Bi-Partisan Legislation Introduced on Flood Insurance

Key House and Senate member have reached a bipartisan deal to delay changes to the federal flood insurance program that are raising premiums for many homeowners and require regulators to address affordability of the coverage.

U.S. Senators Mary L. Landrieu, D-La., 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., released details of their soon-to-be-introduced legislation to fix flood insurance so that it is affordable, accessible and self-sustainable. The legislation is the result of weeks of bipartisan collaboration and consultation with the business community, local leaders and industry representatives.

House bill H.R. 3370, the Homeowner Flood Insurance Affordability Act.
Senate bill S. 1610, the Homeowner Flood Insurance Affordability Act.

Rep. Maxine Waters, ranking member of the House Financial Services Committee, has announced a bipartisan legislative fix for the National Flood Insurance Program (NFIP) that she said will assure that “changes are implemented affordable.” 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. The bipartisan deal comes after several weeks of negotiations with Democrats and Republicans in the House and Senate.

The legislation will:
Delay the implementation of Flood Insurance rate increases until two years after FEMA completes its affordability study mandated by Biggert-Waters or until the FEMA Administrator certifies that the agency has fully adopted a modernized risk-based approach to analyzing flood risk for the following properties: Primary, non-repetitive loss residences that are currently grandfathered; all properties sold after July 6, 2012; all properties that purchased a new policy after July 6, 2012.

It also requires FEMA to promulgate regulations to address the identified affordability issues within 18 months after the completion of the study and establishes a 6-month moratorium thereafter to provide for Congressional review. Affordability measures authorized under this section may include targeted assistance to individual policyholders and factor in the impacts of rate increases on program participation. FEMA has estimated it will take an additional 2 years to complete the affordability study before regulations can be issued and reviewed by Congress meaning rate increases would be delayed for approximately 4 years in total.

• Provides adequate funding for the affordability study: Lifts the arbitrary $750,000 cap on the affordability to ensure FEMA has the funding required to complete it in two years from the date of enactment.
• Provides funds to reimburse homeowners for successful map appeals: Allows 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.
• Eliminates penalties on communities self-financing flood protection: FEMA’s AR and A99 flood zone categories provide more affordable flood insurance to qualifying communities in the process of levee construction, reconstruction, and improvements. Current regulations require a certain level of federal funding to qualify for either an A99 or an AR designation and prevent FEMA from giving communities fair credit for improvements made to existing flood control systems. Proactive communities that are actively investing in mitigation should not be penalized for self-financing flood protection projects.
• Protects the basement exception that allows the lowest proofed opening in a home to be used for determining flood insurance rates. This impacts 54 communities nation-wide where basements are necessary to protect homeowners and businesses from extreme weather.
• Establishes 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.

The Business Alliance for a Sound Economy (BASE) has been working in partnership with the National Association of REALTORS®, the National Association of Home Builders, as well as our local, state, and federal partners and has become part of a national coalition of members whose private and public stakeholders are working in concert and as a unified effort to delay the implementation of the Biggert-Waters Flood Insurance Reform Act of 2012 due to the economic ramifications imposed from this Act.

This is just one of many bills introduced by Congress to delay the implementation of the Biggert-Waters Flood Insurance Reform Act. With Congress back in session, this brings a renewed effort by coalition members for both home and business owners and policy holders as new legislation is introduced.

To read more on this story see:
Sen. Mary Landrieu:
http://www.landrieu.senate.gov/?p=press_release&id=4023http://www.landrieu.senate.gov/?p=press_release&id=4023http://www.landrieu.senate.gov/?p=press_release&id=4023

Insurance Journal:
http://www.insurancejournal.com/news/national/2013/10/28/309383.htm
http://www.insurancejournal.com/news/national/2013/10/28/309383.htm
http://www.insurancejournal.com/news/national/2013/10/28/309383.htm