President Obama signs flood insurance bill into law

By Bruce Alpert, NOLA.com | Times-Picayune 

March 21. 2014

WASHINGTON -- President Barack ObamaFriday signed into law hard-fought legislationthat will limit flood insurance premium increases to no more than 18 percent a year.

White House officials called Sen. Mary Landrieu, D-La., shortly after 1 p.m. CT to say the bill is now law.

"We fought the good fight and we won and thousands of middle class families in Louisiana and throughout the nation are going to get immediate relief," Landrieu said. "Most importantly, we reestablished in this arduous legislative process that affordability is important to the long-term stability of the flood insurance program."

The president's signature culminates a nearly two-year effort to combat large premium increase for some of the 5.5 million flood insurance policyholders. The increases resulted from a 2012 law intended to make the program solvent. But some of the increases were dramatic -- double, even 10 times current premiums -- threatening to make the program unaffordable to some middle-class homeowners.

The Homeowner Flood Insurance Affordability Act limits yearly premium increases to an average of 15 percent per year for each of the nine property categories listed by FEMA, and stipulates that no individual policyholder pay an increase of more than 18 percent per year. 

It calls on FEMA to "strive" to reach the goal that most policyholders have a premium of no more than 1 percent of the value of their coverage -- in other words, $2,000 for a $200,000 policy.

The bill also reinstates the flood insurance program's grandfathering provision, meaning homes that complied with previous flood maps would not be hit with large increases when new maps show greater risk of flooding. It also ends a provision that required an immediate hike to actuarial levels when a home changes ownership -- slowing home sales in many communities designated high risk by FEMA flood maps.

It also provides refunds of premiums for people who purchased homes after Biggert-Waters became law in July, 2012, and learned the change in ownership marked a sudden end to subsidized flood insurance premiums -- sometimes resulting in dramatic increases when policy renewals were due.

And it requires the Federal Emergency Management Agency, as it completes new flood maps, to obtain input from local communities and account for non-federal levees and other locally funded flood protection. It also requires FEMA to complete a study on how to keep the program affordable as it moves to make the program more solvent.

The retention of subsidized rates in the House bill is funded by a $25 surcharge for most homeowner policyholders, and a $250 fee for non-residential property or non-primary residence homeowners. Still, the bill retains a provision in Biggert-Waters to eventually make the program self-sufficient by moving toward actuarial rates.

Louisiana lawmakers said the legislation provides important protections for Louisiana residents who faced large increase in premiums under the 2012 Biggert-Waters law. It passed the Senate 72-22 last week after. It passed the House 306-91 on March 4.

Landrieu said in a Congress that has a hard time getting bipartisan support for a "Happy Birthday'' resolution, a unified Louisiana delegation, backed by a national coalition established by Michael Hecht of Greater New Orleans Inc., and the Stop FEMA Now group, founded by New Jersey homeowner George Kasimos, achieved a big legislative victory. 

Said Sen. David Vitter, R-La. "This huge victory saves families in Louisiana and across the country from losing their homes."

Rep. Steve Scalise, R-Jefferson, said the bill's overwhelming margin in both the Senate and House, including support from leading conservatives, reflects that the bill, while providing protection for homeowners, is fiscally responsible and won't add to the deficit. He predicted it would have immediate positive impact on real estate markets -- some of which were stalled by the immediate transition to actuarial rates for homes that change owners.

Rep. Bill Cassidy, R-Baton Rouge, said the bill was a top priority for him and other Louisiana lawmakers, and will bring "long-term, permanent flood insurance relief to families across the nation."

And Rep. Cedric Richmond, D-New Orleans, said: "Homeowners in Louisiana and all across the country have made their voices heard. Rising premium costs have put them under undue strain, and when the President signs this bill into law they will finally see some much needed relief."

But Sen. James Inhofe, R-Okla., said the bill "abandons the much-needed reforms to the National Flood Insurance Program that were instituted in the Biggert-Waters Reform Act of 2012."

"That bill set the NFIP on a course to quickly remove Federal subsidies from the program and make it actuarially sound," Inhofe said.