2013-05-24 / Top Stories

Schumer Backs New Effort To Fight Flood Premiums

Senator Charles Schumer announced support for the Strengthen, Modernize, And Reform The (SMART) National Flood Insurance Program Act which would stave off looming flood insurance premium increases until six-months after the Federal Emergency Management Agency (FEMA) conducts an “affordability study” on the impact of rate changes expected under recent changes to the National Flood Insurance Program (NFIP).

The legislation was introduced by Senator Mary Landrieu of Louisiana. The affordability study would specifically investigate whether homeowners could afford the rate changes and what can be done to make the program more affordable. The data provided by the study and the six month window will give Congress the time and information to make potential changes to the NFIP. Right now, premium increases could go into effect before the affordability study is even completed.

“This legislation would ensure that flood insurance premiums are not allowed to go up until we know for sure what impact they will have on communities and individual homeowners, and can take action to blunt the impact. Congress passed legislation to stabilize the National Flood Insurance Program, but intended for the affordability study to be completed before premiums changed, so that necessary changes in the law could be made. This legislation ensures that Congress will have the necessary time and data to make changes to NFIP before any premium increases go into effect, so communities aren’t overwhelmed and property values aren’t decimated,” said Schumer.

Currently, New York City is in the midst of having its flood maps revised and updated by FEMA, which will require many new homeowners to acquire or strengthen their flood insurance. The next version of the maps – still subject to change – are likely to be issued within the next two weeks.

The Biggert-Waters Flood Insurance Reform Act includes a provision that requires FEMA to conduct an affordability study of the higher premiums and their impact on homeowners, as well as to make recommendations to Congress on ways to maintain affordability through targeted assistance. Although the study was due on April 6th, it has yet to be commenced by FEMA. Under current law, premiums could go up before the affordability study is completed, which is at odds with congressional intent.

Schumer originally supported a similar amendment, filed by Landreiu in the Water Resources Development Act (WRDA). The amendment was blocked from receiving a vote and “unanimous consent” is required for the Senate to vote on an amendment.

The SMART National Flood Insurance Program Act will:  Delay premium increases until six months after FEMA’s affordability study is submitted to Congress.  Expedite FEMA’s affordability study. To expedite this, the legislation permits FEMA to use available funds outside of the National Flood Insurance Fund to complete the required study and makes a technical change to the affordability study to ensure the timely completion of the study.  Allow properties currently receiving a subsidized rate to keep that rate when sold.  Study voluntary community-based flood insurance options which could provide communities with the option to purchase blanket policies for all properties in their communities or a portion of their communities. This could allow for communities to offer more affordable insurance policies to their residents and provide greater incentives for community wide migration activities.  Eliminate penalties on communities for self-financing flood protection. FEMA’s AR and A99 flood-zone categories provide more affordable flood insurance to qualifying communities in the process of flood protection projects. Currently, while flood expenditures on these activities can be fully counted toward community eligible calculations, there is a cap on the amount of state and local funds that may enter this calculation. Proactive communities who are sharing cost burdens with the federal government for flood protection should not be penalized for self-financing these projects. This bill will eliminate the 50 percent cap on state and local contributions to these projects.  Federally funded new construction is currently prohibited in V-zones. In some situations, new construction should be permitted in the V-zone when relocation is impractical, provided the facilities are built to strict, established flood protection standards. These facilities will also be subject to a FEMA evacuation plan to promote the safety of the persons who occupy or access them.

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