Hearing Held on National Flood Insurance Program Reform
The Housing and Insurance Subcommittee of the House Committee on Financial Services recently held a hearing on the implementation of the Biggert-Waters Flood Insurance Reform Act of 2012. The hearing’s purpose was to assess the ongoing implementation of the law.
Congress enacted the Biggert-Waters legislation to extend the National Flood Insurance Program (NFIP) for five years while enacting reforms to help address the program’s $24 billion debt load.
New York City recently released an independently commissioned study finding numerous gaps in the NFIP that will significantly increase flood insurance costs for the city. The study is part of New York City’s lobbying efforts for a delay of Biggert-Waters until FEMA’s affordability study is complete. FEMA, as part of the Biggert-Waters legislation, had been required to complete its own affordability study by April 2013, but that study had been delayed. Under new FEMA flood maps that will be adopted shortly, thousands of new properties will now be considered in the floodplain, increasing owners’ insurance premiums from an average of $430 to $5,000 to $10,000 per year.
The Biggert-Waters reforms are designed to phase out subsidies and grandfathering that allowed owners to insure their properties at rates corresponding to previous flood maps. It will phase in revised pricing on the nearly 20 percent of all policyholders who pay a subsidized rate. Absent the NFIP, many site owners within FEMA’s flood map borders would probably not have access to flood insurance, since the private market hasn’t occupied this market in a meaningful way.