. Flood insurance premium rates were initially set "based on consideration of the risk involved and accepted actuarial principles." In 1973, Congress amended the 1968 Act to: (1) authorize FEMA to set rates at less than full-risk rates, which FEMA refers to as subsidized rates, and (2) prohibit FEMA from offering subsidized rates to properties that were constructed or substantially improved after December 31, 1974, or after the date upon which FEMA published the first Flood Insurance Rate Map (FIRM) for the community, whichever was later. Therefore, by statute, premium rates charged on pre-FIRM structures are explicitly lower than what would be expected to cover expected costs. The availability of subsidized flood insurance was intended to allow floodplain residents to contribute in some measure to pre-funding their recovery from a flood disaster instead of relying solely on federal disaster assistance. In essence, insurance could distribute the financial burden among those protected by flood insurance and the public. However, the statute's provision creates an inability to collect the full risk-based premiums on about 1.1 million of the program's 5.6 million policies and has, arguably, eroded the program's long-term ability to pay future claims made by all policyholders. The actuarial shortfall from charging less than full-risk (or actuarial premiums) has drawn greater scrutiny as a result of (1) the catastrophic flood events from 2005 through 2012, (2) uncertainty surrounding future flood risk, especially in coastal hazard areas, and (3) the budgetary consequences of frequent ad-hoc emergency supplemental appropriations for disaster relief on the deficit and the program's solvency. Prior to Hurricane Katrina in 2005, the NFIP had been able to cover its cost, borrowing relatively small amounts from the U.S. Treasury to pay claims, and then repaying the loans with interests. However, in the wake of the unexpected need for significant intergovernmental borrowing from the U.S. Treasury to pay claims, and the recognition among policymakers of the nation's increasing vulnerability to hurricane-induced catastrophic flood events in coastal hazard areas, Congress passed legislation in 2012 to address the program's long-term solvency. The nation is currently experiencing a new era of frequent and severe extreme weather and climatic events that have produced more frequent catastrophic flood events. From the early 1990s through 2012, policy makers faced the challenges associated with the nation's increasing vulnerability to flood risks, as evidenced by the series of catastrophic flood events, including Hurricanes Andrew and Iniki in 1992, Katrina, Rita, and Wilma in 2005, Ike in 2008, Irene in 2010, and Sandy in 2012, that required significant levels of NFIP borrowing from the U.S. Treasury to meet NFIP's contractual obligations with respect to residential and small business flood damage losses. According to FEMA, pre-FIRM subsidized properties have accounted for a disproportionate share of total flood losses under the NFIP. At the end of 2013, the NFIP had about $24 billion in debt. Perceptions of the nation's growing exposure to coastal flooding and concerns that the federal government flood-risk management program was both in debt and fiscally unsound drove efforts in Congress to reform and modernize the NFIP after the program expired on September 30, 2008. Since then, Congress has sought a long-term reauthorization of the NFIP and to find ways to strengthen the program's long-term financial sustainability. These efforts have largely taken the form of the gradual elimination of pre-FIRM premium subsidies and grandfather policies. The key issues of contention have been what to do about the nation's increasing exposure to flood risks, the cost and consequences of flooding, premium rate structure changes designed to strengthen the financial solvency of the NFIP, and the affordability of flood insurance coverage in the aftermath of the phase-out of premium subsidies on pre-FIRM properties and policies "grandfathered" into the program. On July 6, 2012, Congress passed and the President signed into law P.L. 112-141 , the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters Act) that reauthorized the NFIP for five years while requiring significant program changes designed to make the program more financially sustainable and to ensure that flood insurance rates more accurately reflect the real risk of flooding. Three sections of the Biggert-Waters Act changed the NFIP's premium rate structures and authorized a draft the affordability framework study: Section 100205 (pre-FIRM subsidy), Section 100207 (grandfathered rates), and Section 100236 (studies and reports). The NFIP's risk assessment and pricing model is based on a hydrologic model for estimating the expected average annual flood damage and insurance rate originally developed in the 1960s by the U.S. Army Corp of Engineers. The rating methodology is applied on a structure-by-structure basis within flood maps that link different risk categories and associated insurance risk zones to floodplain management regulations, particularly in high-risk areas where there is at least a 1% annual chance of flooding—the so-called "base flood." FEMA uses three primary key characteristics to classify properties based on flood risks. Structures are categorized by (1) specific risk zone, (2) the elevation of the structure relative to the Base Flood Elevation (BFE), and (3) occupancy type (e.g., single family, 2-4 family, other residential, non-residential and mobile/manufactured homes), along with other specific determinants of risk. The flood risk zones—based on return periods that cover a wide range of flooding events—are modeled using national topographical maps, hydrological data, digital terrain (elevation) models, extreme flood scenarios, and flood vulnerability data, including flood hazard data and historical flood loss data. Owners of property with a mortgage from a federally regulated lender and living in a Special Flood Hazard Area (SFHA)—that is, a high-risk zone —are subject to a mandatory purchase requirement. Flood insurance is optional for residents living in low-risk, non-SFHAs. Residents outside of SFHAs typically voluntarily purchase a low-cost Preferred Risk Policy (PRP). Table 1 shows flood-risk zones that are depicted on FIRMs. FEMA is responsible for undertaking Flood Insurance Studies (FISs) nationwide to identify areas within the United States having special flood, mudslide, and flood-related erosion hazards; assess the flood risk; and designate insurance zones. FEMA consults with local officials to determine BFEs throughout the community. Communities are required to submit pertinent data concerning flood hazards, flooding experience, mitigation plans to avoid potential flood hazards, and estimates of historical and prospective economic impacts on the community. Prior to the enactment of the Biggert-Waters law, FEMA used two types of premium rate structures and five risk categories to determine rates charged each policyholder in the NFIP. The rate structures are (1) subsidized rates and (2) actuarial full-risk rates based on the probability of a given level of flooding, damage estimates based on that level of flooding, and accepted actuarial principles. Subsidized rates are available to properties constructed or substantially damaged or improved before either December 31, 1974, or the effective date of the initial FIRM, whichever is later.