Bipartisan Deal in U.S. Congress to Delay Biggert-Waters Premium Hikes

U.S. House and Senate members have reached a deal to delay flood insurance premium increases by at least four years. The agreement would require the Federal Emergency Management Agency (FEMA), which administers the National Flood Insurance Program (NFIP), to conduct an affordability study before increasing insurance premiums. It would also require FEMA to propose other solutions and rework its flood-mapping approach to utilize what the bill drafters call “sound scientific and engineering methodologies.” The proposal would also reimburse qualifying homeowners for successful flood-map appeals, give communities credit for locally funded flood-protection systems, and create a FEMA ombudsman to answer policyholder questions. The agreement would apply to primary residences that have not been repeatedly damaged by flooding, properties sold after July 6, 2012, and to people who purchased a new policy after that date. The Legislation giving effect to the deal is expected to be filed in the Senate on Tuesday.

The agreement would grant a retroactive delay in premium increases that took effect on October 1 for millions of consumers covered under the NFIP. The 2012 Biggert-Waters Act, passed by Congress just months before Superstorm Sandy hit New Jersey, increased NFIP premiums and simultaneously eliminated federal subsidies for NFIP premiums. Prior to the Act, homeowners paid 40% of the premium cost, with the remaining cost subsidized by tax dollars. The premium hike was set to increase rates 25 percent each year for four years to help make up for deficits caused by Hurricane Katrina. The increases are designed to match homeowner’s premium price to the true risk of living in high risk flood areas, as well as the cost incurred by the NFIP. Opponents of the proposed legislation say while the bill may make good local politics, it is turning a blind eyes to the NFIP’s $24 billion deficit.