FEMA administrator says just because a home never flooded doesn't mean it isn't a flood risk

FEMA administrator Craig Fugate says Congress must find ways to make the flood insurance program sustainable. (AP archive)

By Bruce Alpert, NOLA.com | Times-Picayune 

July 23, 2014

WASHINGTON -- Federal Emergency Management Agency (FEMA) AdministratorCraig Fugate told senators Wednesday that Congress still must address the long-term financial stability of the National Flood Insurance Program.

Congress thought it dealt with the issue with 2012 legislation, called Biggert-Waters, but some of the rate increases were so draconian that it forced Congress to pass a bill in March rescinding key portions of that law.

"Thank you for giving me the tools for affordability," Fugate told members at a Senate Homeland Security Appropriations Subcommittee hearing Wednesday. He was alluding to the legislation that repealed provisions of Biggert-Waters.

"But we also have to look at sustainability," Fugate said. Last year, Congress increased FEMA's borrowing authority after Super Storm Sandy to $30 billion.

Under questioning by senators, Fugate acknowledged that some flood insurance risk maps are inaccurate, but not all. Fugate said just because a homeowner says "I've lived here all my life, and it never flooded," doesn't necessary mean that listing the property as a flood risk is a mistake.

Fugate said Congress needs to discourage development in the most flood-prone areas, and that people in communities, where flood insurance isn't required, ought to be told coverage could be a wise investment. Many flooded homes in recent disasters weren't in areas that required flood insurance, he said.

For less than $500, Fugate said, many of these homeowners can get $250,000 worth of protection from flooding.

Sen. Mary Landrieu, D-La, who chaired Wednesday's hearing, said she wants to work with other members of Congress to assure that FEMA has the resources it needs to develop accurate flood risk maps.

"Our work is far from over to build a better flood insurance program that we can live with, grow with and prosper with," Landrieu said. "This cannot -- and will not -- happen until we have accurate and reliable flood maps. FEMA's flood maps are the foundation of our local, state and national approach to floodplain management, yet only 52 percent of our nation's flood maps are certified as accurate and up-to-date under the current program.  That is unacceptable."

Landrieu recently added $100 million for development of flood maps to a Homeland Security spending bill approved by the Senate Appropriations Committee.

Landrieu said it isn't always practical to restrict development in flood risk areas, citing the need for people in Louisiana to live near the coast for their energy and fishing jobs.

She said one area designated a V Zone -- indicating significant risk -- is in Cameron Parish, where two liquefied natural gas (LNG) export facilities are planned. That designation won't permit construction of even a gas station or restaurant, Landrieu said, although such facilities are needed for the jobs being produced by the projects.

"A one size fits all approach for flood insurance isn't going to work," Landrieu said.

In his testimony, Fugate said he expects Write Your Own Insurance carriers, who help administer the national flood insurance program, to begin mailing out $100 million in refund checks in October for increased premiums, cancelled by Congress, for properties that changed owners after passage of Biggert-Waters.

The refund process should be completed by December, he said. FEMA expects about 13 percent of policyholders to get refunds.

The Biggert-Waters provision ending subsidies for new homeowners, or people whose coverage lapsed, was repealed by the Homeowner Flood Insurance Affordability Act, signed into law by President Barack Obama in March.

Part of the cost of eliminating some of the premium increases under Biggert-Waters is recouped under the March law from a $25 fee on all flood insurance policies for primary residences and a $250 surcharge for all other polices. Fugate said he wanted to get the refunds out before implementing the surcharges, which he now expects to begin being charged toward the end of 2014.

Under the 2014 legislation, increases for most subsidized properties can be no less than 5 percent per year and no more than 18 percent annually for an individual policyholder. Rates cannot be increased by more than 15 percent on average for policyholders in a single risk designation.