Sec. 301. Replacement cost in determining premium rates
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The Administrator shall conduct a study to— evaluate best practices in the insurance industry for risk rating and classification, including practices that consider replacement cost value in premium rate estimations; and with respect to the estimates of risk premium rates for flood insurance made by the Administrator under section 1307(a)(1) of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4014(a)(1) )— assess options, methods, and strategies for including replacement cost value in the estimates; provide recommendations for including replacement cost value in the estimates; identify an appropriate methodology to incorporate replacement cost value into the estimates; and develop a feasible implementation plan and projected timeline for including replacement cost value in the estimates.
Not later than 1 year after the date of enactment of this Act, the Administrator shall submit to the appropriate committees of Congress a report that contains the results and conclusions of the study conducted under paragraph
(1)(referred to in this paragraph as the study ). The report submitted under subparagraph
(A)shall include— an analysis of the recommendations resulting from the study and any potential impacts that those recommendations would have on the National Flood Insurance Program, including cost considerations; a description of any actions taken by the Administrator to implement the recommendations made by the study; a description of any recommendations made by the study that, as of the date on which the Administrator submits the report, have been deferred or not acted upon; and a statement explaining the reasons for any deferral or inaction described in clause (iii). Section 1307(a)(1) of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4014(a)(1) ) is amended, in the matter preceding subparagraph (A), by inserting after flood insurance the following: , which shall incorporate replacement cost value, and . Section 1308(b) of the National Flood Insurance Act of 1968 ( 42 U.S.C. 4015(b) ) is amended, in the matter preceding paragraph (1), by inserting after Such rates the following: shall incorporate replacement cost value and . During the 3-year period beginning on the date that is 1 year after the date of enactment of this Act, the Administrator may gradually phase in the amendments made by paragraphs
(1)and
(2)with respect to flood insurance coverage made available under the National Flood Insurance Act of 1968 ( 42 U.S.C. 4001 et seq.) for properties located in various geographic regions in the United States as sufficient information for the implementation of those amendments becomes available. The Administrator shall ensure that, as of the effective date described in paragraph (4), the amendments made by paragraphs
(1)and
(2)are fully implemented to apply to all flood insurance coverage made available under the National Flood Insurance Act of 1968 ( 42 U.S.C. 4001 et seq.). The amendments made by paragraphs
(1)and
(2)shall— take effect on the date that is 4 years after the date of enactment of this Act; and apply to the establishment of risk premium and chargeable premium rates by the Administrator on and after the date described in subparagraph (A).
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