Community Flood Resilience Act

This Act may be cited as the “Community Flood Resilience Act”.

It is the sense of the Congress that—

(1) many communities with significant flood risk continue to experience chronically low participation in the National Flood Insurance Program, leaving households and small businesses financially vulnerable to flood events and increasing reliance on post-disaster Federal assistance;

(2) there is a need to promote greater engagement with private flood insurance markets and improve insurance awareness in communities with elevated flood risk and historically low flood insurance take-up rates;

(3) community-based parametric flood insurance has the potential to provide faster, more transparent, and more flexible financial protection at a community level and can serve as a supplemental form of risk transfer alongside existing flood insurance coverage; and

(4) community-based parametric flood insurance may help strengthen the financial resilience of communities undertaking flood mitigation and resilience investments by providing an additional layer of protection for households and small businesses.

(a) Flood mitigation assistance grant eligible use of funds.—

(1) In general.— For the period that is 5 years after the date of the enactment of this Act, the Administrator of the Federal Emergency Management Agency (hereafter referred to as the “Administrator”) shall permit any State or community that receives flood mitigation assistance under section 1366 of the National Flood Insurance Act of 1968 (42 U.S.C. 4104c) to use not more than 15 percent of such assistance amounts each year for the payment of premiums for a community-based, parametric flood insurance policy that—

(A) is offered through the private sector;

(B) specifies objective, predefined trigger conditions for payout based on measurable flood-related metrics;

(C) includes timelines and disbursement terms agreed upon at the time of underwriting; and

(D) provides that funds shall be disbursed to the participating community promptly upon verification that a triggering condition has been met, without the need for post-event damage assessment or additional administrative approval by the Administrator.

(2) Report.— In each year that a State or community that uses assistance amounts as described in paragraph (1), such State or community shall submit to the Administrator a report that describes how such State or community—

(A) promotes National Flood Insurance Program policy enrollment;

(B) educates members of the community about the limitations community-based, parametric flood insurance;

(C) encourages flood-risk mitigation;

(D) uses community based, parametric flood insurance to—

(i) support households and small businesses; and

(ii) contribute to broader flood resilience and insurance awareness efforts; and

(E) encourages flood insurance take-up by improving public awareness of flood risk and promoting participation in either the National Flood Insurance Program or a private flood insurance offering.

(3) Sunset.— The permission described in paragraph (1) shall terminate on the date that is 5 years after the date of the enactment of this Act, absent a reauthorization by the Congress.

(b) Promotion of community-Based flood insurance.— The Administrator shall—

(1) conduct outreach to communities to spread awareness with respect to community-based, parametric flood insurance policies and the eligible use described in subsection (a); and

(2) notwithstanding any other provision of law, allow for the use of other grant amounts under the authority of the Administrator for the payment of premiums of community-based, parametric flood insurance policies by grant recipients for the 5 year period after the date of the enactment of this Act.

(c) Disclosure required.— Any community based, parametric flood insurance policy for which premiums are paid as described in subsection (a) shall include a written dislcosure that explains—

(1) the specific trigger conditions under which a payout will and will not be made;

(2) the circumstances under which a triggering event may occur but individual households or small businesses within the community may not receive financial relief (commonly referred to as the “basis risk”); and

(3) how the parametric policy interacts with and differs from flood insurance provided under the National Flood Insurance Program.

(d) Report.— Not later than 1 year after the date of the enactment of this Act, and on the dates that are 3 and 5 years after the date of the enactment of this Act, the Administrator shall submit to the Congress a report that contains—

(1) an analysis of any changes to the number of National Flood Insurance policies in communities that use flood mitigation assistance grant amounts as described in section 1366(c)(3)(k) of the National Flood Insurance Act of 1968 and communities that do not use such grant amounts as described in such section;

(2) a description of the product types of community-based, parametric flood insurance policies that communities use, including the number of households covered by such policies;

(3) an analysis of the timeliness and effectiveness of claim payouts through community-based, parametric flood insurance policies for which premiums are paid for as described in such section;

(4) an assessment of outreach and flood insurance awareness efforts; and

(5) any legislative recommendations for the continuation or expansion of community-based, parametric flood insurance policies.