WASHINGTON (Dec. 2, 2010) Delaying the implementation of vital reforms to the National Flood Insurance Program could do more harm than good for consumers, the National Association of Mutual Insurance Companies said today.
“Rather than pursuing a piecemeal approach, we at NAMIC have called on Congress to address the significant structural flaws in the National Flood Insurance Program,” said Jimi Grande, Senior Vice President of Federal and Political Affairs for NAMIC, “one which is its reliance on outdated floodplain maps.”
Grande spoke in response to legislation introduced by Sens. Richard Durbin, D-IL., and Charles Schumer, D-N.Y., that would delay the implementation of the Federal Emergency Management Agency’s (FEMA) mandatory flood insurance purchase requirement for five years in communities with newly designated flood maps across the country.
“We would urge members of Congress to carefully consider the potential costs of this legislation,” Grande said. “It is understandable that homeowners are concerned about the costs of flood insurance. Delaying the implementation of the mandatory purchase requirement may save them some money over the next few years, but without flood coverage their costs could end up being much higher. ”
The proposed legislation, known as the Flood Insurance Affordability and Risk Notification Act, would establish a five year moratorium on requiring homeowners found by new maps to be in a flood zone to purchase coverage. After that time, the bill would set another five-year period in which subsidized coverage rates would be gradually phased out. The bill also requires FEMA to notify homeowners of changes in their homes status under the new maps, and inform them about the risks and mitigation possibilities available to them. Similar language was included as part of a broader reform package, HR 5114, passed by the House, and the two senators cited its dim prospects for passage in the upper chamber as reason for introducing their bill.
“The benefits of the broader reforms in HR 5114 made giving homeowners time to adapt more reasonable,” Grande said. “On its own, however, this newly introduced legislation is a short sighted political reaction that ignores important policy and practical implications. It would do nothing to help protect those homeowners from flood-related losses, while adding to the burden on the NFIP and the taxpayers.”
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