On March 16, the House Committee on Financial Services approved H.R. 4973, the Flood Insurance Reform and Modernization Act of 2006. The bipartisan bill, another in a series of post-Katrina bills focused on flood insurance reform, will now move to the full House of Representatives for consideration.

Key items among the bill's many provisions are:

- Increase FEMA's borrowing authority to $25 billion to pay claims from 2005's catastrophic hurricanes as well as other ongoing obligations. FEMA has projected that funds currently available to pay claims would run out during the next few weeks.

- Increase the existing flood insurance coverage limits-which have not changed since 1994-from $250,000/$100,000 (structure/contents) to $335,000/$135,000 for residential buildings and from $500,000/$500,000 to $670,000/$670,000 for non-residential buildings.

- Increase the fines for lenders' noncompliance with flood regulations from $350 to $2,000 per violation, with an annual maximum of $1 million (up from $100,000).

- Require lenders to provide notice as part of the Good Faith Estimate that flood insurance is available to all homeowners, not just those in designated floodplains.

- Reduce the waiting period for flood policies to become effective from 30 to 15 days.

- Increase federal funding for map modernization from $200 million to $300 million per year for the next six years, and require consistent standards of information to be included in the revised maps.

- Commission a review of mandatory flood insurance purchase requirements, including the effects of requiring flood insurance on properties in areas protected by levees, and expanding the purchase requirements to non-federally regulated lenders.

- Phase out subsidized rates for flood insurance policies on certain vacation homes, second homes, and non-residential buildings constructed before applicable maps went into effect.

We will keep you informed of the progress of the bill as well as other relevant legislation.