Legislation Seeks to Delay Implementation of Biggert-Waters Provisions
Newly proposed federal legislation would mitigate the effects of the Biggert-Waters Flood Insurance Reform Act (Act), a law passed in 2012. The Act extended the National Flood Insurance Program (NFIP) for five years, but it also made significant reforms. Many of the changes are supposed to make the NFIP more financially stable and ensure that flood insurance rates “more accurately reflect the real risk of flooding.”
The changes to all major components of the program, which include flood insurance, flood hazard mapping, grants, and the management of flood plains, will be phased in over time. The changes will mean premium rate increases for some, but not all, policyholders. (For additional details on the Act, read the previous Legislative Update article.)
Because of concerns related to the Act’s implementation, a bipartisan coalition of legislators has introduced the Homeowner Flood Insurance Affordability Act, which is an attempt to protect affected homeowners from increasing flood insurance premium rate hikes. To that end, the legislation would require the Federal Emergency Management Agency (FEMA) to complete a study to address affordability issues before any flood insurance premiums are raised. The study is required by the Act, but it has not been completed.
More specifically, the legislation would delay the implementation of rate increases on three types of properties until FEMA: (1) completes the affordability study mandated by the Act and proposes a draft affordability framework for Congressional review; and (2) the FEMA administrator certifies that the agency has implemented a flood mapping approach that utilizes sound scientific and engineering methodologies to determine varying levels of flood risk in all areas participating in the NFIP:
- All homes and businesses that are currently “grandfathered.” These are properties that were built to code and later remapped into a higher risk area. Prior to the Act, these policyholders were not penalized for relying on inaccurate FEMA flood maps.
- All property owners that purchased a new policy after July 6, 2012, before they were legally required to purchase insurance.
- All properties sold after July 6, 2012. New homeowners and business owners will continue to receive the same treatment as the previous owner, unless they trigger another provision in the Act, such as severe repetitive loss, non-primary residence, substantial damage, etc.
One of the bill’s sponsors, Sen. Robert Menendez (D-NJ), stated that:
As we continue to recover from the worst natural disaster in our state’s history, a manmade disaster is looming, jeopardizing that recovery. The combination of new flood maps and phase out of premium subsidies for the National Flood Insurance Program threatens to force victims out of their homes and to destroy entire communities. Many homeowners will have to pay premiums they simply cannot afford, forcing them to either sell or abandon their homes. These are hardworking middle class families, who played by the rules, purchased flood insurance responsibly, and are now being priced out of their own home. We must stop this manmade disaster from doing more damage, take a time-out, and assess the impact these premium hikes will have on homeowners and the communities they live in.
Texas city officials with concerns should contact their congressional delegation to voice support for the Homeowner Flood Insurance Affordability Act (H.R. 3370) by Rep. Michael Grimm (R-NY).