As lawmakers and other regulators scramble to delay impending flood insurance rate increases, roadblocks are cropping up both in Congress and in court. A House hearing yesterday highlighted the difficulty stakeholders will have in pushing back these premium increases, which reach 1000% for some home and business owners.
Rep. Randy Neugebauer, chairman for the House Subcommittee on Housing and Insurance, suggested the reports of large rate increases that have swept across the country may actually be a “misunderstanding,” as most higher rates won’t go into effect until the end of next year.
Meanwhile, Rep. Lynn Westmoreland questioned whether delaying Biggert-Waters would be “fair” to American taxpayers not living in flood zones.
“The fundamental question posed by the flood insurance reform bill is one of fairness. Is it fair for everyone to subsidize the insurance of a few?” Westmoreland said. “The answer is simple… It’s not fair.”
Rep. Maxine Waters, who helped sponsor the original reform law and is pushing a new bill to delay changes for four years, rejected Neugebauer’s and Westmoreland’s assertions. She told the committee of “horror stories” from homeowners across the country who reported unaffordable rate increases of between 300% and 1000%.
“I feel a responsibility to do everything possible to straighten out the unintended consequences,” Waters said. “And deal with it I will.”
Waters reaffirmed her commitment to push for the bipartisan legislation, though chances of getting the bill out of the Republican-controlled committee seem dim.
FEMA dealt another blow to proponents of delaying the premium increases Monday when it urged a Mississippi court to toss out the state Insurance Department’s lawsuit challenging the steep rate hikes.
In a brief filed with the court, FEMA argued that Mississippi lacks standing to sue the federal government and has not shown that residents will suffer “imminent, irreparable injury” without a delay to the rate changes.
FEMA added that delaying the premium increases would have “deleterious effects” on the National Flood Insurance Program, which is still deep in debt following Hurricane Katrina-related payouts.
However, Mississippi does have a friend in Massachusetts Attorney General Martha Coakley, who filed an amicus curiae brief in the case. The brief supports Mississippi, as well as Louisiana, Alabama, Florida and South Carolina, who have all filed briefs joining Mississippi in its attempt to delay rate hikes.
“The federal government should delay these changes until FEMA has followed all the steps required by law,” Coakley wrote. “In setting these new flood insurance rates, FEMA not only failed to evaluate their economic impact, but also failed to gather all the data required to ensure the new rates are accurate.”
