U.S. House Republicans have introduced compromise legislation that would keep thousands of Louisiana homeowners from facing dramatic increases in the cost of their flood insurance.
The bill, HR 3370, also would provide a retroactive refund to people who already realized huge flood insurance rate increases when they sold or bought homes after 2012.
“It permanently reinstates grandfathered flood insurance rates and protects those who built their homes to code. It also helps stabilize our real estate market, so homebuyers don’t face large flood insurance premiums after buying a home,” Rep. Bill Cassidy, R-Baton Rouge, said in a prepared statement.
Cassidy said he was involved in the negotiations and advocated for insertion of a key provision that permanently reinstates grandfathered flood insurance rates.
The legislation is the result of a collaborative effort with Rep. Michael Grimm, R-N.Y., and other House members from Louisiana, Florida, New Jersey, Mississippi, West Virginia and around the country, Cassidy said.
The measure would repeal a provision that threatens hundreds of thousands of homeowners with huge premium increases under new and updated government flood maps. Those homeowners currently benefit from below-market rates that are subsidized by other policyholders and the new legislation would preserve their “grandfathered” status.
Negotiations on HR 3370 finished shortly before midnight Friday.
It would include a $25 surcharge on all flood insurance policies for primary residents and about $250 for business properties and vacation homes. The money would go into a fund that would help pay claims. It would produce about $1 billion over five years and $2.3 billion over 10 years.
Louisiana has nearly 500,000 flood insurance policies, and there are more than 5.5 million policyholders nationwide.
The Republican majority of the U.S. House had blocked three votes on Senate-passed legislation, which would have delayed premium increases, saying no provision was included in the Senate bill to financially stabilize the National Flood Insurance Program. The NFIP carried a debt of about $24 billion.
Some congressmen say the flood insurance program needs to become financially sustainable. Coastal lawmakers from around the country counter that the 2012 changes to make flood insurance more fiscally sound have led to rates so high that few property owners could afford to pay.
The Biggert-Waters Flood Insurance Reform Act of 2012 installed many provisions aimed at financially stabilizing the federal flood insurance program. Newly drawn maps that predicted likely flooding along with the end of subsidized rates caused premiums to skyrocket.
Specifically, the new bill repeals Section 207 of Biggert-Waters and permanently reinstates the rates that had previously been grandfathered from earlier laws. The rate increases will not occur because of the remapping.
The bill also would repeal home sale and new policy rate increase triggers that were in Section 205. This would allow the person buying the home is treated the same as the person selling it.