Watching NFIP changes unfold
Every year I attend the National Flood Conference, which opened yesterday in Washington D.C. and runs through Wednesday. The mood here is especially tentative given the recent two-weekend temporary extension of the National Flood Insurance Program (NFIP) and renewed calls by influential coastal lawmakers to cap the NFIP’s planned Risk Rating 2.0 program, designed to charge more realistic rates to its five million policyholders.
A bipartisan group of Senators from coastal states are pushing back on FEMA’s plan to overhaul the NFIP, in part, by charging flood insurance rates that more accurately reflect individual property risk. While full details of its Risk Rating 2.0 plan haven’t been revealed, FEMA has said some property owners will pay more while many others will pay less going forward. It’s going forward with the plan, saying it has the regulatory authority to do so.
The Senators sent this May 23 letter to the heads of the Senate Banking Committee, asking them to take up the delayed long-term NFIP reauthorization bill. They note their “serious concerns” with the current NFIP plan and urge a “significantly lower” cap beyond the current annual 18% cap, to shield policyholders from premium spikes.
The letter also calls for other major changes to the NFIP, including a means-tested affordability program for low and middle income homeowners and a stronger pre-disaster mitigation program for properties that repeatedly flood.
A recent Associated Press analysis of FEMA and HUD data shows federal buyouts of these “repetitive loss” properties as they are called are growing increasingly expensive, with many of the costliest occurring in the past ten years of big storms and other major flooding events. The AP reports the feds have spent more than $5 billion into buying tens of thousands of these chronically flooded properties across the country.
Congress has increased pre-disaster mitigation funding, such as elevating homes in flood prone areas, from $25 million in 2015 to $250 million this year, but certainly more could be done. It’s a topic we discussed on a recent Florida Insurance Roundup podcast and how it would save lots of taxpayer money in the long run.
LMA Newsletter of 6-3-19