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Reading the tea leaves on flood insurance - The Galveston County Daily News : News

July 31, 2014

Reading the tea leaves on flood insurance

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Posted: Monday, February 3, 2014 2:34 pm | Updated: 3:09 pm, Mon Feb 3, 2014.

With Senate Bill 1926 passing on Thursday, the bill has moved onto the House, where it is being "held at the desk." It hasn't been assigned to a committee. 

This generally is a sign that the House is working on its own legislation on the subject of the held bill, but not always. There are already several bills filed in the House, but all have seemed to be parked in the House Financial Services Committee. The committee's subcommittee on Housing and Insurance held a hearing in November about the issue, but hasn't acted on any bills thus far.

So what happens now? It's hard to tell. Speaker John Boehner has already come out against delaying Biggert-Waters, as has the White House.

Why aren't the House and the Obama administration keen on delaying Biggert-Waters? Well, first there's the financial issue. The National Flood Insurance Program is billions of dollars in debt to the federal government. The GOP is loathe to do anything that will add to the national debt, especially less than a year after reforms were put into place. The Congressional Budget Office recently reported that the four-year delay called for in S 1926 will cost $2.1 billion.

Furthermore, the General Accounting Office has reported that delaying the rate increases will deter private insurers from entering the market and assuming more of the insurance burden. Private sector involvement in the flood insurance market has long been a goal of Republicans like Rep. Jeb Hensarling of Texas, who chairs the financial services committee. 

And here's another reason. A lot of people who aren't directly affected by the problem are scoffing at the rate hikes, saying that the increases are hitting rich folks and their vacation homes and few others. That certainly seems to be the prevailing theme in this Washington Post editorial that came out Sunday, urging Congress not to delay the increases.

So, what do you think?