Controversial flood bill moves on to White House

The Senate approved legislation blocking the most dramatic flood premiums, but some in the industry are none-too-pleased.

Catastrophe & Flood

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After months of congressional back-and-forth on legislation aimed at modifying the severe effects of 2012’s Biggert-Waters Act, Congress sent President Barack Obama a final bill Thursday that would cap many of the biggest premium increases faced by thousands of homeowners.

Originating in the House, the Senate approved the bill 72-22 late Thursday afternoon.

If approved by Obama, the legislation will prevent FEMA from raising the average rates for nine classifications of flood policies above 15%, and rates on individual policies above 18% annually for nearly all properties.

It will also preserve the “grandfathered” status of homeowners who face unaffordable premium increases thanks to new and updated government flood maps.

Newburyport, Mass. producer Ed Howlett is uncertain what changes the legislation will bring to his business, but is hopeful it will prove helpful to his clients.

“Some of our insureds are really seeing significant increases,” Howlett said. “We’re hoping the legislation alleviates a lot of that pain, because it has been very painful. It’s really causing folks to reevaluate their coastal properties.”

Not all in the industry are likely to be pleased, however. The National Association of Mutual Insurance Companies has long stood in opposition to any delays or changes to Biggert-Waters, fearing the solvency of NFIP.

“We remain in full support of reforms to the NFIP made by the Biggert-Waters Act and oppose any effort to delay or roll back pieces of the legislation,” said NAMIC Senior Vice President Jimi Grande.

There are also fears that the legislation will quash the appetite of private insurers to write flood risk. A Government Accountability Office report attached to the bill warned that all congressional efforts to modify or delay Biggert-Waters “may reinforce private insurers’ skepticism that they would ever be permitted to charge adequate rates and make their participation unlikely in the foreseeable future.”

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