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NFIP reformists fire warning shot at Congress

Charge: Don't keep undercutting flood insurance reform

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It may be just a rumor of war they’re hearing, but Taxpayers for Common Sense and SmarterSafer.org are firing a warning shot across the Capitol about plans they say are in the works for yet another vote on the Biggert-Waters Flood Insurance Reform Act of 2012.

“While there is no legislative language available, House leadership is saying there will be vote next week on changes to Biggert-Waters that undercut reforms voted for by 400 house members,” said Steve Ellis, vice president of Taxpayers for Common Sense.

“Nothing is firm but what we are hearing is leadership wants to vote for changes that would slow down rate hikes for second homes, commercial properties and severe repetitive loss properties,” he said. “Even the Senate’s four-year delay bill didn’t touch these. In addition, rate increases for properties remapped into flood plain or new construction could be scrapped entirely.”

Biggert-Waters, which was passed to ensure the National Flood Insurance Program moves closer to solvency and sound underwriting, tried to incorporate a more risk-based approach when setting premiums for insurance offered through NFIP. 

SaferSmarter.org and Taxpayers for Common Sense are worried that the House may consider a new proposal that would keep taxpayers on the hook for subsidizing the premiums of beach houses, rather than helping struggling home owners in flood-prone areas. 

A few months after Biggert-Waters was passed, homeowners battling higher premiums were already pressuring lawmakers to carve back new premium hikes, creating just one more battle over flood insurance.

Over the last few weeks, Republicans stopped several efforts to force a vote on H.R. 3370, which would delay pending flood insurance premium hikes under the National Flood Insurance Program.

A version of this legislation on Thursday passed the U.S. Senate 67-32. Supporters want to stall provisions of the Biggert-Waters Flood Insurance Reform Act of 2012.

Critics say that continuing to subsidize flood insurance through the NFIP is not the answer, especially in the face of growing flood risks from sea level rise, and that affordability concerns are valid but there are better ways to help homeowners, particularly low-income and fixed-income property owners.

From the standpoint of reform hawks, reforms to the NFIP are needed to ensure policyholders pay actuarially sound premiums, allowing for a gradual transition away from situations where the Treasury is having to bail out the program.

Even the Obama Administration is on the side of the budget hawks on this one. The Obama administration has strongly opposed delays, saying they would “further erode the financial position of the NFIP” and “reduce FEMA’s ability to pay future claims made by all policyholders.”

The Congressional Budget Office has estimated a four-year delay would add $2.1 billion to the National Flood Insurance Program’s already sizeable $24 billion deficit.

“If the policy provision on grandfathering (out) decades-old flood insurance rates is … scrapped what is the point of reform?” Ellis asked.

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