The House approved legislation today that would require some homeowners whose houses are valued at more than $600,000 to pay actuarially based rates for flood insurance.

Passed by voice vote, the measure (HR 3959) is aimed specifically at homes that predate the government's flood insurance rate map, or FIRM, and are purchased after the bill is signed into law for more than $600,000.

Because they predate the federal flood maps, which took effect in 1974, such properties have enjoyed lower rates for their flood coverage, which critics have said amounts to a subsidy.

The legislation was sponsored by House Financial Services Committee Chairman Barney Frank, D-Mass., and committee member Scott Garrett, R-N.J., on October 24 and was approved by the committee a week later.

In speaking on the House floor prior to the vote on the bill, Rep. Frank noted that it brought together people with strong views on government spending, like fiscal conservative Rep. Garrett, and those who are concerned about the environment. The bill, he said, “advances the concerns of both those parties.”

For his part, Rep. Garrett also pointed to the legislation as a compromise between those willing to allow the subsidies to continue and the even more fiscally conservative who had sought to immediately impose actuarially sound rates on pre-FIRM homes.

HR 3959 was approved under the suspension calendar, which means it was subject to debate of no more than 40 minutes, could not be amended, and required two-thirds of the vote for passage. Legislation is typically moved on the suspension calendar if it is not expected to have any opposition, and HR 3959 was approved after a few minutes of remarks by Reps. Frank and Garrett.

“This bill is a great start to the 2008 flood insurance reform efforts and illustrates congressional commitment to strengthen the NFIP for policyholders and taxpayers across America,” said Paul Kangas, director, federal government relations for the Property and Casualty insurers Association of America.

The group, he said, has been a strong supporter of reform of the federal flood insurance program, “and we believe H.R. 3959 will help get us closer to that goal.”

With House approval, the bill will now go to the Senate.

John Prible, assistant vice president for federal government affairs for the Independent Insurance Agents and Brokers of America, noted the threshold established by the bill as an important factor for both the National Flood Insurance Program and for homeowners.

“We recognize that the NFIP's need for financial stability must be measured against fairness to the customers we serve,” he said, “which is why we believe it is important that this legislation is aimed at homes valued at over $600,000 and includes a phase-in mechanism,” he said.

Dennis Kelly, a spokesman for the American Insurance Association, said the group “has always supported this legislation, and the phasing in of actuarial pricing for all NFIP policies.”