The Biggert-Waters Act: Fix It, Don’t Abandon It

, Policy Director and Lead Economist, Climate & Energy | January 29, 2014, 12:14 pm EST
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As I mentioned in a previous blogpost, the Senate is gearing up to vote on delaying the reforms to the National Flood Insurance Program (NFIP) mandated by the Biggert-Waters Act. With rising sea levels increasing the risk of coastal flooding and the NFIP’s debt mounting (over $24 billion currently), it’s time for senators to find a sensible middle ground that protects both local communities and taxpayers.

Local communities need help

There is no doubt that Congress needs to fix flaws in the Biggert-Waters Act to address affordability concerns. Slowing the phase-in of premium increases and targeting assistance to low-income and fixed- income property owners can help, as could some of the other measures I have previously described.

Coastal communities need help as they face growing flood risks from rising seas. Insurance is but one tool to help them understand that risk and take protective measures. We need to do a lot more. Congress must take serious steps to help communities build resilience to these risks. Accurate scientific and technical information and adequate financial resources must be forthcoming.

People who own homes and businesses along our coasts shouldn’t have to bear the brunt of choices we have all made collectively – the choices that have contributed to growing carbon emissions and climate change. Yes, risk-based premiums are important. But so are other measures to protect communities.

Fix Biggert-Waters, don’t abandon it

Senator Pat Toomey (R-Penn.) has offered compromise legislation that avoids a four-year delay and slows rate increases, while keeping the overall reforms intact. It is a promising sign that a sensible middle ground is emerging in what has been a heated and polarized debate.

GAO report emphasizes the need for risk-based premiums

Last week the Government Accountability Office (GAO) released a report reiterating its previous recommendations that “Congress consider eliminating subsidized rates, charge full-risk rates to all policyholders, and appropriate funds for premium assistance to eligible policyholders to address affordability issues.”

According to the report, as of September 2013, the NFIP’s debt to the U.S. Treasury stood at $24 billion – up from $17.8 billion prior to Hurricane Sandy. It has not paid any principal on its loan since 2010. Furthermore GAO states starkly: “NFIP is unlikely to be able to repay this debt in the near future, if ever.”

The report also discusses a potential role for the private sector in flood insurance but starts with the useful reminder that the NFIP was created in part because private insurers were unwilling to insure against flood damage.

While private insurers can certainly play a larger role in providing flood insurance, that is no guarantee of either affordable rates or broad, widely available coverage for most Americans. Ironically, as part of the GAO’s stakeholder process, one private risk modeler said that FEMA’s base flood elevations were likely too low in many places and that many structures across the country were at higher flood risk than the flood maps indicated.

Leadership from the Senate

The Senate has an opportunity now to demonstrate true leadership. It should preserve the best features of the Biggert-Waters Act and work to fix it with the minimum amount of delay possible. Four years is too long.

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  • Ed Trotter

    Rachel, How do you address the literally billions in lost property value? In my case my house has likely went from 200k to 50k.

  • Santina

    I live 2 miles from a dry creek bed in Kansas, several hundred miles from the ocean or the Mississippi. If you want to purchase my $140,000 home you will pay $5000 per year for flood insurance, that’s an additional $416.00 per month on top of your mortgage. Shame on all who think this is a fair law. I can only assume they are not affected financially.

  • JCasto

    Looks like the government will impose their will on all of us soon. I see the government passing this cost to all homeowners so that the cost for flood insurance will be affordable to those that need insurance.

  • H. Hasen

    My heart goes out to all the people who bought beach property years ago as an investment only to learn now that they’ll likely not be able to sell it due to the looming possibility of exorbitant food insurance. My husband and I were ready to sign for a loan on a beach home of our own last summer after years of home-searching. What we found was too good to be true – a beautiful home that was large enough to be comfortable in, required no renovations, and
    was within our budget. Also re-zoned to higher flood-risk area, we found out at virtually the last minute, and only because we were adamant about the exact (not a guesstimate) cost of flood insurance, that our flood insurance was to cost us $13,000 a year. Current owners were paying $450.

  • harry lambdinur

    Paid cash for my house in 2004. House was in Zone X at that time. FEMA redrew maps in 2009 and put me in highest risk (AE). House has never flooded .Survived the Jackson MS 500 year flood. No water came within 2 blocks of my home. Trying to sell to help fund my retirement. Premium quotes on flood went. from 550 to 5500. Have to reduce price of home by 40-50% to sell. This might not be enough. It is wrecking me finanacially. The redrawing of the maps in 2009 is ludicrous. FEMA needs more money so they are randomly expanding the flood zones where no flood has ever occurred and will NEVER occur.

  • Christin Blazekovic

    Where is this money going? I am advertising sales person and I know for a FACT that FEMA gives out $7500 to every insurance agent who sells flood insurance for free advertising. You can check this out on the government website and see for yourself under the Agent tab go to marketing options and you will see that every agent receives $2500 a year in Yellow Page advertising and an addition $5000 toward billboards, benches, and direct mail. Why is my insurance money going toward flood insurance advertising from a government agency that is going broke supposedly. The dollars of monies out and monies in from areas other than what were hit in the past physical year is an elementary math equation slating monies in the pocket of FEMA that isn’t going toward the aid of the American homeowner struck by flood damage and catastrophic disaster its going toward advertising, dinners, and other corporate luxuries that we aren’t being privileged to. Maybe a true breakdown of their expenses per state and per city would be in order to reflect a true picture of where increases would be warranted. They say its a global warming thing when they feel like using that card……………. that card…… George Bush would’ve never let this happen to the American people. He would’ve at least read the bill and it never would’ve got this far. This is a worse financial ripple in the American economy then the well known disaster from Freddie Mac and Fannie Mae. My house payment went up 50% due to this ……… what………..

  • Julie Califf

    Here’s the thing Rachel, by the time a waiver or voucher program is put in place homes will have already been lost. It’s already happening. I have a neighbor who is caught in the post-July 2012 purchase trap. Her renewal for $125k in coverage is $11,894. Her mortgage company paid it out of escrow which put it 9K in the negative and increased her mortgage payment by $1500 a month. FOR INSURANCE ON A $125,000 HOUSE!! She’s already 2 months behind foreclosure is going to happen. People need help today, not 2 years from now.

    We all agree the NFIP needs reform. The fright train of BW12 needs to be stopped while sustainable reasonable reforms are put in place.