FEMA Rebuffs Flood Insurance Rate Hike Foes
Statements by congressmen from Louisiana and Mississippi that increases in flood insurance premiums now being implemented will be delayed through a provision in a recent appropriations bill are inaccurate, according to industry lobbyists and officials at the Federal Emergency Management Agency.
Rep. Steven Palazzo (R-Miss.) and Rep. Bill Cassidy (R-La.) said a bulletin written by FEMA and sent out Thursday to Write-Your-Own companies indicated that the rate hikes being imposed by FEMA would be delayed, perhaps until June 2016.
However, the rate hikes discussed in the statements do not relate to a provision of the 2012 Biggert-Waters Act, Sec. 205, mandating a phase-in of actuarial rates on most properties insured by FEMA – and are the rate hikes that are regarded as the most controversial.
The appropriations bill and the FEMA bulletin relate to Sec. 207 of B-W, a provision not scheduled to go into effect for a while.
A lobbyist in Washington for the WYO companies confirmed that the Sec. 205 provisions are not affected by the appropriations bill. And, the FEMA bulletin specifically says it does not affect the Sec. 205 provisions, which call for the most controversial and far-reaching rate hikes mandated by the 2012 law. It says the Sec. 205 provisions were effective as of October 2013.
A FEMA spokesman confirmed Friday that the Sec. 205 provisions implemented starting last October “were not rolled back” by the provision in the appropriations bill.
Earlier Friday, Sen. Mary Landrieu (D-La.), renewed her request that the House consider S. 1926, The Homeowner Flood Insurance Affordability Act, which was passed by the Senate last week.
Republicans in the House have since blocked requests that the bill be placed on that floor for a vote. It has 182 co-sponsors.
“We would remind [House Speaker John] Boehner and other members of Congress that in places like Louisiana, the people who will be affected are not just the owners of second homes, but those who drive the energy and seafood and navigation industries. Boehner should stand aside and let the members of Congress speak for their constituents,” Landrieu said.
An analysis of the law said it has four main provisions:
n The FEMA administrator has two years to complete an affordability study and send it to Congress.
n The FEMA administrator has 18 months after the affordability study goes to Congress to send a new affordability framework to Congress.
n Six months after the framework is due to Congress, the prohibition on premium increases is lifted.
The outside analysis estimates that that would take 48 months to complete, which would coincide with the sunset of the reauthorization of the NFIP, mandated by the 2012 law, of September 2017.
According to Landrieu, Cassidy supports the Senate bill. A spokesman for Cassidy did not respond to requests for comment.
The key provision not impacted by the appropriations bill phases-out rate subsidies over four years for second homes, businesses, severe repetitive loss, or substantially improved/damaged) built before the effective date of the first Flood Insurance Rate Map for a community. The rate for these pre-FIRM properties would increase by 25% per year until premiums reach the full (actuarial) cost, according to the law enacted in 2012.
Sec. 205 also bars extension of subsidies to properties purchased after the law’s enactment, not previously insured by the National Flood Insurance Program or with a lapsed flood insurance policy.
Sec. 205 also increases from 10% to 20% percent the annual permissible rate hikes except for those subject to the 25% subsidy phase-out.
The statements include one by Cassidy that rate hikes “for up to 400,000 Louisianans” could be suspended” as long as until June 2016.
Next Page: Appropriations Legislation
The rate suspensions stem from a provision in the appropriations legislation for the current year sponsored by Cassidy that was recently enacted by Congress dealing with Sec. 207 of the 2012 law.
That provision was first contained in a Homeland Security appropriations amended at the request of Cassidy last June on the House floor and passed by the House.
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 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.
The bulletin sent out by FEMA to WYO companies on Wednesday deals with suspension of rate hikes dealt with Sec. 207, as per the appropriations bill recently passed by Congress. FEMA has not yet sent to WYO written instructions as to how to change their software related to Sec. 207 provisions.
The provision in the appropriations bill was first included in legislation funding the Homeland Security Department for 2014 passed by the House last June. It would bar use of federal funds to implement a section of the 2012 law that mandates phased-in rate increases for grandfathered properties.
FEMA has told members of Congress that it would “comply with the spirit of the appropriations bill” and delay implementation of Sec. 207 of the law even though administration of NFIP rate hikes are paid for through premiums and not through FEMA.