01.24.14

Reed & Whitehouse Urge Changes to Fix Flood Insurance Reform

WASHINGTON, DC – As the U.S. Senate prepares to vote next week on flood insurance reform, U.S. Senators Jack Reed and Sheldon Whitehouse are urging passage of the bipartisan Homeowner Flood Insurance Affordability Act.  Reed, Whitehouse, and 29 of their colleagues are cosponsors of legislation that would limit abrupt increases in premiums for homeowners in older homes or in homes newly mapped into the floodplain.  The bill will also require the Federal Emergency Management Agency (FEMA) to complete an affordability study and develop recommendations for a policy to assist homeowners who cannot afford their premiums.

In 2012, the Biggert-Waters Flood Insurance Reform Act was enacted as part of the highway and transit reauthorization bill in order to prevent the National Flood Insurance Program (NFIP) from lapsing and leaving thousands of property owners without access to flood insurance protection.  The law sought to phase out or eliminate federal subsidies for certain flood-prone properties in order to address the program’s growing debt.  To date the program owes $24 billion to the U.S. Treasury for funds it borrowed to pay claims from past disasters, including Hurricanes Katrina, Rita and Sandy.  By law, the program may only borrow $31 billion from taxpayers in order to pay claims.  Since 1978, the program has paid more than $117 million claims in Rhode Island, with approximately $70 million in the last four years as a result of Superstorm Sandy and the historic floods of 2010.

“The National Flood Insurance Program is vital to protecting Rhode Island homeowners as well as our housing market in general.  This legislation will give FEMA time to strike a better balance among risk, affordability and fiscal soundness.  It will also give homeowners time to learn more about and mitigate their potential flood risk -- steps that  may limit future insurance costs,” said Reed, who supported a provision in the fiscal year 2014 Consolidated Appropriations law that will postpone some of the increases until September 30.  “We have a strong, bipartisan coalition in the Senate that agrees on the need to strengthen the National Flood Insurance Program by making it fairer and fiscally sound.  I hope we can move this legislation forward”

“This bill will provide temporary relief to many Rhode Island homeowners facing sharp rate increases in their flood insurance policies,” said U.S. Senator Sheldon Whitehouse.  “In addition to delaying rate hikes, the bill also aims to ensure the long-term viability of the federal flood insurance program without asking homeowners to bear an unreasonable portion of the cost.”

More than 5.5 million people currently hold flood insurance policies in more than 21,800 communities across the country.  According to a report by the Rhode Island Emergency Management Agency (RIEMA), there are currently more than 16,000 NFIP issued policies in Rhode Island (county-by-county breakdown: Bristol: 2,141; Kent: 2,439; Newport: 3,016; Providence: 2,668; Washington: 5,859) and the average premium in Rhode Island is $1,343 annually.  About 6,800 of those policies are subsidized, according to FEMA.  In general, FEMA and GAO have reported subsidized premiums represent only about 40-45 percent of the full flood risk.

The Homeowner Flood Insurance Affordability Act is authored by Senator Bob Menendez (D-NJ) and currently has the support of 30 cosponsors.  In addition to Senators Reed and Whitehouse, cosponsors of the bill include Senators: Mark Begich (D-AK), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Robert Casey (D-PA), Susan Collins (R-ME), Thad Cochran (R-MS), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Lindsey Graham (R-SC), Kay Hagan (D-NC), Heidi Heitkamp (D-ND), John Hoeven (R-ND), Johnny Isakson (R-GA), Amy Klobuchar (D-MN), Mary Landrieu (D-LA), Joe Manchin (D-WV), Edward Markey (D-MA), Jeff Merkley (D-OR), Lisa Murkowski (R-AK), Bill Nelson (D-FL), Brian Schatz (D-HI), Chuck Schumer (D-NY), Tim Scott (R-SC), Debbie Stabenow (D-MI), David Vitter (R-LA), Elizabeth Warren (D-MA), Roger Wicker (R-MS), and Ron Wyden (D-OR).

A House companion bill has also introduced by U.S. Representatives Maxine Waters (D-CA) and Michael Grimm (R-NY) and has 175 bipartisan cosponsors from across the country.

A procedural vote has been scheduled in the U.S. Senate on Monday, January 27 at 5:30 p.m.  A supermajority of 60 votes will be required to open debate on the measure.

SUMMARY: Homeowner Flood Insurance Affordability Act seeks to:

Delay implementation of the most aggressive rate increases until FEMA understands how they will impact individual policyholders and the program at large.  This includes older properties that were built before flood maps were developed.  Owners of these properties could see their rates skyrocket overnight when they try to sell.  It also includes properties that were built to code and later remapped into an area of higher flood risk.

Provide targeted rate relief to these policyholders until FEMA certifies that their methodology for producing flood maps is accurate and reliable, and Congress has an opportunity to review and take action on the draft affordability framework FEMA will develop using the findings of the study mandated by Biggert-Waters.

Provide funds to reimburse homeowners for successful map appeals.  This would allow FEMA to utilize NFIP to reimburse policyholders who successfully appeal a map determination.  FEMA currently has the authority to reimburse eligible expenses related to surveyors, engineers or similar services, but Congress has not appropriated funding for this account.

Establish a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process.  The Rate Map Advocate will be responsible for educating policyholders about their individual flood risks, assisting property owners through the map appeals process, and improve outreach and coordination with local officials and community leaders.

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