Flood Insurance Program

The National Flood Insurance Program

The National Flood Insurance Program aims to reduce the impact of flooding on private and public structures. It does so by providing affordable insurance to property owners and by encouraging communities to adopt and enforce floodplain management regulations. These efforts help mitigate the effects of flooding on new and improved structures. Overall, the program reduces the socio-economic impact of disasters by promoting the purchase and retention of general risk insurance, but also of flood insurance, specifically.
Read more » click here

Previously reported – January 2018
National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On December 22, 2017, the President signed legislation passed by both houses of Congress that extends the NFIP’s authorization for four more weeks. It previously had been set to expire at midnight on December 22, 2017. Congress must now reauthorize the NFIP by no later than January 19, 2018.

FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Property owners who are required to have flood insurance would be unable to complete new mortgage transactions. The National Association of Realtors estimates that a lapse might result in the delay or cancellation of approximately 40,000 home sale closings per month nationwide.
Read more » click here

Previously reported – February 2018
National Flood Insurance Program lapses on government shutdown
The National Flood Insurance Program has officially lapsed after the failure to reach a deal in Congress to prevent the federal government from shutting down. In December, the NFIP was temporarily extended as part of a continuing resolution to keep the U.S. government open until Jan. 19, but legislative talks to pass a new continuing resolution to fund the federal government, which would have included an NFIP extension, failed over the weekend. The Washington-based National Association of Professional Insurance Agents said it is “extremely disappointed with the lapse, as the NFIP is a program that is integral to policyholders” and called on Congress to extend the NFIP. “Many consumers engaged in real estate transactions may experience disruptions because of this lapse with some home sales put on indefinite hold,” the organization said in a statement on Saturday. “If flooding events occur during this lapse, some claims will not be processed.” The NFIP was extended 17 times between 2008 and 2012 and lapsed four times. In most cases when the NFIP lapsed, Congress reauthorized the NFIP retroactively, but borrowers were unable to obtain flood insurance to close, renew or increase loans secured by property in a Special Flood Hazard Area until the NFIP was reauthorized, according to a report issued earlier this month by the Congressional Research Service.
Read more » click here

National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On February 9, 2018, the President signed legislation passed by both houses of Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to March 23, 2018. Congress must now reauthorize the NFIP by no later than 11:59 pm on March 23, 2018.

 FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.

As affected communities recover from the devastating impacts of the 2017 hurricanes, a timely, multi-year reauthorization is critical for insured survivors and businesses. Policyholders need confidence not only that FEMA can pay flood insurance claims, but also that the NFIP will be able to sell and renew policies to help them protect against future flooding. Flood insurance – whether purchased from the NFIP or through private carriers – is the best way for Americans to financially protect themselves from losses caused by floods.
Read more » click here

Previously reported – April 2018
National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On March 23, 2018, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to July 31, 2018. Congress must now reauthorize the NFIP by no later than 11:59 pm on July 31, 2018.

FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program while transitioning it to a sounder financial framework. The level of damage from the 2017 hurricanes makes it abundantly clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP.
Read more » click here

Previously reported – June 2018
Flood insurance program could lapse in midst of hurricane season.
What home buyers need to know

  • The federal flood insurance program already has been reauthorized six times since September 2017.
  • When the program lapsed for a month in 2010, an estimated 1,400 home-sales closings were canceled or delayed each day.
  • In some high-risk areas, the only option for coverage is through the government plan.
    Read more » click here

Hurricane Season Has Begun. Do You Need Flood Insurance?
The Atlantic hurricane season is here, and with it the threat of storm-related flooding. So, homeowners may want to buy flood insurance, if they don’t already have coverage. Hurricane season runs from June through November. The National Oceanic and Atmospheric Administration has forecast a “near- or above-normal” hurricane season this year, with one to four “major” hurricanes expected. Standard homeowner policies typically don’t cover damage from floodwaters resulting from rising tides, flash floods or overflowing streams. To get flood coverage, you’ll need to buy a separate flood policy. Most flood insurance is sold through the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency and covers about five million policyholders. A few private companies also sell coverage.
Read more » click here

Previously reported – July 2018
Long-term NFIP reauthorization is essential
The National Flood Insurance Program (NFIP)’s five-year authorization originally expired on September 30, 2017. Congress had not agreed to reforms in time for a reauthorization bill to be signed into law by its expiration date, so it was included in a short-term extension of federal government spending, an ominous sign for an already-troubled program. The program was then subjected to four additional short-term extensions between December and March. In March, during the debate over the omnibus appropriations package to fund the government for the rest of fiscal year 2018 (FY18), Congress decided to separate the NFIP from the appropriations process and extend it alone until July 31, 2018, while the rest of the government appropriations were made to last through the end of FY18.
Read more » click here

Previously reported – August 2018
Your flood insurance premium is going up again, and that’s only the beginning
The bottom line: your flood insurance premium is going up again — and under a policy change the Federal Emergency Management Agency is considering, it could skyrocket even more in coming years.
Read more » click here

National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On July 31, 2018, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to November 30, 2018. Congress must now reauthorize the NFIP by no later than 11:59 pm on November 30, 2018.

 FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. Should the NFIP’s authorization lapse, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance. The level of damage from the 2017 hurricanes makes it abundantly clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP.
Read more » click here

Congress passes flood insurance extension, again punting on reforms
The Senate voted to approve yet another short-term extension of the federal flood insurance program — scrambling to move the stopgap measure just hours ahead of this year’s hurricane season. The 86-to-12 vote preserves access to flood insurance for U.S. homeowners, but it again punts reforms to a program that covers more than 5 million households and collects more than $3 billion in premiums yearly. The bill [which was slated to sunset Aug. 1], extends the authorization for the program and its ability to borrow funds through Nov. 30. Lawmakers have been unable to move forward on changes to the program nearly a year after a string of hurricanes — Harvey, Irma and Maria — highlighted the fiscal stress on the program. Claims in 2017 exceeded $8.7 billion, with more claims from last year’s storms expected to be filed in 2018. The National Flood Insurance Program has more than $20 billion in public debt on its books; an additional $16 billion was canceled last year to avoid a $30 billion ceiling on the program’s borrowing. The extension approved Tuesday is the seventh stopgap Congress has passed since the previous long-term authorization lapsed last year.
Read more » click here

Congress just dodged hard decisions about flood insurance again
A federal flood insurance program that’s the only option for many homeowners in areas threatened by water damage was extended Tuesday with none of the reforms many observers call necessary.
Read more » click here

Previously reported – October 2018
With the NFIP underwater, expand private sector’s role
With each passing year of devastating storms and as Hurricane Michael leaves a path of destruction, the financial woes of the National Flood Insurance Program (NFIP) deepen. But despite promising alternatives, until recently, U.S. policymakers have failed to act. However, Rep. Ed Royce’s (R-Calif.) recently introduced bill – The “Government Risk and Taxpayer Exposure Reduction Act of 2018” (GRATER Act or HR 5381) – provides a fresh approach that seeks to transfer federal risk to private capital and reinsurance markets. This legislation represents an important step in improving U.S. flood policy that will benefit both consumers and taxpayers.
Read more » click here

Previously reported – November 2018
Key Insurance Pool Needs More Than A Life Preserver
Congress should permanently fix the broken National Flood Insurance Program

Fifty years ago, Congress created the National Flood Insurance Program in the aftermath of Hurricane Betsy, a monster storm that killed 76 people and flooded more than 164,000 homes in New Orleans. Since then, the program has provided flood insurance to homeowners and businesses where a private market did not exist.

The program is broken, however. It’s in debt, and there doesn’t seem to be any help on the way. Congress needs to make a long-term fix. Doing so will not only protect covered properties in flood-prone areas but will help stabilize a market for mortgage originators and others in the real estate industry.

Key Points
Reforms needed for National Flood Insurance Program        

* Make repetitive loss properties a priority.
* Require mitigation on every flooded property.
* Open up flood insurance to private insurers.
* FEMA should update flood maps quickly.
* Gradually right-size rates in flood-prone areas.
*  Run the National Flood Insurance Program as a business.

The goal of the National Flood Insurance Program (NFIP) is to reduce rising emergency disaster-relief payouts, map the flood risk of the entire country and cut down the risk of floods by working with communities on proactive flood-plain management.

Until 2005, the NFIP was largely self-sustaining, but Hurricane Katrina and a series of other hurricanes and storms have left the program nearly $20.5 billion in debt, and that’s before Hurricane Florence hit the Carolinas.

Last fall, Congress forgave $16 billion in NFIP debt. NFIP’s fiscal lifeline has been extended by its overseers more than 75 times during its existence, including 41 times in the past 20 years. It’s due up for another congressional reauthorization later this year, on Nov. 30.

The program needs a long-term reauthorization to protect the vulnerable, improve the program’s financial soundness and promote private-market competition in the flood insurance market. Following are some common-sense reforms that Congress should consider.
Read more » click here

Fixing the National Flood Insurance Program
More than 5 million homeowners and businesses rely on the federally-run National Flood Insurance Program (NFIP) for protection from flooding, but with each passing year, the program’s design flaws and mismanagement are nudging it closer to insolvency.

Despite repeated bailouts by Congress, the NFIP continues to lose an estimated $1.4 billion each year. The program’s debt to the U.S. Treasury now exceeds $20 billion, which no one expects it to ever pay back.

But the NFIP’s problems are largely self-inflicted.

The program’s fundamental flaw is that the premiums homeowners pay rarely reflect covered risk. Underpricing policies encourages over-development in areas vulnerable to flooding, while over-pricing deters property owners from purchasing coverage at all. In fact, recent estimates suggest that between 60 and 99 percent of Americans affected by recent disasters did not have flood insurance.

The NFIP recently announced that it plans to upgrade its rating methodology to more closely align premiums with risk, but it remains to be seen whether these measures will go far enough to stabilize its finances.

One major handicap to properly assessing the risk of flood damage is that many of the flood maps the NFIP uses to set premiums and allocate resources are decades out of date. Some communities rely on maps created in the 1970s, leaving policymakers and residents without the information needed to make informed decisions about their flooding risk.

But it’s not just the age of the NFIP’s maps; even newer maps are poor predictors of flood risk because they don’t take into account relevant factors like rapid rain accumulation, building codes, or expected population growth.

A recent Inspector General report found that only 42 percent of the NFIP’s maps “adequately identified the level of flood risk.” The report concluded, “Without accurate floodplain identification and mapping processes, management, and oversight, FEMA cannot provide members of the public with a reliable rendering of their true flood vulnerability or ensure that NFIP rates reflect the real risk of flooding.”

On top of inadequate mapping, the NFIP does not do enough to reduce flood losses and help communities become more resilient to flooding. Preparing for disasters is crucial – studies have shown that for every $1 invested in mitigation, society saves $6 in rebuilding costs.

Buildings that are damaged and rebuilt over and over again without adequate mitigation measures are a significant drain on the NFIP’s finances. A $70,000 home in Mississippi, for instance, filed 34 claims with the NFIP from 1978 to 2010 worth $663,000 – more than 9 times the value of the house. A $153,000 house in Alabama has received $2.3 million in claims (15 times its value). Years back, an investigation by USA Today found that owners of 19,600 homes and commercial buildings have collected insurance payments from the NFIP that exceed the value of their property.

Overall, properties like these, which represent about 1-2 percent of the NFIP’s total policies, have been responsible for 30 percent of claims since the program’s inception. The NFIP should end this wasteful practice.

Aligning premiums with risk, improving mapping procedures, and creating stronger incentives to make homes and businesses stronger and more resilient to floods would go a long way toward setting the NFIP of firm financial footing.

In addition, Congress should consider expanding the private sector’s role in flood protection, which the NFIP itself has acknowledged could be a fruitful path. Private market participation would give consumers a broader selection of coverage options, often at cheaper rates than what the NFIP offers, while reducing taxpayers’ exposure to flood losses. To this end, Representative Royce’s GRATER Act is a positive step in getting the private sector to assume these market risks.

Consumers and taxpayers deserve better. Congress shouldn’t wait to enact meaningful reform to a program millions of families count on when disaster strikes.
Read more » click here

Realtors: Flood Insurance Program Needs Reau­tho­riza­tion
Millions of small business and homeowners currently depend on the National Flood Insurance Program (NFIP) to protect their property against flooding, the most costly and common natural disaster in the United States. To continue providing flood insurance after Nov. 30, Congress must reauthorize the National Flood Insurance Program before that date. Without the NFIP, more property owners could become uninsured. Flood insurance is required for a mortgage in more than 20,000 communities nationwide. The National Association of Realtors supports reauthorizing and gradually strengthening the NFIP, so it is sustainable over the long run. In addition to long-term reauthorization of the NFIP, NAR supports improving flood map accuracy.

Policyholders in more than 22,000 communities across the country depend on the NFIP to protect homes and businesses from flooding, according to NAR officials. Without the reauthorization, the NFIP cannot issue new policies or renew existing residential or commercial policies that expire. That is bad for consumers and potential homebuyers, as well as the broader economy.  When the NFIP last expired, NAR estimated that 1,300 home sales were disrupted every day as a result. That is 40,000 sales every month. Although the National Flood Insurance Program has been extended through Nov. 30, it is in need of reforms that will make it solvent and sustainable in the long term. 

The National Association of Realtors will continue fighting for these reforms as the next NFIP reauthorization discussions loom later this year, according to officials.

Despite years of debate and proposals to fix the program, reforms have stalled. Instead, Congress has passed six short-term extensions of the program. Lawmakers also let the program lapse in 2017 and 2018. The House passed legislation with reforms more than a year ago; the Senate has yet to do so. In July 2018, Congress avoided a lapse in the federal flood insurance program. After the House voted to temporarily reauthorize the program, the Senate voted 86-12 to extend authorization for the program by four months to Nov. 30. The reauthorization did not include any reforms. “Although the National Flood Insurance Program is currently authorized through November, the National Association of Realtors remains focused on ensuring Congress and the White House enact long-term reauthorization and reforms to strengthen the program’s sustainability,” National Association of Realtors President Elizabeth Mendenhall said in a statement. Mendenhall said Congress and the president need to act before the flood insurance program expires.
Read more » click here

Previously reported – December 2018
National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On Dec 7, 2018, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to Dec. 21, 2018. Congress must now reauthorize the NFIP by no later than 11:59 pm on Dec. 21, 2018.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance. The level of damage from the 2017 hurricanes makes it clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP.
Read more » click here

Previously reported – January 2019
National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On Dec 7, 2018, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to Dec. 21, 2018. Congress must now reauthorize the NFIP by no later than 11:59 pm on May 31, 2019.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance. The level of damage from the 2017 hurricanes makes it clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP.
Read more » click here

FEMA resumes selling, renewing flood insurance policies amid shutdown
Agency rescinds previous decision to not sell or renew policies
Read more » click here

Previously reported – February 2019
Private Flood Insurance Gets Boost from Regulators
Flood insurance policies not backed by the government currently represent less than 5% of the residential market
The number of flood insurance policies underwritten by private companies could triple under a new federal rule that would require mortgage lenders to accept both private and government-backed policies.

The rule, approved by the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency late last week, is aimed at boosting the availability of private flood insurance in flood zones, a market dominated by a multibillion-dollar government program. It could usher in private flood insurance for hundreds of thousands of residential properties in those areas, according to government estimates. “This ruling has the potential to open up the private insurance market,” said Michael Barry, a spokesman at the industry-funded Insurance Information Institute. He said the effect was likely to be concentrated in Florida, Louisiana and Texas, where most of the nation’s flood insurance policies are held.

The private-sector insurance industry historically has been reluctant to write flood insurance because of the potential for large losses, but interest has grown in recent years with the improvement of mapping and modeling technologies. Private flood insurance policies currently represent less than 5% of the residential market, according to government and academic research. Most private flood insurance is for commercial and more expensive residential properties that need coverage above the federal program’s $250,000 limit.

The public program had more than five million policies outstanding and $1.3 trillion in potential claims as of July 2018. It is operated by the Federal Emergency Management Agency. “If the private market can take care of it, that’s just more sustainable for taxpayers and for society in general,” said R.J. Lehmann, a senior fellow at the R Street Institute, a libertarian policy organization that has argued for shrinking the government flood insurance program.

The regulation is set to go into effect in July, as the next hurricane season gets under way. It stems from a provision in a 2012 flood insurance law that sought to partially address financial pressures on the government’s flood insurance program, which is deeply in debt from record disaster payouts in recent years and limitations on its ability to increase premiums.

Congress has for years debated how to fix the National Flood Insurance Program, created about 50 years ago because private insurers were unwilling to risk catastrophic flood losses. Lawmakers, divided based on the prevalence of floods in their districts, have approved only partial solutions such as premium increases or debt forgiveness for the government program. The government, for instance, wrote off $16 billion in debt for the federal program in 2017 following claims made in the aftermath of hurricanes Harvey, Irma and Maria.

Congress must reauthorize the federal insurance program this year. It is expected to discuss additional ways to overhaul the federal program, such as redrawing the maps that dictate where coverage is required and making it financially stable.

Opponents of opening up the flood insurance market argue private insurers could cherry-pick safer properties that could be cheaper to insure, saddling the public program with riskier ones. And some lawmakers, including Sen. Robert Menendez (D., N.J.), have called for increasing controls over the private flood insurance sector.

The rule would require lenders to accept private flood insurance policies that have coverage at least as comprehensive as what is offered by the federal program. Banks also could allow policies that aren’t as comprehensive as government flood insurance, a move backed by the insurance industry but opposed by some consumer advocates because it could concentrate riskier insurance policies in the federal plan.

Narrower coverage will “appeal more to lower risk people and then leave the National Flood Insurance Program principally with higher risk people,” said Daniel Schwarz, a professor at University of Minnesota Law School. Three other regulators, including the Federal Reserve, must still approve the rule.
Read more » click here

Previously reported – March 2019
National Flood Insurance Program needs long-term reauthorization to address key challenges
As the House Financial Services Committee meets this week to discuss reauthorizing the National Flood Insurance Program (NFIP), there is a lot at stake. The NFIP, on which 5 million Americans depend for protection from flooding, began with the best of intentions — reducing the burden on federal taxpayers stemming from flood relief while providing resources to help devastated communities rebuild. But as the Nobel Prize-winning economist Milton Friedman was fond of saying, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” Judged by its results, the NFIP is badly in need of serious changes to address its massive debt, persistent operating deficits, and many structural flaws — all of which expose taxpayers to financial risk. With the NFIP’s authorization set to expire in May, Congress has an opportunity to enact real reforms that will put the NFIP on a sustainable, fiscally-responsible footing. Lawmakers should begin to chart a future for the NFIP that addresses its key challenges.

One of the NFIP’s biggest flaws is that it masks the true flood risk of properties by offering a significant portion of its policyholders heavily subsidized rates. One in five homeowners with NFIP protection pay less than half the full cost of their policy. No one begrudges low-income homeowners who need financial assistance to purchase coverage, but most of the NFIP’s subsidies actually go to homes with the highest values. A study by the Congressional Budget Office found that the median value of homes with NFIP coverage is about double that of all American homes. Not only that, but wealthier households tend to get much larger subsidies than middle-income homeowners. Ending these handouts to the wealthy and refocusing resources on the truly needy is essential. Limiting NFIP subsidies would have another positive effect. Currently, by shielding policyholders from the full cost of building in a flood zone, the government encourages more houses to be constructed in disaster-prone areas than if homeowners bore the costs of flooding themselves. Transferring more of the flood risk from federal taxpayers to individual homeowners would cause them to think twice about where to build their home.

But setting risk-based premiums is impossible without accurate flood maps. Many of the 22,000 communities that participate in the NFIP currently rely on outdated and inaccurate flood maps. A recent audit found that only 42 percent of the NFIP’s maps “adequately identified the level of flood risk.” Without better mapping that incorporates improvements in engineering methods and technology, full-risk insurance rates cannot be accurately determined, and homeowners and local policymakers may be misled about the true flood vulnerability of their communities.

Another issue that merits more attention is mitigation. The best way to reduce insurance premiums for homeowners is to lessen the risk of flood loss. Making communities more resilient to flooding before disasters strike by adopting better zoning and building codes and other measures can significantly reduce the cost of cleaning up after floods. Studies have shown that for every $1 invested in mitigation, society saves $6 in rebuilding costs. Overall, so-called “repetitive loss properties,” structures that are damaged and repaired over and over again, account for about 1-2 percent of the NFIP’s total policies but have been responsible for 30 percent of claims since the program began in 1968. One Mississippi home worth $70,000 filed 34 claims with the NFIP from 1978 to 2010 totaling $663,000 — more than 9 times the value of the house. Through more aggressive mitigation incentives, policymakers could reduce this massive drain on the NFIP’s finances.

Congress should also resolve ambiguities in federal law that have limited the growth of private flood insurance; currently, private insurance only makes up 4 percent of the residential market. Greater private-sector involvement in flood insurance would benefit both consumers — many of whom could find lower rates and more flexible options through private carriers — and taxpayers by reducing the NFIP’s financial exposure.

Rather than continue postponing meaningful reforms to the NFIP with short-term stop-gaps, Congress should work over the next several months to craft a long-term solution to the NFIP’s challenges. Without reform, the NFIP’s precarious financial position will only grow worse, to the detriment of taxpayers and homeowners alike.
Read more » click here

House Financial Services Committee Issues Hearing Memo on National Flood Insurance Program
Subject: March 13, 2019, Full Committee Hearing Entitled: “Preparing for the Storm: Reauthorization of the National Flood Insurance Program”

Background
Prior to 1950, flood insurance was a peril often included in standard homeowners’ insurance policies. However, in response to an increasing frequency and severity in flood- related losses in the 1950s, insurance companies began excluding flood insurance coverage and selling it separately. By the 1960s, widespread flooding along the Mississippi River caused most private insurers to flee the business of flood insurance altogether, leaving many consumers with virtually no access to private flood insurance.1 The lack of availability of flood insurance for consumers left them vulnerable in the event of a flood, and also left taxpayers vulnerable to bearing the costs of flood damage through post-disaster relief in the case of a flood event.

In direct response to this private market failure, the National Flood Insurance Program (NFIP) was created in 1968 with the passage of the National Flood Insurance Act (NFIA). In doing so, Congress determined that “as a matter of national policy, a reasonable method of sharing the risk of flood losses is through a program of flood insurance which can complement and encourage preventive and protective measures” and that transferring the costs of private property flood losses from the general taxpayer to individuals in the floodplains through premiums would ease the strain on the nation’s limited disaster resources. Congress also passed the Flood Disaster Protection Act of 1973 (FDPA) that requires most property owners in a designated Special Flood Hazard Area to purchase flood insurance.

The last long-term reauthorization of the NFIP occurred when Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12), which was subsequently amended by the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA). Since the end of fiscal year (FY) 2017, the NFIP has been reauthorized ten times and has experienced brief lapses. According to the National Association of Realtors, an estimated 40,000 home sales are lost or interrupted every month that the NFIP’s authority lapses. The NFIP’s authorization is currently set to expire on May 31, 2019. In the event of a lapse, NFIP will be unable to enter into new flood insurance contracts, which will lead to widespread market instability due to the stalling of mortgage processing for homes that are statutorily required to have flood insurance.

Several Members of Congress have put forward legislative proposals to reauthorize the NFIP and make programmatic reforms to promote affordability, protect policyholders, and improve flood mapping and floodplain management.

Overview of the NFIP
The NFIP is administered by the Federal Emergency Management Agency (FEMA) through its Federal Insurance & Mitigation Administration (FIMA). The NFIP was designed to serve two interrelated goals: (1) provide access to primary flood insurance and (2) reduce flood risk through the adoption of floodplain management standards. The NFIP advances these goals by offering primary flood insurance exclusively for properties in communities that adopt minimum floodplain management standards under FEMA regulations. The NFIP also administers the Community Rating System (CRS), which is a voluntary incentive program that recognizes communities for implementing floodplain management practices that exceed the NFIP’s minimum requirements and, in exchange, FIMA offers reduced flood insurance premiums to policyholders.

Today, the NFIP is the principal provider of primary flood insurance in the U.S., covering over 5 million households and businesses across the country for a total of over $1.3 trillion in flood insurance coverage. As of the end of FY 2018, approximately 22,324 communities participate in the NFIP, covering an estimated 93 percent of the U.S. population. According to FEMA, the NFIP saves the nation an estimated $1.87 billion annually in flood losses avoided because of the NFIP’s building and floodplain management regulations.

In 1983, FEMA created the Write Your Own (WYO) Program in an effort to: increase the NFIP’s policy base and geographic distribution of policies; improve service to NFIP policyholders through infusion of insurance industry knowledge and capacity; and, provide the insurance industry with direct operating experience with flood insurance. This WYO Program operates as a partnership between FEMA and participating property and casualty insurance companies that are compensated to write and service NFIP policies. The WYOs assume none of the risk by participating in this program. FEMA retains all of the insurance risk and underwrites any losses. Currently, approximately 60 different companies administer about 87 percent of NFIP policies through the WYO Program. The remainder of NFIP’s policies are provided through the Direct Program, which is operated by a government contractor and performs the same basic functions as a WYO company.

The NFIP offers a Standard Flood Insurance Policy (SFIP) for properties in participating communities within a Special Flood Hazard Area (SFHA). By virtue of the mandatory purchase required by law, most property owners within the SFHA are required to purchase flood insurance. Many of the SFIP’s policy terms are set in statute. The maximum coverage amount for building coverage is $250,000 for single-family homes, and $500,000 for multi-family residential properties, and non-residential properties including commercial properties. The maximum coverage amount for contents only is $100,000.9 If the SFIP’s maximum coverage amounts are insufficient to cover the full value of the property, policyholders may have the option of obtaining excess flood insurance in the private market.

The NFIP also offers coverage for properties that are not within a SFHA, usually as a Preferred Risk Policy (PRP). PRPs include similar coverage but at discounted rates in accordance with their lower risk profile. If a property has a significant loss history, that policyholder may become ineligible for a PRP and would need to purchase a SFIP that is commensurate with the flood risk.

The NFIP’s Financial Status
The NFIP is largely self-funded through insurance premiums collected from policy holders. Policyholders are also assessed a number of surcharges and other fees. In FY 2018, policyholders paid $382 million in surcharges, $188.162 million in federal policy fees, and $496.82 million in reserve fund assessments. A portion of these premiums, fees, surcharges, and assessments goes towards the cost of flood mapping and floodplain management. A large portion also goes to paying interest on debt of the NFIP.

Congress designed the NFIP as a program that would operate on a cash flow basis, borrowing from the Treasury in bad years and returning funds to the Treasury in good years. The NFIP was largely self-supporting in this way from 1986 until 2005, but due to extraordinary losses incurred as a result of hurricanes Katrina, Rita, and Wilma in 2005, and then Superstorm Sandy in 2012 and Hurricane Matthew in 2016, the program currently carries a debt of $20.5 billion.11 It is also important to note that a significant portion of the NFIP’s debt accrued as a result of Hurricane Katrina ($19 billion) could not possibly have been properly accounted for in NFIP’s risk modeling; specifically, the U.S. Army Corp of Engineers took responsibility for engineering and design failures in the levees that should have been able to provide far better protection for New Orleans in the face of Katrina.

Taxpayers are not on the hook for this debt and receive millions of dollars in interest payments every year (currently approximately $400 million annually or a total of $4.2 billion since 2005) at the expense of policyholders. In 2017, following a proposal submitted by OMB Director Mick Mulvaney, Congress passed legislation to partially forgive $16 billion of the NFIP’s debt of $30.4 billion, after the NFIP’s debt ballooned following Hurricanes Harvey, Irma and Maria and other historic flooding that year.

Affordability Challenges
In 2018, FEMA submitted its congressionally mandated Affordability Framework demonstrating, among other things, that low-income homeowners and renters face significant affordability challenges. The report documents that those that are least able to afford higher premiums tend to live in the highest flood hazard areas writing, “generally, incomes are higher outside the SFHA than they are inside the SFHA. The median household income for residential policyholders is $82,000, although it is substantially lower in the SFHA than outside the SFHA.” Further, FEMA found that “the combination of higher premiums and lower incomes in the SFHA creates affordability pressure on households.”

Draft Legislation
* Waters_009 is a discussion draft that would reauthorize the NFIP through September 30, 2024 and address a number of affordability issues such as: 1) forgiving the NFIP’s debt; 2) creating a 5-year demonstration for means-tested assistance to low-income policyholders; 3) reducing fees and surcharges; 4) revising the NFIP’s coverage limits; 5) enabling policyholders to pay premiums in monthly installments; and 6) creating a state revolving loan fund modeled after legislation previously introduced by Rep. Crist.

* Maj_Mitigation is a discussion draft that would make several improvements to floodplain management and mitigation such as: 1) raising the amount of funds available under Increased Cost of Compliance program and expanding the eligible mitigation activities to include the cost of acquisitions, among others; 2) granting the Administrator discretion to consider the extent to which communities are working to remedy problems with repeatedly flooded areas when administering mitigation assistance; 3) granting credits for alternative forms of mitigation, allowing coverage for coops and community-based policies; and 5) authorizing and flood plain management activities.

* Maj_Mapping is a discussion draft that would reauthorize the flood mapping program and provide funding to support flood mapping. It would also make several improvements to the mapping program such as: 1) requiring the most up-to-date technology, and more advanced and granular flood maps; 2) improving the process for policyholders and communities to appeal FEMA’s mapping decisions; and 3) creating new flood map zones for levee-impacted and for agricultural areas.

* Velazq_035 is a bill that would make numerous improvements to the claims process drawing on the lessons learned from Superstorm Sandy. The bill would ensure that policyholders better understand the terms of their flood insurance policies and improve the appeals and litigation process for consumers
Read more » click here

Climate Advocates Cheer Trump Policy Shift on Flood Insurance

  • Premiums to be based on full flood risk starting in late 2020
  • Change expected to raise costs for the most deluge-prone homes

Climate advocates say an overhaul of the nation’s flood insurance program being unveiled by the Trump administration will spur communities around the country to better plan for extreme weather, but could drive up costs for some homeowners.

The changes being announced Monday by the Federal Emergency Management Agency represent one of the most significant reforms in the history of the National Flood Insurance Program. It will tie premiums to the actual flood risk facing individual homes nationwide starting in October 2020. The current system sets prices based largely on whether a home is inside or outside of the 100-year flood plain.
Read more » click here

Trump Administration Plans Flood Insurance Overhaul
Expensive properties could see rate increases under new FEMA plan
The Trump administration said Monday it plans to overhaul government-subsidized flood insurance, in a sweeping proposal that could raise rates on more expensive properties and those in higher-risk areas. The new system would affect policies for most homeowners who own property in flood-prone areas, where such coverage is required because few private companies offer flood insurance. The Federal Emergency Management Agency, which runs the National Flood Insurance Program, said the plan would start assessing properties individually according to several variables—including hurricane rainfall, coastal surges and the distance to a body of water—rather than applying one formula across an entire flood zone when assessing flood risk and contract cost. The government also would factor in the replacement cost of the home, which could push up premiums for homeowners with higher-valued properties and decrease those with lower-cost homes. FEMA plans to announce the new rates on April 1, 2020 and implement them starting Oct. 1 that year. They could affect more than 5 million single-family policyholders of public flood insurance. The NFIP covers both coastal flood zones and inland river flood plains, though the policy change may have a greater impact in coastal states including Florida, Louisiana and Texas, where most of the policies are held.

The changes are likely to stoke a longstanding debate over flood insurance, with policy makers divided over how much the public should subsidize the program. While those in coastal areas have advocated for more federal funding, both environmentalists and fiscal conservatives have argued the program encourages building in risky flood-prone zones. FEMA has increasingly struggled to pay off claims after a series of natural disasters in recent years. The government wrote off $16 billion in debt for the federal program in 2017 following claims made in the aftermath of hurricanes Harvey, Irma and Maria. Scientists say the frequency of such events is influenced by climate change. FEMA’s current system calculates rates based on whether a home falls in a designated flood zone. Since higher-valued properties are more likely to hit the $250,000 insurance cap because they face costlier damages, “there’s an inequity,” said David Maurstad, FEMA’s deputy associate administrator for insurance and mitigation. “Lower-value homes are paying proportionately more than higher-value homes.” “What we’re going to do is change an insurance-rating structure that hasn’t fundamentally been changed since the 1970s,” Mr. Maurstad added. “We’re going to consider more flood risk than we currently do now.” The changes would also leverage new loss-estimation technology, said Mr. Maurstad. In recent years, private insurers have developed increasingly sophisticated models that account for variables including climate change. The agency hopes that a more risk-sensitive pricing could attract more homeowners to purchase flood insurance, even if they aren’t required to. “People even outside the high-risk area will have a better understanding of what the specific risk is,” said Mr. Maurstad. “They will take the responsible action and insure for flood just like they insure for windstorms, hail and fire.”

FEMA faces Congressional restrictions on how much it can increase rates, so the agency could phase in the rate changes, said Mr. Maurstad. It plans to make more details of the plan public in the coming weeks, he added. For years, Congress has debated how to modernize the financially beleaguered flood-insurance program, created about 50 years ago because private insurers were unwilling to risk catastrophic flood losses. Lawmakers are set to reauthorize the federal insurance program this year, after granting a short-term extension in December.
Read more » click here

Previously reported – May 2019
Vote set on flood insurance extension
Nick Sobczyk, E&E News, May 13, 2019
The House will vote this week to extend the National Flood Insurance Program until the end of the fiscal year, another sign lawmakers have again punted on reform talks. The NFIP expires at the end of the month, and despite months of extra time to reach a deal on a reform package, the measure up for a vote under fast-track procedure this week would be the 11th short-term reauthorization in two years. The measure would extend the program until Sept. 30. There are talks underway on both sides of Capitol Hill, but few signs lawmakers are close to striking a long-term reauthorization deal for a program that advocates say is badly in need of reform. Sen. Bill Cassidy (R-La.) said last week he’s working with Sens. Kirsten Gillibrand (D-N.Y.), Bob Menendez (D-N.J.) and John Kennedy (R-La.) on a reform bill. And House Financial Services Chairwoman Maxine Waters (D-Calif.) has drafted reform proposals and held a hearing on the NFIP to jump-start efforts on the other side of Capitol Hill. Meanwhile, four bipartisan former Federal Emergency Management Agency administrators penned a letter to congressional leaders last week imploring lawmakers to make long-term changes to the program. The group includes Obama-era FEMA chief Craig Fugate and Brock Long, who resigned the post earlier this year. Among other things, they suggest a requirement that sellers disclose flood risk to potential homebuyers and a low-interest loan program to help buy out owners of properties that are repeatedly flooded. Especially in a time when losses from natural disasters and flood events are ballooning, it doesn’t make sense for the federal government to keep paying to rebuild in flood zones, they wrote. “By incentivizing Americans to live in vulnerable areas without taking steps to mitigate the risk, the NFIP gives property owners a false sense of security,” they wrote. “In the absence of reforms, costs in taxpayer dollars and lives lost will only get worse.”

National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On May 31, 2019, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to June 14, 2019. Congress must now reauthorize the NFIP by no later than 11:59 pm on June 14, 2019.

FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. Should the NFIP’s authorization lapse, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance. The level of damage from the 2017 hurricanes makes it abundantly clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP.
Read more » click here

Previously reported – June 2019
House Panel Approves Bill Overhauling Federal Flood Insurance
Bipartisan bill aims to spur private flood insurance and lower costs for lower-income homeowners

Lawmakers in the House advanced a bipartisan plan to overhaul the federal flood-insurance program, which has struggled to keep pace with record disaster payouts in recent years.

The bill, approved unanimously Wednesday by the House Financial Services Committee, aims to change the financial stakes that people in flood-prone areas face when shopping for insurance. The Midwest has been hit particularly hard by flooding this spring, as several states in the Farm Belt suffer from the wettest year on record. The legislation seeks to spur private flood insurance and reduce costs for lower-income policyholders. It also would require the government to make sure more properties that need coverage are identified on updated flood-zone maps. The plan backed by Democrats and Republicans on the committee would extend the National Flood Insurance Program for another five years. It now goes to the full House and must also pass the Senate. The program has operated since 2017 under a series of temporary extensions passed by Congress, the latest of which ends in September. “This has put our communities and housing market at risk,” House Financial Services Committee Chairwoman Maxine Waters (D., Calif.) said. “We’ve worked very hard to give consideration to the concerns on both sides of the aisle.”

 Rep. Patrick McHenry (R., N.C.) said the bill will “not only provide long-term certainty to [federal flood insurance] but will modernize the program to ensure it has the tools it needs to perform its functions.” Federal flood insurance, offered through the Federal Emergency Management Agency, was created more than 50 years ago because private insurers were unwilling to risk catastrophic flood losses. Recent extreme weather events such as Hurricanes Harvey, Irma and Maria in 2017 put so much financial pressure on the program that Congress took the unprecedented step of canceling its debt, writing off $16 billion that year. The flood program had $20.5 billion in debt as of September 2018. The bill doesn’t forgive any additional debt, a move Ms. Waters had championed. But it could be the first step by Congress to overhaul flood insurance and provide a longer-term extension for the program—two measures that have eluded lawmakers since 2012. The deal would create a pilot program that provides discounts for premium rates paid by low-income households, ensuring they don’t exceed 2% of the local median income. The bill also would end surcharges enacted by Congress in 2014, including premium increases of $250 for vacation homes.

 It would appropriate $500 million in annual funding for flood-zone mapping and expand mapping to all areas of the U.S. FEMA would be required to use new mapping technologies, such as a pulsed laser-based method called Lidar, or light detection and ranging. In a move that could give private flood insurers a boost, the plan would allow property owners to switch between public and private flood insurance without losing subsidies available to them under the federal plan. For instance, property owners would be able to reinstate lower rates that were locked in when the government said they were subject to higher flood risk. They could also get reimbursed for overlapping public coverage held while they switch over to a private plan. The bill is the latest move by policy makers to jump start a private market for flood insurance. Banking regulators earlier this year said lenders as of July must accept private flood-insurance policies, in addition to the government-backed program. The bill’s prospects are uncertain in the Senate, where Republicans and Democrats have panned it. Republican senators from Louisiana—Bill Cassidy and John Kennedy—said it doesn’t go far enough to cut costs for policyholders. Mr. Cassidy in a statement said it “lacks reforms needed to ensure the program is sustainable and that families won’t be hit with drastic premium increases.” . .
Read more » click here

FEMA looks at flood insurance program changes
With the 2019 Atlantic hurricane season officially underway as of June 1, coastal residents should be aware of updates to the National Flood Insurance Program that will change how the Federal Emergency Management Agency calculates flood risk and insurance policy pricing. FEMA announced in March it is redesigning its flood risk rating system to deliver insurance rates that more accurately reflect a property’s unique risk of flooding. The effort has been dubbed “Risk Rating 2.0,” and the new rates will be announced next April and go into effect Oct. 1, 2020. The change could lead to higher insurance rates for some policyholders and lower rates for others, depending on an individual property’s updated flood risk calculation. Under the new system, properties at the highest risk of flooding will generally see higher insurance rates and lower-risk properties may see a lower rate, but FEMA says it is too early in the process to know for certain which policyholders will see an increase and which will see a decrease. Under Risk Rating 2.0, FEMA will take data from a variety of sources to develop a comprehensive understanding of flood risk, according to the agency. Data sources include existing FEMA flood maps, National Flood Insurance Program policies and claims, U.S. Geographical Survey data, National Oceanic and Atmospheric Administration Sea, Lake and Overhead Surges from Hurricanes model data, the U.S. Army Corps of Engineers data sets and information from third-party flood models. In addition to raw data, FEMA will take into account factors such as type of flood, distance away from the coast or other flooding source and cost to rebuild when determining new rates. By reflecting costs to rebuild, for example, owners of lower-valued properties will not pay as much for flood insurance as their higher-valued counterparts even if both properties have the same risk of flooding. With Risk Rating 2.0, FEMA also plans to offer mitigation credits to help incentivize risk reduction efforts and reduce the cost of future flooding events. The program will initially offer credits for three mitigation efforts: installing flood openings; elevating onto posts, piles and piers; or elevating equipment and machinery above the lowest floor.

FEMA says the risk calculation methodology currently in place was developed in the 1970s and has barely been updated over the years, even as technology has evolved to be more precise. Currently, insurance rates are based predominately on the Flood Insurance Rate Map and base flood elevations. The National Flood Insurance Program is federally-backed and administered by FEMA to provide flood insurance to homeowners, renters and business owners as most standard insurance policies do not cover losses from flood. According to FEMA, floods are the most common and most destructive type of natural disaster in the United States, but the majority of home and business owners do not possess flood insurance. In conjunction with the NFIP, FEMA maintains a database of community flood hazard maps that help inform floodplain management policies. The flood maps, which are updated periodically, will still be used to assess risk calculation, but they will no longer be the primary source of risk rating. Even as major changes are coming to the NFIP, there are some questions about the long-term viability of the program, which is about $20 billion in debt. On Thursday, President Donald Trump signed into law a $19.1 billion disaster aid package that includes a temporary extension of NFIP until the end of September as lawmakers deliberate how to reform the program. In addition, FEMA recently announced it will soon publicly release about 50 million NFIP records as part of an initiative known as OpenFEMA to improve transparency within the agency and the flood insurance program. The agency said those records will be available for viewing on the website fema.gov/openfema by mid-June. “We believe this will provide transparency, reduce complexity for public data requests, improve how our stakeholders interact with and understand our program, all without  consumer privacy,” FEMA chief executive David Maurstad said in a statement about the data. According to FEMA, flood insurance policyholders in North Carolina received average payments of $40,000 after Hurricane Florence for flood claims. The average annual cost of an NFIP policy for homeowners is about $700. A single-family home can be insured up to a maximum of $250,000, not including contents coverage, which can be purchased separately and covers up to $100,000. Renters can cover contents up to $100,000, and non-residential property owners can insure their structure up to $500,000 and contents up to $500,000. FEMA encourages home and business owners to purchase flood insurance before the hurricane season begins, or as soon as possible, because it takes 30 days for a policy to take effect.

 Now that the Atlantic hurricane season is underway, FEMA offers other tips to stay safe this year, including the following:
• Create an emergency communication plan with your family. This plan spells out how everyone will contact each other, where to go and how to get back together.
• Build an emergency kit. Keep it ready at home, at work and in the car.
• Know your community’s evacuation plan, evacuation routes and how to receive alerts.
• Stay informed about current conditions. Listen to local officials and evacuation orders.
• Download an emergency weather app on your phone.
• Have backup power for your phone. Purchase a weather radio.
• Keep all important documents in a waterproof container to take with you if you evacuate.

Ready.gov/hurricane and ReadyNC.org provide helpful information on how to plan.
For more information on the NFIP, visit FloodSmart.gov or call 800-427-4661.
Read more » click here

National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On June 6, 2019, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to September 30, 2019.
Congress must now reauthorize the NFIP by no later than 11:59 pm on September 30, 2019.

FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. Should the NFIP’s authorization lapse, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance. The level of damage from recent catastrophic storms makes it clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP. Flood insurance – whether purchased from the NFIP or through private carriers – is the best way for homeowners, renters, business, and communities to financially protect themselves from losses caused by floods.
Read more » click here

Previously reported – October 2019
Gillibrand Urges Senate to Reauthorize National Flood Insurance Program Immediately
The National Flood Insurance Program is set to expire at the end of this month
With the National Flood Insurance Program set to expire at the end of September, U.S. Sen. Kirsten Gillibrand (D-N.Y.) Tuesday urged Senate leadership, via a letter to Majority Leader Mitch McConnell and Sen. Mike Crapo (R-Idaho), chairman of the Committee on Banking, Housing & Urban Affairs, to extend the NFIP without delay and to ensure that any legislation includes her reforms to fix the current broken system and make flood insurance policies more affordable for New Yorkers. Gillibrand helped write the bipartisan National Flood Insurance Program Reauthorization and Reform Act of 2019, which would extend the NFIP for five years and fix the problems plaguing the beleaguered program. The NFIP Re Act of 2019 was introduced in the Senate earlier this summer, but no vote has been taken on the measure.

 The NFIP Re Act of 2019 would:

  • Place protections against sudden rate shocks for policy holders and implement regulations for Federal Emergency Management Agency’s new rating methodology.
  • Provide vouchers for homeowners and renters if their flood insurance premium causes their housing costs to exceed 30 percent of the Adjusted Gross Income.
  • Freeze interest payments on the NFIP debt while reinvesting savings towards mitigation efforts to restore the program to solvency and reduce future borrowing.
  • Provide robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk, Gillibrand said.
  • Increase the maximum limit for Increased Cost of Compliance coverage and expand ICC coverage eligibility to encourage more proactive mitigation before natural disasters.
  • Authorize funding for Light Detection and Ranging technology, which would help create more accurate mapping of flood risk across the country, reducing confusion and generating better data.
  • Place limits on profits for private insurance companies; Write Your Own compensation policies would be capped at the rate that FEMA pays to service its own policies.
  • Create new oversight measures for insurance companies and vendors and provide FEMA with greater authority to terminate contractors that have a track record of abuse.
  • Fundamentally reform the claims process to level the playing field for policyholders during appeal or litigation, ban aggressive legal tactics preventing homeowners from filing legitimate claims, hold FEMA to strict deadlines so that homeowners get quick and fair payments, and end FEMA’s reliance on outside legal counsel from expensive for-profit entities.
  • Provide for increased training and certification of agents and adjusters to reduce mistakes and improve the customer experience.

“My constituents across the State of New York desperately need this bipartisan, common-sense bill, from families still struggling to rebuild from Superstorm Sandy on Long Island to low-income homeowners in Syracuse who are struggling to keep up with rising premiums they cannot afford,” Gillibrand wrote in her Tuesday missive to McConnell and Crapo. “I urge you to make reauthorizing and reforming the NFIP a priority for this Congress and seize the opportunity to achieve a real bipartisan legislative accomplishment that will profoundly help millions of Americans.”
Read more » click here

National Flood Insurance Program: Reauthorization
Congress must periodically renew the NFIP’s statutory authority to operate. On September 27, 2019, the President signed legislation passed by Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to November 21, 2019. Congress must now reauthorize the NFIP by no later than 11:59 pm on November 21, 2019.

FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. Should the NFIP’s authorization lapse, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.

NFIP reauthorization is an opportunity for Congress to take bold steps to reduce the complexity of the program and strengthen the NFIP’s financial framework so that the program can continue helping individuals and communities take the critical step of securing flood insurance. The level of damage from recent catastrophic storms makes it clear that FEMA needs a holistic plan to ready the Nation for managing the cost of catastrophic flooding under the NFIP.
Flood insurance – whether purchased from the NFIP or through private carriers – is the best way for homeowners, renters, business, and communities to financially protect themselves from losses caused by floods.
Read more » click here