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

January 29, 2014
Rachel Cleetus
Policy Director

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.