By Zachary Warmbrodt 
12/06/2016 10:26 AM EDT

The House Financial Services Committee is taking a first step toward tackling a must-do item on next year's agenda: reauthorizing The National Flood Insurance Program.

Rep. Blaine Luetkemeyer, the Missouri Republican who chairs the housing and insurance subcommittee, is circulating among Republican members for discussion this week a set of principles he hopes will guide the debate around updating the government insurance arm and strengthening the private flood insurance market.

The NFIP, which insures homes and businesses against flood risk, is $23 billion in debt and expires at the end of September.

Luetkemeyer is suggesting areas of focus to shore up the NFIP's fiscal footing, expand consumer options, provide more transparency around how flood insurance rates are set, improve flood mapping and add more flexibility in flood mitigation.

"There's a lot of stuff in here I think a lot of people will like," Luetkemeyer said in an interview, acknowledging there might still be aspects that give some stakeholders heartburn. "We've been working with everybody as we've gone through the process, and I think we've mitigated a lot of concerns." 

Proposed changes: requiring the government to rely on reinsurance or "capital markets alternatives" as a means to protect taxpayers; phasing out coverage for certain residential and commercial structures; eliminating non-compete restrictions for insurers participating in the NFIP's "Write Your Own" program, and repealing mandatory coverage requirements for commercial properties.

Luetkemeyer recommends enacting a House-passed bill by Reps. Dennis Ross and Patrick Murphy that aims to make it easier for homeowners to use private flood insurance to satisfy requirements for government-backed mortgages.

"We want to be able to find a way to enhance a private market to be able to participate and compete with the NFIP," Luetkemeyer said. "Right now, it's very difficult by the way this thing is set up to be able to do that."
House Financial Services is trying to get a head start on what could be a contentious debate around what to do with the program. The Senate Banking Committee, which will have a new chairman next year, has yet to put forth a reauthorization plan.

Last month, House Financial Services Chairman Jeb Hensarling (R-Texas) said he wanted to pass a reauthorization bill that would "begin the transition to a more competitive, innovative and sustainable flood insurance market where consumers have real choices, and where private capital has a significant role."

When it comes to flood insurance, political divisions tend to be more geographic than partisan. And the lobbying effort cuts across industries and special interests, including insurance, banking, real estate, environmental advocacy focused on climate change and fiscal conservatives.

In 2014, House Republican leadership and Democrats responded to complaints from homeowners about rate increases by going around Hensarling and enacting a bill that rolled back changes in a 2012 reauthorization designed to improve the program's solvency.

Luetkemeyer suggests that Congress should mandate a more open rate-setting process and require the Federal Emergency Management Agency, which runs the program, to hold public meetings and explain its rate structures. He recommends that NFIP align its practices with the private sector when it comes to calculating premiums. 

"We want to try to make the rates more fair," he said.
Other ideas that Luetkemeyer is proposing include giving local communities more avenues to develop flood maps and adding flexibility around mitigation programs such as pre-disaster voluntary buyouts for severe repetitive loss properties owned by low-income families.