NAMIC: Senate Passes the Buck on Flood Insurance

NAMIC: Senate Passes the Buck on Flood Insurance

Legislation approved by the Senate today to undo reforms to the National Flood Insurance Program fails to address any of the actual problems facing homeowners at risk of flooding, according to the National Association of Mutual Insurance Companies.

“The legislation approved today by the Senate doesn’t make flood insurance cheaper, it just makes the American taxpayer foot the bill for other peoples’ flood insurance,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “It continues to hide the true risk that homeowners in flood-prone areas are facing and removes incentives for homeowners to protect their properties from flooding.”

The legislation would delay many of the provisions of the Biggert-Waters Flood Insurance Reform Act, which sought to provide fiscal stability for the NFIP by allowing it to gradually raise rates to risk-based levels for most subsidized policies and require mitigation for those that have been repeatedly flooded. The law was passed by Congress with overwhelming majorities in both chambers and signed into law by President Obama in 2012.

“Congress passed these reforms because the NFIP had become unsustainable, with a debt of more than $20 billion to the taxpayers that it had no hope of ever repaying,” Grande said. “The reforms signed into law in 2012 will help the NFIP to raise the revenue needed to meet its obligations to flood insurance policyholders across the country. And as rates increase for some homeowners, it will also hopefully encourage them to take whatever action they can to mitigate against flooding and prevent a loss from happening in the first place.”

As the reforms in Biggert-Waters have taken effect, some stories have been reported of premiums rising to levels unaffordable to the average American. However, Grande said that Congress can and should provide a solution targeted to these particular cases rather than abandoning the reforms of Biggert-Waters completely in the name of delivering cheap flood insurance.

“As often happens in reform legislation, some extreme cases will arise as an unintended consequence,” Grande noted. “Congress should absolutely help those facing true hardship, but the legislation approved by the Senate today doesn’t do that. It doesn’t address any of the actual reasons that properties are at such a high risk of flooding, and it won’t help a single homeowner to protect his or her home or belongings from a flood. Instead, it gives elected officials the ability to say they lowered flood insurance premiums during an election year.”

An alternative proposed by Sen. Pat Toomey, R-Pa., would have addressed the main issues causing affordability problems by expanding limits on rate increases to those newly mapped into flood zones and recently purchased homes but was voted down on the Senate floor.

“Senator Toomey’s amendment gave senators the chance to address affordability issues during the amendment process, and they declined,” Grande said. “We at NAMIC hope their counterparts in the House will make a real effort to address the problem of flood risk rather than simply passing the bill to the taxpayers.”

Matt Brady
Director, Federal Public Affairs