The National Association of Mutual Insurance Companies expressed continued disappointment today as the Senate voted to approve House legislation to undo much-needed reforms to the National Flood Insurance Program.
“Today’s vote continues a move down the wrong path by Congress on flood insurance reform,” said Jimi Grande, senior vice president of federal and political affairs for NAMIC. “This bill approaches the problems encountered during the implementation of Biggert-Waters in exactly the wrong way. It forces the vast majority of flood insurance policyholders to pay a little more so that those with subsidized rates can continue to pay less than what they should, whether they need assistance or not, and it wipes out important reforms that would ensure that the NFIP will be able to pay claims from future storms without a taxpayer-funded bailout.”
The Grimm-Waters Act was passed by the House earlier this month and would undo many of the reforms enacted under the Biggert-Waters Act, which passed with overwhelming bipartisan support less than two years ago. Under Biggert-Waters, flood insurance rates that had been artificially suppressed would have gradually been allowed to rise to levels that matched the risk of flood facing a property.
“It’s important for homeowners to know the risk of flooding they face, especially for those cases where the risk is extremely high,” Grande said. “Simply forcing FEMA to charge less than it should may allow members of Congress to say they kept flood insurance premiums down, but it also removes any incentive for homeowners to take steps to prevent flooding, and more importantly keeps those homes at risk.”
According to FEMA, which oversees the NFIP, only 20 percent of its 5.5 million policies were paying rates below risk-based levels. However as the reforms were implemented, several cases arose in which premiums for flood coverage were projected to rise to unreasonable levels.
“Congress could have, and should have, taken the time to address the actual problems that arose from Biggert-Waters implementation with means-tested direct assistance or slower rate increases,” Grande said. “Instead the Senate today - like the House before them - chose to leave policyholders reliant on an unsustainable government program that will almost certainly need more money from the taxpayers after the next big storm.”
Director, Federal Public Affairs