Sen. Reed says ‘no’ to flood insurance increases
In an effort to help Rhode Islanders avoid abrupt increases in flood insurance premiums, U.S. Sens. Jack Reed and Sheldon Whitehouse recently joined a bipartisan coalition of 26 of their Senate colleagues in introducing an updated version of the Homeowner Flood Insurance Affordability Act.
The legislation seeks to help protect property owners from sharp increases in their flood insurance premiums for up to four years in order to allow the Federal Emergency Management Agency time to develop a plan to assist property owners who cannot afford their premiums. FEMA’s proposal would require congressional approval before it could be implemented. If Congress rejects the proposal, the Biggert-Waters reforms Congress passed last year would come back into force. The bill would also require FEMA to certify that its flood mapping strategy is based on sound science and engineering methodologies.
Last year, to prevent the National Flood Insurance Program from lapsing and leaving thousands of property owners without access to flood insurance protection, Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012. The law sought to phase out or eliminate federal subsidies for certain flood-prone properties in order to address the program’s growing debt. To date, the program owes $24 billion to the U.S. Treasury for funds it borrowed to pay claims from past disasters, including Hurricanes Katrina, Rita and Sandy. By law, the program may only borrow $31 billion from taxpayers in order to pay claims. Since 1978, the program has paid $117 million claims in Rhode Island, including approximately $70 million in the last four years as result of Superstorm Sandy and the floods of 2010.
“The National Flood Insurance Program is vital to protecting Rhode Island homeowners as well as our housing market in general,” said Reed. “Homeowners deserve to know their flood risks and the cost associated them so they can take actions to mitigate those risks and reduce their costs. For too long, the program failed to provide that kind of information and appropriate incentives. The sudden change in some rates under the Biggert-Waters, however, has been too dramatic and surprising for many policy holders, particularly those who were required to begin paying unsubsidized premiums immediately. The uneven implementation of the law by FEMA has exacerbated the effect of these changes. This legislation will give FEMA extra time to strike the appropriate balance between risk and affordability.”
According to a report by the Rhode Island Emergency Management Agency, there are currently more than 16,000 issued policies in Rhode Island, including 3,016 in Newport County, and the average premium in Rhode Island is $1,343 annually. About 6,800 of those policies are subsidized, according to FEMA. In general, FEMA has reported subsidized premiums represent only about 40 to 45 percent of the full flood risk.
A similar version introduced in the U.S. House of Representatives currently has 168 cosponsors, including U.S. Rep. David Cicilline.
Congress may take up the bill when both the House and Senate reconvene in January of 2014.
“This is a sensible step to protect Rhode Island homeowners from unaffordable cost increases, but we must continue working to find a long-term solution that puts the federally supported flood insurance program on solid financial footing without shouldering homeowners with an unreasonable burden,” said Whitehouse.