New bipartisan bill may delay flood insurance premium hikes

Sky-high premiums may be on hold if new legislation designed to delay the effects of 2012’s Biggert-Waters is passed.

New bipartisan bill may delay flood insurance premium hikes

Construction & Engineering


Home and business owners might not be facing sky-high flood insurance premiums as soon as they thought. New congressional legislation unveiled Friday would effectively delay the premium hikes, caused by the 2012 Biggert-Waters Act, for four years.

The bill is being sponsored by a bipartisan group of senators from affected states, and would halt increases until two years after FEMA completes an affordability study on the changes. That study is not expected for another two years, which means the impact of Biggert-Waters may not be felt until 2017.

The proposed delay would apply to primary, non-repetitive loss residences that are currently grandfathered, as well as to properties sold or that purchased a new policy after July 6, 2012—the date Biggert-Waters took effect.

The senators sponsoring the legislation raised concerns not only about the affordability of the rate increases under Biggert-Waters, but the practices used by FEMA to assess flood risk.

“Recent studies call into question the soundness of the engineering practices FEMA uses to determine levels of flood risk, on which premiums will be based,” the senators wrote in a letter entitled “Dear Colleague.” “While we are unlikely to be able to perfectly assess potential risk, we should be confident in FEMA’s capabilities before we implement policies that could devalue large swaths of private property.”

That concern was also raised by Michael Hecht, CEO of non-profit economic developer GNO, Inc.

“The maps being used by FEMA are incomplete,” said Hecht, whose home state of Louisiana contains 484,000 flood insurance policyholders. “One representative was visiting our region and he stood on levies that do not exist, according to FEMA maps.”

The presence of levies and other improvements made by the state would ostensibly lower premium rates, Hecht pointed out.

If passed, the bill may help solve such concerns by the appointment of a Flood Insurance Rate Map Advisor, who would assist policyholders through the flood map appeals process and improve communication and coordination with FEMA and local officials.

Meanwhile, insurance carriers are expected to resist such delays as the National Flood Insurance Program sinks further into a $17bn hole caused by payouts after Hurricane Katrina. The National Association of Mutual Insurance Companies has already voiced its opposition to the new legislation.

“We remain in full support of reforms to the NFIP made by the Biggert-Waters Act (BW-12) and oppose any efforts to delay or rollback pieces of the legislation,” said NAMIC Senior Vice President Jimi Grande, adding that the group would instead support means-tested subsidies for policyholders who can’t afford the rate increases.

Without action on the bill, about 20% of the nation’s 5mn policyholders are likely to see rate increases. In some cases, imminent increases of 1,000% to 3,000% are likely, and many fear the unaffordable flood insurance will lead to a high amount of vacated properties.


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