House Measure Barring Federal Funds in Flood Insurance Enforcement Draws Fire
House members squirming in an effort to deflect consumer outrage from flood insurance premium rate increases mandated by the 2012 bill are touting a provision in appropriations legislation passed this week that apparently won’t accomplish what they want it to do.
The amendment, included in legislation funding the Homeland Security Department for 2014, would bar use of federal funds to implement a section of the 2012 law that mandates phased-in rate increases for grandfathered properties.
The amendment passed 281-146, and the appropriations bill was later approved by the full House and sent to the Senate.
An industry official who has been following the issue for decades said, “Look at the vote tally on the Cassidy amendment.
“As I recall, Biggert-Waters got 407 votes when it passed the House. So- in effect -- nearly three-quarters of the members who voted for it less than a year ago are now ready to abandon the premium increases that they were touting as "urgently needed" at the time,” he said.
And, a top agency official said he has no idea how the provision would bar the agency from implementing the rate increases because FEMA uses flood insurance premiums—not federally appropriated funds--to administer the National Flood Insurance Program.
The official, who declined to be identified by name, said that Congress has appropriated taxpayer funds for NFIP purposes only once, $1 billion appropriated in the 2003 legislation extending the program for five years. The funds were used to finance remapping for areas feared to be at greater risk for flooding.
The amendment to the Homeland Security appropriations bill Wednesday was introduced by Rep. Bill Cassidy (R-La.), Rep. Cedric Richmond (D-La.), Rep. Michael Grimm (R-N.Y) and Rep. Steven Palazzo (R-Miss.)
The statement issued afterward by Cassidy said that, “This amendment will block those rate increases and give us time to carefully modify the Biggert-Waters Act. It is important to have a self-sustaining flood insurance program.”
However, Cassidy added, “it must account for the flood protections throughout south Louisiana that make massive flood insurance rates unnecessary. I will lead in making sure that occurs.”
The House amendment would prohibit officials of the Federal Emergency Management Agency from using appropriated funds to implement Sec. 207 of the Biggert-Waters Flood Insurance Reform Act of 2012.
Specifically, they said the amendment would delay for one year the expiration of grandfathered National Flood Insurance premium rate hikes for existing policy holders.
At the same time, Sen. David Vitter (R-La.) proposed an amendment to legislation creating a National Association of Registered Agents & Brokers being debated by the Senate Banking Committee aimed at stopping the rate increases.
Vitter immediately withdrew it after winning a commitment to hold a hearing on flood rate increases by the committee early in July from the committee chairman and ranking minority member.
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, said, “Delaying the reforms enacted under Biggert-Waters will not solve the problems facing either homeowners or the NFIP.”
He said that the amendment is “a step back” to a program that was financially unsustainable due to hidden subsidies that also created a false sense of security for property owners who, in reality, faced severe risk from flooding.
“A fiscally unstable NFIP helps nobody, and we hope Congress will resist efforts to further delay the phasing in of actuarially sound rates,” Grande said.
At the same time, Mike Cheney, Mississippi insurance commissioner and chairman of the Property and Casualty Committee of the National Association of Insurance Commissioners, said, “I believe a reduction in the proposed rate increase and a longer phase in for actuarial soundness of the NFIP is in order.”
Late Tuesday, Sen. Mary Landrieu, D-La., proposed an amendment to the bill that would delay implementation of Sec. 207 of law for three years.
It would also require the Federal Emergency Management Agency to provide to Congress a detailed study of how the rate increases would impact the affordability of living in flood zones before any rate increases were applied.
Sec. 207 of the law directs FEMA to increase rates over a five year period on any community that receives a revised or new flood maps.
It would impact grandfathered rates, some grandfathered dating back to 1969, when basing rates based on maps detailing the likelihood of a flood impacting a community were first imposed, on second homes, businesses and areas deemed most likely to be impacted by a storm.