WASHINGTON — A bipartisan group of 15 senators and more than 50 House members filed flood insurance legislation Tuesday to delay by about four years many of the most onerous insurance premium hikes affecting homeowners.
The new Homeowner Flood Insurance Affordability Act was introduced on the one-year anniversary of Superstorm Sandy. The bill is considered the most viable piece of legislation to move through Congress and make substantive changes to the National Flood Insurance Program premium rate increases that began going into effect Oct. 1 for some property owners.
The effort is backed by Sens. Mary Landrieu, D-La., and David Vitter, R-La., and Reps. Cedric Richmond, D-New Orleans; Bill Cassidy, R-Baton Rouge; Steve Scalise, R-Jefferson; and Charles Boustany, R-Lafayette.
Richmond, Rep. Maxine Waters, D-Calif., and Rep. Michael Grimm, R-N.Y., are leading the House version while Sens. Robert Menendez, D-N.J., and Johnny Isakson, R-Ga., are handling the Senate bill.
The legislation would delay many of the premium insurance hikes by two years after the Federal Emergency Management Agency completes an affordability study on the rate increases. The study is not expected to be finished for another year or more.
The legislation focuses on delaying the insurance hikes on primary residences — excluding properties that suffered repeated flooding — that have received “grandfathered” lower premiums. The legislation also would delay the property sale “trigger” so that homes and businesses sold after July 6, 2012, do not see dramatic automatic insurance increases.
The National Flood Insurance Program was changed last year by Congress to make the program more financially self-sustainable. But, in doing so, many insurance rates are projected to increase substantially more than lawmakers expected.
Waters, who cosponsored the change in the law last year, said the new proposal is needed to “correct the unintended consequences of that legislation.”
The NFIP has been in financial distress with a loss of nearly $25 billion, largely due to payments made after hurricanes Katrina and Rita in 2005. Louisiana has nearly 500,000 NFIP policies and there are more than 5.5 million policyholders nationwide.
“This is a real threat to the economic well being of many communities, whether it’s North Dakota, Louisiana, California or the East Coast,” Landrieu said.
“We have priced middle-class people and retirees out of the market,” she said.
“We’re fighting for Louisiana families,” added Cassidy, who sponsored a one-year delay of rate hikes that previously passed the House but has not become law.
Vitter said too many homeowners are facing “unaffordable rate increase when they’ve followed the rules every step of the way. That’s just not right.”
The NFIP will never become financially solvent if the policyholders are losing their homes, Vitter added.
Richmond said the NFIP is creating “havoc” in Louisiana and is the state’s No. 1 problem.
“This effort transcends party affiliation and reaches down to the core of our purpose in Congress, which is to draft legislation that protects our constituents,” he added.
Sen. Bill Nelson, D-Fla., said the new law “has dried up the real estate market” almost entirely in Florida.
Menendez said it is appropriate for the proposal to come on the anniversary of Sandy that devastated much of New Jersey and New York.
“There is a manmade disaster looming in the distance, jeopardizing our recovery,” Menendez said. “The combination of updated flood maps and the phase out of premium subsidies for the National Flood Insurance Program threatens to force victims out of their homes and destroy entire communities.”
The bill would authorize reimbursements for policyholders who successfully appeal how their properties are rated in federal flood maps and the legislation also would create a “flood insurance rate map advocate” within FEMA to help answer policyholders’ questions and lead them through the appeals process. The bill also helps FEMA credit communities that have locally funded flood protection measures in construction.
Some of the flood insurance rate hikes began going into effect the beginning of October.