Sen. Mary Landrieu, left, and Sen. David Vitter are sponsoring legislation to delay flood insurance increases.
By
October 25, 2013
October 25, 2013
WASHINGTON -- A bipartisan group of senators on Friday unveiled new legislation that would delay most flood insurance premium increases resulting from the 2012 Biggert-Waters law for four years. They expect to introduce the bill next week.
The bill was developed by a geographically diverse coalition of eight senators representing states affected by the law, which was adopted by Congress in 2012 to make the flood insurance program more fiscally sound. Supporters of the delaying legislation want to stop the insurance rate increases, which in some cases are 100 percent or 200 percent -- or even 1,000 percent.
About 20 percent of the nation's 5 million flood insurance policyholders are likely to see rate increases under Biggert-Waters, according to FEMA, which administers the program. Louisiana has 484,000 policyholders in the flood insurance program.
The lead sponsors of the new Senate bill are Sen. Robert Menendez, D-N.J. whose state's residents are reporting large flood insurance premium increases after last year's Super Storm Sandy, and Sen. Johnny Isakson, R-Ga. Co-sponsors include Sens.Mary Landrieu, D-La., and David Vitter, R-La.
Specifically, the bill would delay the rate increases until two years after FEMA completes an affordability study. The affordability study isn't expected for another two years -- so the impact of this provision would be to put off many of the premium increases resulting from the 2012 law for four years, if not longer.
Among the "affordability" measures authorized by the bill are targeted assistance to individual policy holders and consideration of how large premium increases might affect participation in the flood insurance program. Sponsors of the delaying legislation say the premium increases won't make the program more fiscally sound if large numbers of homeowners can't afford them and drop their coverage.
The bill also would grant relief to property owners who bought homes after the Biggert-Waters legislation took effect in 2012. Under the terms of that law, those people found their properties redesignated for market-rate premiums -- sometimes leading to substantially higher premiums.
In addition, the Senate bill sets up a Flood Insurance Rate Map ombudsman to answer questions from policyholders about the mapping process. Among other things, the ombudsman would be responsible for educating policyholders about their individual flood risks and how to mitigate them, assisting property owners through the flood map appeals process, and improving outreach and coordination with local officials and community leaders.
Passage is far from guaranteed. Without a waiver, the sponsors must come up with an offset to cover the costs of delaying premium increases to the federal treasury, as calculated by the Congressional Budget Office. And there will be some lawmakers, backed by the insurance industry, who will likely oppose any effort to move away from establishing actuarial rates for the flood insurance program, $17 billion in the hole, largely because of payouts after Hurricane Katrina.
In a letter to Senate colleagues, the eight sponsors and co-sponsors write that the Biggert-Waters law is likely, when fully implemented, to increase the premiums of 1 million of the 5 million flood insurance policyholders.
"For some Americans, these premium rate hikes will force them out of their homes and could even erode entire neighborhoods or communities," the eight senators wrote in a "Dear Colleague" letter.
"In addition, recent studies call into question the soundness of the engineering practices FEMA uses to determine levels of flood risk, on which premiums will be based," the senators wrote. "While we are unlikely be able to perfectly assess potential risk, we should be confident in FEMA's capabilities before we implement policies that could devalue large swaths of private property."
Along with the two lead sponsors and Landrieu and Vitter, the co-sponsors are Sens. Jeff Merkley, D-Ore.; Thad Cochran, R-Miss.; Heidi Heidkamp, D-N.D.; and John Hoeven, R-N.D.
They hope to pick up more co-sponsors by the time the bill is introduced next week.
FEMA has said that for properties in high-risk flood areas, it expect annual rates of $533 a year for properties that are 4 feet above the base flood elevation; $1,815 for properties that are at base flood elevation; and $10,723 for properties that are 4 feet below the base flood elevation.
The Biggert-Waters bill was incorporated into an omnibus bill approved overwhelmingly by both the House and Senate in July, 2012. Every Louisiana member voted for the legislation.
Members who supported the bill said they were surprised by the large increases resulting from the legislation, suggesting that some of the blame rests with an unreasonable remapping process by the Federal Emergency Management Agency.
During the Senate debate, Landrieu warned of major problems with the bill, including unsustainable increases in insurance premiums. She urged unsuccessfully that it be separated from the omnibus bill. In the end, Landrieu voted for the bill because, as she explained at the time, it was part of a bill that included the Louisiana delegation's top 2012 priority -- the Restore Act, which provides 80 percent of Clean Water Act fines from the 2010 BP oil spill to the five Gulf Coast states, a provision potentially worth billions of dollars to Louisiana.
Parallel efforts are underway in the House to delay some of the premium increases under the Biggert-Waters law. Among those championing the legislative efforts are members of the Louisiana delegation, led by Reps. Cedric Richmond, D-New Orleans; Steve Scalise, R-Jefferson; and Bill Cassidy, R-Baton Rouge. Also part of the effort is Rep. Maxine Waters, D-Calif., the co-author of Biggert Waters who said she never intended such big premium increases for homeowners.
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