Senate Panel Supports Delay on Some NFIP Rate Increases
A panel of the Senate Appropriations Committee has voted to effectively stop the Federal Emergency Management Agency from implementing a provision of the 2012 law reauthorizing the National Flood Insurance Program that mandates phased-in rate increases for grandfathered properties.
The provision barring FEMA from implementing Sec. 207 of the 2012 Biggert-Waters Act was passed by the Senate Appropriations Subcommittee on Tuesday and will be considered by the full committee on Thursday.
The subcommittee is chaired by Sen. Mary Landrieu, D-Louisiana, who had pushed a stronger three-year delay. But she said she did not want to “risk losing an opportunity for a one-year” delay. She said a lot of senators from non-coastal states still support the legislation passed last year to make the flood insurance program more financially self-sustainable.
The legislation passed out of the subcommittee Tuesday also includes about $10 million more than the president’s proposed budget for modernizing flood maps to help ensure they fully reflect local investments in flood protection infrastructure.
Landrieu said she will still push for enactment of her “Strengthen, Modernize and Reform the National Flood Insurance Program” (SMART NFIP) Act, which industry officials oppose, and which would substantially weaken the reforms imposed by the 2012 bill.
SMART NFIP, which would at a minimum delay all rate increases imposed by the 2012 law, and would impose a high standard on FEMA for implementing the rate increases at all.
Landrieu’s amendment passed Tuesday would bar the rate increases by preventing FEMA from using federal funds to implement Sec. 207.
But a FEMA official, who declined to be identified by name, said 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.
However, Matthew Lehner, a spokesman for Landrieu, said FEMA officials have the office the amendment would bar implementation of the rate increases, if enacted.
FEMA officials declined to comment.
Landrieu said her amendment would affect those “homes and businesses that were built to code and were subsequently placed into higher risk areas on a flood map,” in announcing that the subcommittee she chairs had passed the provision.
A similar provision was added to the House version of the Homeland Security appropriations legislation through an amendment by Rep. Bill Cassidy, R-La., who is running against Landrieu for her seat in 2014.
Some of the rates date back to before 1969, when Congress first authorized that NFIP rates be based on updated maps that reflected the chances that a property was in a primary flood zone.
But the provision in the appropriations bill would only be a temporary fix.
Her “SMART NFIP Act” would be even more sweeping in rolling back the provisions of the 2012 law.
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, cautioned that “any effort to delay the reforms enacted last year could ultimately weaken the NFIP.”
Grande said the reforms were designed to move the NFIP towards fiscal stability and at the same time to show policyholders the true risk they face from flooding.
But, the “SMART NFIP Act” would delay all flood insurance premium increases authorized in 2012 legislation.
This would include the requirement that flood insurance premiums on second homes and businesses be phased out over four years.
It would also block a mandate to start phasing out subsidies on properties whose rates were grandfathered when the Federal Emergency Management Agency, which runs the program, was ordered starting in 1974 to develop maps showing the risks of flooding in a particular area, and to base rates on those maps.
Under B-W, there is no time limit for phasing in the rate increase for subsidized properties.
Under the 2012 legislation, rates can now go up 20 percent a year, from 10 percent under the old program. Therefore, the Landrieu bill would bar allowing the rates to go up indefinitely until they are actuarially-based.
It would also bar the NFIP from raising rates up to 20 percent a year, effective in 2014, from the current maximum of 10 percent a year.
Those increases would be blocked until six months after FEMA conducts an affordability study on the higher premiums.
The Landrieu bill would also repeal provisions in the 2012 federal flood insurance bill that ended subsidized flood insurance rates when a parcel in a high risk area is sold.
That would make many Louisiana homes unsellable, she said.
Her bill would also strike a provision blocking the rebuilding of community facilities destroyed in a disaster when the location is in a high-risk area.
Landrieu aides said the delay, along with the completed study, would provide Congress with the information it needs to develop a law that helps make the flood insurance program more sustainable without putting insurance out of the price range of homeowners and businesses.