The prospect of a delay in flood insurance reforms that are raising premiums for many homeowners is being met with pushback from business, taxpayer, climate and insurance groups.
Rep. Maxine Waters, D-Calif., announced that key Senate and House members have reached agreement on a bipartisan legislative fix for the National Flood Insurance Program (NFIP) that she said will assure that “changes are implemented affordably.” Waters is a ranking member of the House Financial Services Committee and a chief architect of the 2012 reform law she now wants to delay.
The bipartisan deal, which Sen. Mary L. Landrieu, D-La. also reported, calls for a four-year delay in implementation of reforms ordered by the Biggert-Waters Flood Insurance Reform Act of 2012.
Senators Johnny Isakson, R-Ga., Robert Menendez, D-N.J., Jeff Merkley, D-Ore., Thad Cochran, R-Miss., Heidi Heitkamp, D-N.D., David Vitter, R-La., and John Hoeven, R-N.D., are among those sponsoring the legislation in the Senate, according to Landrieu, who is also a sponsor.
Senate and House leaders, who are involved now in budget talks, have not indicated if or when there might be a vote on any proposals to delay Biggert-Waters.
The new legislation calls for a four-year delay in most rate increases and requires FEMA, which administers the flood program, to complete an affordability study and propose regulations that address affordability issues.
But some interest groups hope lawmakers will stick with the Biggert-Waters reforms despite pressure to postpone them.
“We should be helping this law along, not pulling it out by its roots,” said Steve Ellis, vice president of Taxpayers for Common Sense, speaking at a media briefing today with Ceres, a nonprofit representing businesses and investors on climate issues that issued a new report today on the anniversary of Superstorm Sandy on the cost of to taxpayers federal disaster programs.
Ellis said that the NFIP was about $17 billion in debt when Biggert-Waters was passed in 2012, while it is now $25 billion in debt — proof that the current program in unsustainable.
Franklin Nutter, president, Reinsurance Association of America, also criticized the idea of a delay in the flood insurance reforms. “It [the bipartisan deal] effectively guts the reforms,” Nutter said. “It would be a remarkable and unfortunate turnaround for Congress to do this.”
Nutter urged Congress to create a transparent program to assist homeowners who can’t afford flood premiums rather than gutting all the reforms with what he termed a “blanket, club-like approach.”
Nutter said the four-year delay proposed by Waters— two years for an affordability study followed by two years of implementation of affordability provisions — would actually delay reforms beyond the authorization of the flood program, which is set to expire in September, 2017.
“Taxpayers should be outraged that their tax dollars are incentivizing high risk behavior that increases federal disaster costs,” said Ellis of the taxpayer group.
Ellis said Congress could create a means-tested relief option for homeowners but for lawmakers to delay Biggert-Waters on the assumption there are other solutions beyond charging risk-based premiums is “preposterous.”
The Biggert-Waters Flood Insurance Reform Act ordered an end to many premium subsidies for property owners and a remapping of communities along with other changes. These changes are resulting in substantial premium hikes for some homeowners and causing more property owners to have to buy flood coverage.
The Biggert-Waters law was intended to help reduce the debt of the NFIP by bringing rates more in line with the risk and losses in flood-prone areas.
Waters said the legislation will be released this week in the House and Senate.
The proposed legislation would delay implementation of rate increases until two years after FEMA completes an affordability study, which was mandated in Biggert-Waters but not undertaken.
In addition, the legislation requires FEMA to propose regulations that address the affordability issues within 18 months after the completion of the study and establishes a six month moratorium thereafter to provide for Congressional review.
The proposed delay applies to: primary, non-repetitive loss residences that are currently grandfathered; all properties sold after July 6, 2012; and all properties that purchased a new policy after July 6, 2012.
FEMA has estimated it will take two years to complete the affordability study before regulations can be issued and reviewed by Congress, meaning rate increases would be delayed for approximately four years in total, according to Waters.
In addition, Waters said the legislation:
- Allows FEMA to utilize national flood insurance funds to reimburse policyholders who successfully appeal a map determination.
- Eliminates the 50 percent cap on state and local contributions to levee construction and reconstruction
- Protects the so-called “basement exception,” which allows the lowest proofed opening in a home to be used for determining flood insurance rates.
- Establishes a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process.
- Requires FEMA to certify that the agency has fully adopted a modernized risk-based approach to analyzing flood risk.
Lawmakers from both parties have been clamoring for a delay in the Biggert-Waters reforms.
FEMA Director Craig Fugate, under pressure from lawmakers to delay the premium increases, told Congress last month that legislation is necessary because he does not believe he has the authority under the Biggert-Water Act to stop the changes administratively. He also said there was not enough time or money to complete an affordability study before the changes went into effect.