U.S. congressman seeks to repeal flood insurance reform law

An American congressman recently tabled legislation that, if passed into law, would repeal existing legislation that requires the United States National Flood Insurance Program (NFIP) – which is at least US$28 billion in debt – to increase premiums for some older properties in high-risk areas.

NFIP was introduced in 1968 to enable residential and commercial owners and tenants to get flood coverage. Though coverage is written by the private sector, the rates do not differ among carriers and agents, and in some cases premiums are subsidized.

In 2012, the Biggert-Waters Flood Insurance Reform Act of 2012 was passed into law. It requires insurance rates for policies under NFIP to be raised, in some cases, to reflect true flood risk.

But on Jan. 7, 2014, a bill to repeal the Biggert-Waters Flood Insurance Reform Act of 2012 was introduced in the U.S. House of Representatives.

“When Biggert-Waters was enacted, no one anticipated rates would increase so drastically,” stated the bill’s sponsor, Republican Tom Marino, in a press release.  “The Federal Emergency Management Agency was required by law to report to Congress on the affordability of implementation decisions but it failed to do so.  FEMA also failed to warn buyers of such rate increases ahead of time.”

In order to qualify for flood insurance under NFIP, the property must be in a community that has joined the NFIP and agrees to enforce sound floodplain management standards.

Under the Biggert-Waters law, “subsidies will be phased out” for several types of properties, including non-primary residences, severe repetitive loss properties, business properties, and “properties that have incurred flood-related damages where claims payments exceed the fair market value of the property,” according to FEMA.

NFIP has a debt of US$28 billion, Marino noted in a press release Dec. 19.

Marino represents the 10th congressional district of Pennsylvania, which includes areas in the northeastern part of the states, including Williamsport and nearby Muncy.

“A homeowner that I met with in Muncy told me his flood insurance premiums are going from less than $1,000 a year to over $9,000,” Marino stated.  “Another couple invested in properties along Main Street in Jersey Shore but is now facing a $40,000 bill every year for their insurance premium.”

Muncy and other towns in Marino’s district are in the Susquehanna River basin, which in 1972 was hit by the most expensive natural disaster in U.S. history (before Hurricane Andrew in 1992).  That was when Tropical Storm Agnes caused flooding, according to the Susquehanna River Basin Commission website.

FEMA advises owners they can reduce their flood insurance premiums by raising their buildings “above the minimum required elevation standards” or to flood-proof non-residential buildings.

“Generally, the higher a building is elevated above flood levels, the lower the cost of flood insurance,” FEMA states on its website. “Additionally, depending on where you live, other ways to reduce premiums could include adding vents to enclosures, installing breakaway walls, or relocating your structure further from the flood source if possible.”

Insurance policies under NFIP cover building and/or contents. Building coverage includes the building itself and foundation, the electrical and plumbing system as well as central air conditioning, furnaces, water heaters, refrigerators, stoves, built-in appliances such as dishwashers and permanently- installed carpeting. Contents coverage includes clothing, furniture, electronic equipment, curtains, portable and window air conditioners, portable microwaves and dishwashers, washing machines and clothes dryers.