a southern florida basis, if this thing were to expire, what kind of impact as far as percentage of homes would it have, say, in southern florida? >> well, i can't be specific about that, although i'll get you those -- >> i just want to get an idea. >> we were, as i quoted to you, nationally we were about 1300 a day, 37,000 across the board, but in florida where we would be specifically impacted because the entire state is a floodplain, it would impact every one of those sales, and even the existing mortgages. perce percentage-wise, 1 out of every 2. >> thank you very much. ms. murdoch, from your perspective, if we keep doing extensions or if it is to expire, how does that impact the mitigation efforts? >> clearly, you know, we're

seeing more and more increased storms and storm damage, which is causing more and more damage, and the mitigation efforts are long-term efforts. they are not something that can happen overnight, so you need that long-term certainty of the program, the backing of the program, and the grants that they provide in order to really plan for and implement some of these mitigation efforts. >> thank you, senator vitter? >> thank you, mr. chairman, and i certainly, strongly support a short-term extension if we feed it, you know, if we can't do anything else before may 31st. in fact, i think technically it's my bill, so i'll certainly be trying to clear that if it's necessary. i'm just concerned about two things. number one, patience is running really thin among some members about doing all these short-term extensions, so we may not be able to clear it, clear it means

get unanimous consent, every senator on our side has to agree, and, you know, the more these ban dad extensions we do, the less patience members have, because they want reform, which is needed. secondly, a short-term extension avoids a lot of negatives, but it doesn't accomplish the positives that the full reauthorization does, and i think that was one of the points, so i'm for it if we can only do that between now and may 31st, but i'm also trying, as john and others are, for the full reauthorization. may 31st is three weeks and a day away. when do concrete negative actions, notices, letters, other things, start going out compared to that date. is it now, dr. sampson? >> they've already started.

>> why don't you describe some of that and when that starts. >> 60 days out from the expiration of the program, insurers are required to notify holders of policies that the coverage is going to be ending, and then, as i say, it has a casca cascading, during the lapse there is this whole cascading series of very complicated bridging transactions that add no value to the process, but only cost to the carriers and uncertainty to the policy holders. you know, we're in a bizarre situation where you have the national flood insurance program actively advertising the nfip on television to try to increase the take uprate, which is the socially responsible thing to do, and yet everyone who has a

policy knows the number of disruptions that we've experienced over the last several years, and so we're really sending cross signals here, and these lapses are causing companies to exit the program, and i'm convinced that these continual lapses create such uncertainty in the policy holder that it reduces and suppresses the take uprate and the renewal rate. >> and i assume part of what you're saying is a near lapse, a near miss is also negative. i mean, if you act the day before, three days before, that's also -- >> well, we are within -- we are within the period where negative activities are already occurring from the company's perspective, but i would say, if you can get the short-term extension without letting it lapse, we're talking about here the least of the bad

alternatives, so certainly, we're in the cone of negative activity, but it's not as negative as it will be if we get to may 31st and the program lapses for the 13th time. >> right, right. okay, that's all i have. thank you, mr. chairman. >> senator moran. >> mr. chairman, thank you. i'm not a member of this subcommittee, i appreciate you allowing me the opportunity to join you today, really only for the purposes to lend my support to see that we get this accomplished and to hear from the witnesses today to -- so i can have my arguments reenforced. i still remain baffled by at least i'm unaware of a response to the letter that the two of you led to our leaders asking that the five-year reauthorization be considered by the senate. i just don't understand why this is something that can't be accomplished based upon the nature of this legislation, its importance, its value to the

country, and its bipartisan support, and so every once in awhile, when we have to admit how dysfunctional this place is, this seems to be the perfect example of dysfunction, and if there's something i can do, senator vitter, senator tester, to assist to get the five-year reauthorization bill to the senate floor, i'm your ally, and i appreciate the testimony i read and heard expressing the value and importance of accomplishing that, and what mr. sampson said does make sense to me, the ability to continue to write these policies in this uncertain environment diminishes as congress fails to act on so many occasions, so i appreciate you having this hearing to highlight the importance of this legislation, and i'm pleased that you would allow me to join you for this brief period of time. >> i've got another question here. there's some that have suggested

that a two-year straight extension would be better than the reform of the existing insurance program. i think, and i think both senator vitter and senator moran eluded to it, i think we have an opportunity here to reform this program and put it more firm ground with a long-term extension. i would just like, and this is basically dr. sampson or mr. jensen or all of you can talk to this, but beyond improving the program, can you discuss some areas where reform on this bill are important to the constituencies that you represent, what else does it provide? >> thank you, senator. in addition to the reform, as you mentioned, there are some issues with increasing maximum coverage limits.

currently, the coverage limit on a home is for flood loss is $250,000 as a maximum indemnity limit. that is increasingly becoming a problem and an issue as we see higher values in homes again. as well, we are looking at business interruption, it's important to note that there is a study called for in the bill that talks about business interruption coverage within the commercial sector. we think that's very valuable as well. >> in addition, you heard testimony on the previous panel of folks that were placed in areas that, in fact, were not in a floodplain. some of the things that might happen would be in the streamlining would be the ability for folks who were not in floodplain areas but were charged for those areas would have an opportunity to come back and get reimbersed on an expense

basis to the nfip, so that would help us for the folks either misrepresented initially or just don't know what they are doing at the present time. >> thank you. >> mr. chairman, i would say that from the company perspective, the number one concern is the -- is the fiscal reforms, and i would not underestimate that at all. i think the bill, also though does address the repetitive lost properties. i think it's absolutely essential, as the previous panelist talked about, the repetitive loss properties where you have 1% of the properties that account for 30% of all the claims in the nfip. the reform bill does address that, and i would say that that is a critical component. the increase in the amount that fema can increase premiums to incrementally move toward a sound rate, while important, i

would say what's more important than that, though, fema has been unwilling to raise the premium prices even by the amount that they are currently authorized in legislation, which is 10% a year, so even more important than raising the cap in legislation of what they could raise prices i think is a signal to the marketplace that they will actually do that in incremental steps. the longer you artificially suppress these rates, the longer the impact on the consumer down the road, so in addition to what's in the legislation, this committee and other committees of jurisdiction encourage fema to use the authority they currently have, i think, is critically important. >> thank you, ms. murdoch, in your testimony you cite an interesting statistic that for every dollar spent on flood mitigation, $5 are saved, in your testimony you make the distinction between gray and green flood related

infrastructure investments, could you just elaborate on the distinction between gray and green infrastructure investment and the relative costs of both? >> sure. we're talking about gray, we're talking about hard systems like levies and dams, bulk heads, sea walls. what we're more and more focussed on is implementing projects where we allow natural systems, floodplains, wetlands, coastal wetlands, barrier beaches, oyster reeves, to also perform flood mitigation services. so we're doing a lot of projects like that, both in the mid part of the country, a lot of flod plain restoration, some of that involves just setting back levies far enough from the river to allow floodplains to perform their natural function, and then along the gulf coast, we have a

goal of building 100 miles of oyster reeves along the alabama coast. the cost comparison compared to gray infrastructure is very new, and we're actually starting to work and partnership with insurance companies to really measure those out. we have some preliminary figures on the oyster reef, but it's very new, and i don't think it accurately yet reflects what the two true cost-benefit of the green versus gray would be. >> thank you very much. senator wicker is coming here in just a second, and i want to make sure to get his perspective for his questions in. in lieu of that, i want to say this, first of all, and he will be here momentarily, i would just like to say thank you, guys, for your testimony. yep, we got you, we're waiting

for you, roger, you're good to go. go ahead and get organized while i talk for a second. i want to thank you for your testimony. we want to make sure we get this thing considered and move forward. i think, as you do, mo, this is a critically important piece of our economic recovery, and i think the longer we put this off, i think, is just a missed opportunity. so the coalition that has formed here and the work that you're doing on the hill, don't underestimate it, it is critically important to put pressure on everybody that serves in the senate to allow us to put pressure on leadership, to take this bill up sooner rather than later, and with that, senator wicker, you have comments, questions, have at it. >> right. thank you, mr. chairman, and i have been back in my office watching the hearing while

trying to get my desk cleared. i wouldn't be surprised if some other members of the committee also were availing themselves of this opportunity, but i just had to rush down and add my support for what you're trying to do, mr. chairman, and to thank all of these members of the panel for their excellent remarks. and i -- i guess it was the representative from the realtors who -- i'm not sure, but someone made a very cogent point, you know, mr. chairman, we need a bipartisan accomplishment in this senate, and we have it in our grasp to do this on a very important issue. the american people are looking at us. they are looking to us. they expect us to come to

washington and actually engage in accomplishments. this is an opportunity for us to do that. a good vote in the house, strong support in this committee, and the opportunity is right there, so for those members of the leadership within the sound of our voices, i just had to rush down before we gavel to a close and say that i absolutely hope we can do this. i would mention that the committee leadership has been very generous in working with me and others on -- on the so-called coastal act, which is a small step toward using science that's already out there to get us toward a resolution on this wind and water issue that is often a problem when a hurricane comes along, but

you've made great points. this is not just a bill for people along the oceans and the gulf. this is a bill for the entire united states of america. it's a bill for the taxpayers, for heaven's sake, and so senator tester, thank you for your leadership and that of senator vitter and i appreciate moran coming on too. i don't have questions, because the questions i would have asked had been asked while i was listening, but thank you very much, and let's keep this up and let's redouble our resolve to actually get an accomplishment for the taxpayers and for the american public. >> well, thank you, senator wicker, we certainly appreciate your long support in working on this bill, it's been critically important, and i think you're right, mo brought it up, it is a good bipartisan win, and it's something that we need to do

that will help do a lot of good things for a lot of folks out there and plus fix some fiscal problems that this program has. i want to thank this panel, i want to thank the previous panel for their testimony, the hearing record will remain open for seven days for any additional comments anybody might want to add for that or any questions that folks want to submit for the record. with that, thank you all very much and this hearing is adjourned. we also looked at the national flood insurance program on "washington journal." this is 40 minutes. on mondays, we have our

"your money" segment, what the program's about, who participates and who benefits. this morning we're talking about the national flood insurance program, and our guest is carolyn kousky. she's a fellow at resources for the future. thanks for coming in and talking with us. >> thanks for having me. >> the national flood insurance program, talk to us why there's this federal program. when we think of insurance, we think of private insurance against things like private and theft, but how are floods different? >> yeah, so the idea of a national flood insurance program dates back to the 1950s. it was actually created in 1968 in response to a widespread belief that private flood insurance was not readily available for american home owners, and if it was, that it was extremely expensive, so congress created the national flood insurance program and designed it to be a partnership between local governments and the federal government. local communities decide to join the program. when they do, they must adopt some minimal floodplain

regulations, and in exchange, the federal government makes insurance available for all the residents of that community. currently, home owners can insure the structure, their building, up to $250,000, they can insure the contents, and insurance is also available through the program for businesses which can insure their structure and contents up to $500,000. right now there's over 22,000 communities participating in the program nationwide, that covers much of the area of the country that's subject to flood risk. there's over 5.5 million policies enforced nationwide. those policies represent over 1.2 trillion of coverage. >> let's look at those numbers in more detail. policy information, who has these policies and how does it work, there are over 5.5 million active policies, and the total worth is $1.2 trillion. the average claim payment, $15,000. $15,000 doesn't sound like an

enormous amount of money if you've had flood damage. how far does it go in terms of helping people who suffer from floods? >> certainly, the average is not that high. there's a lot of small-scale flood damage that causes some damage to property or contents but doesn't destroy the whole structure. if you look at the average claim payment in 2005 after hurricane katrina, the average payment that year was $95,000. so when we get the severe events, then we correspondly see an increase in the claims. >> congress is working on the national flood insurance program and the latest extension. the house has extended it for 30 days, but unless the senate does the same, the program runs out of money on may 3 1st. >> the program is set to expire on the 31st, operating on short-term extensions since around 2008 and several times the program has actually completely lapsed, and what's going on right now is there's an

effort to try to pass some comprehensive reform legislation and extend it for much longer, for five years. that comprehensive legislation has already passed the house. it was passed with overwhelming bipartisan support, i should say, but the senate has passed that bill out of committee but has not yet acted on the floor on that bill. the house, as you said, recently passed a short-term extension to give the senate more time to act, so what people are looking to see this week is whether the senate's going to pass a short-term extension and delay these reform efforts are whether they will take up a longer term extension to the program. >> what happens to people who have floods if they fall into that window when the program's expired. >> yes, if the program expires, then no new policies can be written, and so that can be a problem for people trying to transact on properties, trying to buy or is property. if your policy was already

enforced and a flood happens, you can still submit a claim payment. so people who have policies already enforced won't be in too much jeopardy, but it does stall the writing of new policies. >> carolyn kousky is with resources for the future where he's a fellow -- let's go to the phones and hear from our first call. it's kenny, he's a republican in huntington, new york. good morning. kenny, are you with us? >> caller: yes. okay. >> go ahead. >> caller: well, anyway, yeah. well, you know, i live in an area known as, you know, slightly off of huntington bay, and every time it rains, the streets, you know, get flood ed

and the like, but it was only during hurricane irene i had to finally put everything up in my apartment and leave because the area really flooded out badly and it wound up coming into my apartment. so i would like to know, seeing i didn't have any, you know, insurance at the time, no home owners insurance or renters insurance at the time, i would like to know if i could put in, you know, even if i put in a policy, you know, how long would it be that i could still make a claim for any damages that might have been there. >> after the fact, anything you can do? >> unfortunately, after the fact is too late. you need to be holding the

insurance policy at the time that the flood occurs, and there's also a 30-day waiting period between when you can sign up for flood insurance policy and when it takes effect, and i'd also say in response to the caller's questions that for most home owners insurance policies, flood insurance is not included in those home owners policies, so that's important to keep in mind, if they want the additional flood coverage, they need to purchase it through the nfip extra policies. it might be worth also saying an important aspect of the program is that for home owners located in 100-year floodplains and part of the nfip is that fema maps flood risks for participating communities, for home owners with a mortgage from a federally-backed lender, purchases are mandatory as a requirement for that loan, so there is a subclass of people required to be purchasing flood insurance. >> we're looking at the new york

bureaus flood zones, and you can see the areas there for where fema is currently considers to be a potential flood zones and areas that could be in the future be so. let's hear from our next call, art, democrat in port pierce, florida, good morning. >> caller: good morning, how are you? >> good. >> caller: appreciate you taking my call. my question is, i live in a floodplain in florida here, and i have to buy flood insurance because i have a mortgage, and yet i know that there are certain people in this same allotment that don't, are exempt from having flood insurance even though they have a mortgage, so i'm confused as to why certain people are -- it's mandatory, and yet others it's not mandatory, maybe you could help me out on that, thank you. >> yeah, sure. the flood insurance purchase is mandatory if your loan is from a

federally backed or regulated lender, so there are some lenders this would not apply. that said, there's been some ongoing debate about how well this requirement is actually enforced and practiced, and unfortunately, we don't have good data nationwide on the number of properties in 100-year floodplains, the number of those with qualifying mortgages, so it's hard to say, you know, the extent of compliance with the mandatory purchase requirement. some research that myself and colleagues have done subject that after a few years, lots of people let their policy lapse and it's unclear whether lenders are around to continue to have people holding on to that policy for the life of the loan. it's been an issue raised. >> our guest mentioned horton, she's a visiting scholar at the school at the university of pennsylvania in philadelphia. and our guest, carolyn kousky,

mentioned what's happening in congress related to the flood insurance program, and we can see here in this story from nola.com, some debate over how the flood program, flood insurance program, should go forward. tell us about the reforms that republicans in the house in particular want to make to the program before allowing it to get reauthorize. >> sure, i think the first thing is talk about how prices are set, because that's one of the key issues of the reform. so right now, prices in the nfip are set, there are two differences in rates that are important. one is that rates vary according to the flood zone that fema maps, so are you in the 100-year floodplain, are you out of it, you'll have higher rates if you're in. there's also a flood zone for property subject to wave action. it's a small percentage of policies overall in the program, but they also have a different rate structure. then on top of that difference

in rates by flood zone, fema also has two classes of policies, those they refer to the premium based on modeling of the expected damages and historical damages in the area, so they are more or less based on the risk you face. there's a small group of policies that receive discounted premiums, sometimes referred to as subsidized policies, these home owners are only paying about 40% or 45% of the full premium and a lot of concern has been over the nature of these discounts. they were initially put in by congress as a way to help encourage communities to participate in the program and encourage home owners to purchase insurance, because it was essentially thought it wasn't fair that people who might have built or located in the floodplain before they were aware should be penalized.

it was thought that those discounts would phase out relatively quickly over time because as structures were modified, the idea was the discount would phase out, but they've been persistent, and one of the problems is that those policies that are paying discounted rates are also some of the riskiest properties in the program, so they face the highe esest claims and damages. so that's been part of the problem. what happened in the early 1980s is fema decided the combined revenue from those discounted policies should be enough to cover the average historical loss here, ta required increasing the rates on the discounted policies through the '80s, and in 1986 that was achieved. now, fast forward to 2005 and that was not an average loss year. the amount of claims the nfip paid out in 2005 was more than the m