WASHINGTON May 13 (Reuters) - A U.S. congressional panel voted on Friday to reform the troubled government flood insurance program amid heavy flooding along the Mississippi River from the Midwest to the Deep South.
As authorities shored up levees to protect New Orleans after towns and farms upstream were inundated, the House Financial Services Committee approved a bill that would overhaul the National Flood Insurance Program, or NFIP.
The bill will likely win approval in the full House soon. Then it will have to go to the Senate for review, with supporters hoping to get it to President Barack Obama for enactment before Sept. 30, when the NFIP is due to expire.
Insuring more than 5.6 million U.S. property owners, the NFIP had to be bailed out by taxpayers after it was swamped by claims from Hurricane Katrina in 2005. Now it is $17.5 billion in debt and unable to pay the money back.
Moreover, critics say, the program encourages development in flood-prone areas more suited to conservation, subsidizes some policy-holders to live in flood zones, and pays to repair some properties that flood again and again.
"This program is too important to let lapse, and too in debt to continue without reform," said Republican Representative Judy Biggert, who is leading the effort to fix the NFIP. Her bill was approved unanimously by the House Financial Services Committee.
"We need to put the National Flood Insurance Program back on stable financial footing so that it can provide homeowners with reliable coverage without putting taxpayers on the line for billions in losses. This legislation will give the program long-term stability, help draw better flood maps, and initiate actuarially sound pricing," Biggert said.
The measure would reauthorize the program for five years, reduce subsidies and let insurers raise premiums in phases to levels that more closely reflect actual flooding risks. (Editing by Gerald E. McCormick)