Congress, however, acted in 2012 without understanding the actuarial rate phase-in exposed political deals going back to 1972 that subsidized flood-insurance rates in critical areas, for example, Louisiana and Florida.

The 2012 law also created unintended consequences for voters throughout the country. For example, the Des Moines Register published a story today depicting the plight of an Iowa homeowner who saw her yearly flood-insurance premium jump this year from $729 to $4,923.

Regarding the latest bill to delay the increases, Sen. Mary Landrieu, D-La., says, "We really passed it in record time, given the pace around here, so I'm very proud."

The battle isn't over yet, though. As the price for allowing the bill on the floor quickly, the Senate also passed S. 2137 by unanimous voice vote. This legislation, sponsored by Sen. Mike Lee, R-Utah,  mandates that owners of second homes do not receive refunds for rate increases paid since Biggert-Waters went into effect last October.

That second bill, S. 2137, now goes to the House. An industry lobbyist who has accurately followed the legislative process aimed at rolling back the rate increases imposed by B-W said, "I don't see the bill having a good chance in the House. The debate over flood-insurance premium-rate increases this year was a painful exercise for members of Congress, and the House is unlikely to want to revisit the issue in this Congress."

As Landrieu cautioned, "Now that we are beyond the immediate crisis, we must dedicate ourselves to crafting a program that works decade to decade so generation after generation can continue to affordably and safely live along our coasts and inland waterways where they work to power our nation's economy."

She added, "this will require vigilant oversight of the NFIP by Congress and continued engagement from the industry groups and passionate grassroots organizations that made flood insurance reform a national priority."

What's in the bill?

The latest bill retains provisions in B-W that provide a glide path to the actuarial rates imposed by the 2012 law. Consumers and their allies, including homebuilders, state regulators and real estate interests, say this provision will make it unaffordable to build in flood-prone areas. In the most likely case, the bill will allow Congress to postpone dealing with that issue for several years, until it reopens debate on legislation that will reauthorize the NFIP when the current authorization runs out Sept. 30, 2017. 

Given that the debate over reauthorization that resulted in B-W lasted for seven years, from 2007 to 2012, it appears that the insurance industry will be facing chronic uncertainty over the fate of the NFIP.

A number of states are moving to facilitate private-insurance options. However, the most recent RAND report indicates only between 130,000 and 190,000 U.S. homeowners and businesses have private insurance. The NFIP has 5.6 million customers. Currently, the NFIP is $24 billion in debt. 

FEMA gets the bulls-eye on its back through provisions in the latest bill that call on the agency to "strive" to reach the goal that most policyholders have a premium of no more than 1% of the value of their coverage, for example $2,000 for a $200,000 policy.

The bill limits annual rate increases for individual policyholders to 18% per year. The bill also reinstates the flood-insurance program's grandfathering provision, meaning homes that complied with previous flood maps would not be hit with large increases when new maps show greater risk of flooding. It also ends a provision that required an immediate hike to actuarial levels when a home changes ownership — slowing home sales in many communities designated high risk by FEMA flood maps.

The retention of subsidized rates in the House bill is funded by an annual $25 surcharge for most homeowner policyholders, and a $250 fee for businesses and second homes. 

It sloughs the refund issue onto the backs of FEMA officials, but it will force the approximately 84 Write-Your-Own companies that administer the program on behalf of the FEMA to act in an unprecedented fashion to revise the software used to send out bills and deal with other required paperwork issues. 

Revising the software needed to implement the changes will take months and cost the industry millions of dollars. That process is expected to extend until next July, at the earliest.

Industry reacts

Industry reaction was mixed. Nat Wienecke, senior vice president, federal government relations for Property Casualty Insurers Association of America (PCI), said the bill will address some of the "unintended consequences" of B-W, but PCI "will continue to work with Congress on the long-term affordability and availability of flood insurance, as well as the long-term financial soundness of the NFIP." PCI's members include more than two-thirds of the WYO insurers.

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, was highly critical.

He said the Senate vote "continues to move Congress down the wrong path on flood-insurance reform," and said the bill "approaches the problems encountered during the implementation of B-W in exactly the wrong way."

He explained that it forces the vast majority of flood-insurance policyholders to pay a little more so that those with subsidized rates can continue to pay less than what they should.

But, for most members of Congress, bringing the current debate to a close was a relief.

Rep. Maxine Waters, D-Calif., one of the named sponsors for the 2012 act, said in a statement, "Ending skyrocketing flood-insurance premiums was personal to me. I am the 'Waters' in 'Biggert-Waters.'"