Schumer: Senate passage of Flood Insurance bill avoids catastrophic premium increases

Sen. Mary Landrieu, pictured here at a news conference, praised Senate passage of bill averting large premium increases in flood insurance rates. (The Associated Press)

By Bruce Alpert, NOLA.com | Times-Picayune 

March 13, 2014

WASHINGTON -- After a day full of frantic negotiations, the Senate Thursday gave final congressional approval to legislation that would limit most flood insurance premium increases resulting from a 2012 law to 18 percent a year.

The vote was 72-22.

"We really passed it in record time -- given the pace around here, so I'm very proud," said Sen. Mary Landrieu D-La.

The bill now goes to President Barack Obama for his expected signature.

Sen. Charles Schumer, D-N.Y., said the bill averts catastrophic increases in flood insurance premiums.

"To be a homeowner is to have their piece of the rock,"  Schumer said.  "If you are a middle-class person, it is ail all you own. to have that taken way from you by an irrational Washington force called Biggert-Waters made no sense. Yet when people's flood insurance bills went up from $500 to $4,000, when they were told if they sold their house it might go up to $10,000, their piece of the rock, there home was in true jeopardy."

The Homeowner Flood Insurance Affordability Act legislation incorporates provisions in the bill passed by the Senate on Jan. 30. But it takes a different approach in terms of cancelling, rather than simply delaying, some provisions of the 2012 Biggert-Waters law that are leading to large increases in some flood insurance premiums.

The legislation, passed 306-91 last week by the House, 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 and after Biggert-Waters became law in July, 2012, and found that the change in ownership marked a sudden end to subsidized flood insurance premiums -- sometimes resulting in dramatic increases when policy renewals were due. Lee, of course, wants to limit the refunds to owners of primary residences.

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.

There were frantic discussions on the Senate floor most of the afternoon -- with Sen.  Landrie  seen talking with Sen. Johnny Isakson, R-Ga., the bill's lead Republican sponsor; Majority Leader Harry Reid, D-Nev., and Sen. Mike Lee, R-Utah, who had previously had a hold on the bill. Landrieu also could be seen consulting with Sens.  Schumer, D-N.Y., and Robert Menendez, D-N.J. She also spoke briefly with Lee.

Just before a 3 p.m. CT vote on a bipartisan child-care bill, Reid stood up and praised Sen. Lee for his role in helping eliminate obstacles to the legislation. No one in the Senate Press gallery could remember a time when Reid has praised Lee, one of the Senate's most conservative members. For some that was a sign that Lee had signed off on the flood insurance bill, which was due to be taken up following the child-care vote.

Sure enough, Lee did after getting an agreement for a vote on his legislation that would bar refunds to homeowners who bought second/and/or vacation homes after Biggert-Waters took effect in July 2012, triggering increases to actuarial rates. His bill was passed by voice vote, but still needs approval in the House before it can be sent to the president.
For now, his bill has no impact on the bill passed by the House and Senate.

Lee complained that the flood insurance bill averting most large Biggert-Waters premium increases was rushed to the floor without adequate review.