Senators Introduce Bill To Delay Flood Insurance Rate Increases

U.S. Sen. Robert Menenedez

U.S. Sen. Robert Menenedez

WASHINGTON, D.C. – On the one year anniversary of Superstorm Sandy, U.S. Senators Robert Menendez (D-NJ) and Johnny Isakson (R-GA) today led a bipartisan coalition of members to introduce the Homeowner Flood Insurance Affordability Act which will delay significant flood insurance premium rate hikes and require FEMA to complete an affordability study and propose solutions to address affordability issues before any flood insurance premiums can be raised in the future. 

“As we continue to recover from the worst natural disaster in our state’s history, a manmade disaster is looming, jeopardizing that recovery.  The combination of new flood maps and phase out of premium subsidies for the National Flood Insurance Program threatens to force victims out of their homes and to destroy entire communities,” said Menendez.

“Many homeowners will have to pay premiums they simply cannot afford, forcing them to either sell or abandon their homes.  These are hardworking middle class families, who played by the rules, purchased flood insurance responsibly, and are now being priced out of their own home.  We must stop this manmade disaster from doing more damage, take a time-out and assess the impact these premium hikes will have on homeowners and the communities they live in,” Menendez said.

The proposed legislation drew fire from the New Jersey Sierra Club. “Some of the senators like Menendez and [co-sponsor Ed ] Markey [(D-MA)]are leaders on climate change and sea level rise, however this legislation will undermine those efforts,” said club Director Jeff Tittel.

“This type of legislation is being pushed because of pressure from people who still want flood insurance subsidies and the government to help pay for their beachfront homes. It shows that leaders who care about climate change are not immune to public pressure from constituents who want to have it both ways,” Tittel said.

Homeowners with mortgages living in flood zones are required to have flood insurance, which for about 20 percent of properties has traditionally been subsidized or grandfathered at a lower rate by the National Flood Insurance Program (NFIP). Before Superstorm Sandy struck, a federal flood insurance reform bill, the Biggert-Waters Act, was passed as part of a larger legislative package. The Biggert-Waters Act was aimed at reducing, or phasing out, the federal NFIP subsidy at up to 25 percent a year, which would significantly increase premiums for homeowners and businesses.

The Menendez-Isakson “Homeowner Flood Insurance Affordability Act” would:

Delay the implementation of rate increases on the following three types of properties until FEMA completes the affordability study mandated by Biggert-Waters Flood Insurance Reform Act of 2012, proposes a draft affordability framework for Congressional review, and Congress has a chance to give FEMA affordability authority; and  the FEMA Administrator certifies that the agency has implemented a flood mapping approach that utilizes sound scientific and engineering methodologies to determine varying levels of flood risk in all areas participating in the National Flood Insurance Program:

1.   All homes and businesses that are currently “grandfathered.”  These are properties that were built to code and later remapped into a higher risk area.  Prior to Biggert-Waters, these policyholders were not penalized for relying on inaccurate FEMA flood maps.

2.   All properties that purchased a new policy after July 6, 2012, before they were legally required to purchase insurance.

3.   All properties sold after July 6, 2012.  New homeowners and business owners will continue to receive the same treatment as the previous owner unless they trigger another provision in Biggert-Waters such as Severe Repetitive Loss, non-primary residence, substantial damage, etc.

The measure requires FEMA to propose a draft regulatory framework to address any affordability issues identified by the study within 18 months after the completion of the study and establishes a six month period thereafter to provide for Congressional review.  The House and Senate would then hold up or down votes through a privileged motion on giving FEMA the authority to promulgate affordability regulations.  If Congress approves this authority, the targeted freeze set forth by this bill would continue until regulations are finalized.  If not, the freezes would be lifted absent other Congressional action.



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