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Congressional accord reached on flood insurance rate delay

Flood insuranceA bipartisan group of legislators from the U.S. House and Senate have reached an agreement to delay flood insurance rate increases for at least four years for millions of homeowners.

The agreement, reached between U.S. Rep. Maxine Waters, D-Calif, author of the Biggert-Waters Flood Insurance Reform Act, and other congressional leaders, would delay the rate hikes for four years and require FEMA to complete an affordability study before increasing any flood insurance premiums in the future. A companion bill is expected to be filed by U.S. Sen. Bob Menendez, D-N.J. 

The tentative deal, which still must be voted on in both the House and Senate, was hailed by Gov. Rick Scott and members of Florida's congressional delegation, which urged a delay in the rate increases.

"This is great news for many Floridians who've been told their flood insurance rates were going way up," said Sen. Bill Nelson, a Florida Democrat, in a press release. Nelson was among several Florida lawmakers who proposed similar legislation to dely rate increases for at least a year. "If people can't afford the coverage, what good is it going to do?"

Scott urged President Barack Obama to step in and support the deal "or take any other action within the executive branch to undo these insurance rate hikes that hurt Florida families.'' 

Congress passed the Biggert-Waters Flood Insurance Reform Act in 2012 to make the nation's flood insurance program more financially sound. The program eliminated and phased out subsidies for homeowners in flood-prone areas. But the rate shock was too much to bear for most homeowners, particularly in Florida where consumers hold one-third of all the policies in the national program.

Realtors complained that the rate hikes had a chilling effect on home sales, and Florida regulators said they would consider encouraging private insurers to sell flood insurance as an alternative to NFIP. 

But the conservative R Street Institute, a free-market research group, condemned the proposed rate hike delay on Monday, calling it a give away.

"Delaying the scheduled phase-out of flood insurance premium subsidies amounts to a gift to mostly wealthy homeowners who get to enjoy cheap insurance on their beach homes thanks to taxpayer support," said R.J. Lehmann, a fellow at R Street.

"To the extent that FEMA remapping may result in genuine affordability problems for some homeowners, Congress should look to target those individuals specifically with limited, means-tested support,'' he said. "However, an across-the-board delay in new maps taking effect will only further imperil the program's solvency, while also robbing those policyholders whose remapped properties show a reduced risk of flooding the opportunity to enjoy the lower rates they deserve." 

Here's the report from the Insurance Journal:

Bipartisan Deal Reached to Delay Flood Insurance Premium Hikes: Waters 

October 28, 2013

Key House and Senate members have reached a bipartisan deal to delay changes to the federal flood insurance program that are raising premiums for many homeowners. The bill would require regulators to address affordability of the coverage before implementing rate hikes.

Rep. Maxine Waters, D-Calif., ranking member of the House Financial Services Committee, announced the bipartisan legislative fix for the National Flood Insurance Program (NFIP) that she said will assure that “changes are implemented affordably.”

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., are among those sponsoring the legislation in the Senate.

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.

Waters was a chief architect of the bipartisan Biggert-Waters Flood Insurance Reform Act that ordered an end to many premium subsidies for property owners and a remapping of communities along with other changes that are resulting in many homeowners facing big premium hikes and more property owners being told they must buy flood coverage. In some areas, the premiums hikes are beginning to affect home sales.

The Biggert-Waters law was intended to help reduce the debt of the NFIP, a debt now estimated at more than $25 billion, by bringing rates charged more in line with the risk and losses in flood-prone areas.

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. Waters said that on Oct. 9, in the midst of the government shutdown, she convened a bipartisan meeting of nearly 20 House members, as well as Senate staff, to build consensus around an agreement to delay and fix the program.

“Over the past several months, I have felt the harm and heartache that many Americans have already experienced as a result of changes to the National Flood Insurance Program. From the start, I have made clear that I would lead the effort to fix the unintended consequences of the Biggert-Waters Flood Insurance Reform Act,” said Waters in a statement released by her office announcing the deal.

She said the legislation will be released this week in the House and Senate. It will impose a delay likely to total four years for the most vulnerable properties, by delaying 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.

Business, taxpayer and insurance interests immediately criticized delaying Biggert-Waters as “unfortunate” and “preposterous.”

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.




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Randy Hemsath

My home has never had a flood claim in 63 years, yet my new insurance rate is quadrupling to $10,000. My wind insurance is $4500 per year and my home has had two small wind claims in the same 63 years.

So how can these new rates be actuarially sound, let alone a "gift to wealthy homeowners."

It's just another way to tax us for the benefit of Washington.

Randy Hemsath

Earl Murphy

Simple. If you pay into FEMA you get your home fixed, FEMA blew all the money on homes that never paid in.. Can you say Katrina and homes built below sea level..


R.J. Lehmann, a fellow at R Street

Is an ignorant moron of epic proportions. ALL 50 states have A Zones which have flood premiums ready to soar -- newsflash Lehmann -- not all 50 states are on the coast!

Bob Bronsord

R.J Lehmann a "fellow" at R street is shockingly naive and misinformed. He is either a complete moron or is just spitting out tea party rhetoric. There are 50,000 homes
in Pinellas county florida located in flood areas and maybe 10% are big beach houses.
The other 90% are owned by low to middle class working folks who can't cough up a 400% rate increase and will most likely give their houses back to the banks if something is not done to bring sanity back to this issue.

Bob Smith

R.J. Lehmann... you are an idiot.

Larry Chaman

Lehmann must be kin to mitch McConnell to be stupid enough to make these kind of comment.


There is a very simple solution to this issue is that all property insurance be forced to include flood insurance as is stated in many of the comments in other articles on this issue. That is the purpose of insurance to spread the risk, and as history has proven nobody knows where there will be a flood next. If this were done it would make it palpable for all.

We need to campaign locally, statewide, and nationally for this solution! I am very disappointed in any politician, including President Obama, that voted for this or signed this! There was no thought of the repercussions it would have. If you read the comments there are very many good ideas and reasons, like property in a flood zone since the 1700's and it has never been flooded, or turning Sacramento into another Detroit as it is totally in a flood plain.

K Hoyt

Florida is not the only State that will suffer, here in Massachusetts we are preparing to walk away and let the banks take the house that has been in the family over 60 years and never flooded. Why should we be forced with higher insurance rates??? The Government is the one who has screwed up, whereas at the end of the fiscal year any funds remaining in the NFIP, gets turned over to the general fund, leaving no reserves.

Peter Gozinia

Hey R.J. Lehmann:

Go f&#k yourself!

Best regards.

Joseph Young

WOW quite the civil conversation going on here. Flood insurance rate mapping focuses on identifying the statistical 1% chance of flooding. Over 30 years anyone in an accurately modeled special flood hazard area would have a 26% chance of being flooded. In contrast your chances of having a fire during that same period is less than 6%. The reason why flood insurance is so expensive is because the only ones required to buy it are those who are most likely to get flooded. Richard's solution is one potential fix.

We are addicted to FEMA's response to disasters where they come in to town after a the event and pay 90% of the communities expenses for fixing roads bridges and other infrastructure damage.

We should be planning on moving people away from floodplains or allowing them to take the full risk of being there rather than subsidizing development in risky areas.

If Atlantic city wants to rebuild its boardwalk why should the federal government be paying for it?

Cindy Kaye

Does anyone know when the final vote will be on this? As a Realtor I have clients who's futures hang in the balance!

doug ockerman

I have a small cottage on a river that has never flooded. it is spring fed and does not have a dam. the equity I have in this property will not sustain this increase in ins. what is the state going to do when I give this back to the banks and the state gets no tax money from it anymore. plus the fact that the flood zone maps have not been updated adds to my frustration.

ed smith

"Moving away from the coast" is not the solution. Consider that Florida, with more 11,000 miles of waterfront, contributes 40 percent of total NFIP premiums collected, yet only accounts for 15 percent of the claims paid. Should all Floridians choose to move away from the coast, it would negatively impact the FEMA balance sheet by virtue of these very disproportionate realities.

Timothy Sims

I'm one of the citizens affected by this mad dash for revenue,, without it being thought through. The concept here is immediate revenue without the thought of lost revenue, due to lost policy's by those in my shoes, Ive owned a home for 25 years with not one claim on my flood policy of which I was not required to have, due to living on a lake in Florida I just felt a peace of mind. Having it, the rate was $329.00 per year. That was when my mortgage company notified me of a change in my flood zone from c to av and a $7500.00 cost annualy. I have 2 option's, default on mortgage, or pay it, due to fact no one would buy my home with this baggage. I wonder who in their right mind would think this is a good idea. GOD help us.TRS

Joe A

The solution can be found in a combined mix of less governemnt waste and spending (can you spell Katrina and thousands of unoccuppied mobile homes)and spreading hte risk as mentioned previously. The third element is again as mentioned previously, the use of common sense. Is there any reaosn anyone should be living below sea level let alone millions of people? Is there any reason we should spend millions through the Army Corp of engineers to build a fiasco like the New Orleans now has in it their levies? Spread the risk, while cutting government waste and prohibting people to live on the edge of the next Katrina.

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