GNO Inc. President Michael Hecht urged Congress Tuesday to take action to prevent huge premium hikes in the federal flood insurance program. (Mark Waller, NOLA.com | The Times-Picayune)
By
on November 19, 2013
on November 19, 2013
WASHINGTON - Moving legislation to delay large flood insurance premium increases is no slam-dunk.
That was apparent Tuesday during a flood insurance hearing by the House Subcommittee on Housing and Insurance, with the panel's chairman, Randy Neugebauer, R-Tx., suggesting some reports of large rate increases may be a big "misunderstanding."
He said rates for most people who now have subsidized rates won't be determined until new flood maps are completed -- a process that will take at least until Oct. 2014.
Neugebauer said that he's reluctant to have Congress intervene again on flood insurance rates one year after it passed the Biggert-Waters Act to strengthen the finances of the program, though he acknowledged concern about people being hit with such large increases that they'd have to give up their homes.
"If I have learned anything, it is that the federal government does a terrible job of underwriting and pricing risk," said Neugebauer, mentioning premiums for health care under the Affordable Care Act. "And that has very real consequences for taxpayers who end up footing the bill for the government's failures."
Still, many subcommittee members said they've been hearing from constituents about rate increases of 300, 400, 500 and even 1,000 percent that would make the policies unaffordable.
Rep. Maxine Waters, D-Calif., co-author of the Biggert-Waters Act, said during a recent congressional recess she traveled to Plaquemines Parish to meet with homeowners and heard reports of huge increases in premiums. She said she's hearing the same "horror stories" from homeowners across the United States.
"I feel a responsibility to do everything possible to straighten out the unintended consequences," said Waters, who added that the scope of the increases is beyond all her expectations for the legislation she helped write.
"And deal with it I will."
Waters said she will continue to push for legislation, backed by a growing group of House and Senate members from both political parties, to delay most of the rate increases until after an affordability study is completed and Congress, and FEMA take actions to keep the rates affordable.
FEMA Administrator Craig Fugate told the subcommittee that he is hoping Congress will act because he doesn't have the authority to delay the large increases now drawing opposition from officials in at least 27 states. But he said that he believes the relief from higher rates should be made on the basis of need and ability to pay, and not extended, for example, to second, or vacation homes.
St. Tammany Parish President Pat Brister, who attended but did not speak at the House hearing, said she's pleased many House members are at least conceding that huge unaffordable increases are a problem.
"I feel more confident after this hearing that we'll get something done," said Brister, who contends the threat of sharply higher flood insurance premiums already is curtailing economic growth in her parish,
Michael Hecht, president and CEO of Greater New Orleans Inc., spoke to the subcommittee on behalf of the Coalition for Sustainable Flood Insurance, consisting of 200 business and trade associations and local governments from 27 states.
"We are dealing with a problem of profound unintended consequences," Hecht said. "A three-way confluence of the Biggert-Waters Act, incomplete FEMA maps that artificially inflate risk, and questionable actuarial calculations, has led to premium increases of up to 3,000 percent and more -- including massive rate increases for policyholders who have built as the government told them and have no history of flooding."
Rep. Bill Cassidy, R-Baton Rouge, who sat in for Tuesday's hearing though not a member of the committee, said the hearing "is an important step forward in addressing the affordability of the National Flood Insurance Program."
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