Flood insurance increases delayed in Senate
The floodgates have opened on the legislative debate surrounding flood insurance. On Monday, followed by remarks by Senator Robert Menendez, D-NJ, the Senate voted 86-13 to begin debate to delay the increases mandated by the 2012 law for four years.
Proponents of the Homeowner Flood Insurance Affordability Act say that the price of coverage is too high for many policyholders making their homes unaffordable. Fifty five percent of Americans live within 50 mile of the coast. The National Flood Insurance Program insures more than 5.5 million properties across all 50 states. Rate increases affecting premiums all over the country. Proponents say that while The 2012 Biggert-Waters law was intended to make the flood insurance program fiscally solvent, it forces changes that are far too large and fast causing people to lose their homes.
Menendez acknowledges, "The flood insurance program needs to be put on a more solvent trajectory, (but) we first need to understand the scope of these changes and be sure the mapping process used to set these rates is accurate. We need to understand the impact that these dramatic changes in Biggert-Waters will have on the housing market before it's too late.
It requires FEMA to increase rates dramatically, even before FEMA knows the scope of these changes or how they will impact program participation. That's why our bill would impose a moratorium on the phase-out of subsidies and grandfathers included in Biggert-Waters for most primary residences until FEMA completes the affordability study that was mandated in Biggert-Waters and proposes a regulatory framework to address the issues found in the study."
The White House is concerned that delaying the law will further erode the National Flood Insurance Program, which is already $24 billion in debt reducing FEMA's ability to pay claims by all policyholders in the future.
In a statement, the Office of Management and Budget says, "FEMA is working diligently with the National Academy of Sciences to conduct a study on insurance affordability for economically distressed policyholders. The Administration recognizes that many policyholders may be challenged financially by the new rates and remains committed to working with the Congress to develop approaches that ensure economically distressed policyholders are not unduly burdened while maintaining the financial stability of the NFIP."
According to Sen. Mary Landrieu, D-LA, "The bill had good intentions, (but) it's had very detrimental consequences, and so this bill that we're going to go to debate on, the Menendez-Isakson bill, is really a good-faith attempt to correct some of the problems with the Biggert-Waters and to lead us in a direction to a place where the country can have a public-private partnership for flood insurance that actually works."
With the delay secured, the Senate will consider several amendments culminating with a final vote as early as Wednesday.
Read more at: Congress.Gov.
Flood damaged home as a result of Superstorm Sandy, Far Rockaway, NY image via Shutterstock.