The White House signed into law comprehensive legislation designed to delay planned rate hikes for flood insurance originally designed to reform the National Flood Insurance Program, which is in debt to the tune of more than $24 billion.
In a bipartisan, election-year vote, the House of Representatives on March 4 and the Senate on March 13 passed the rate hike delay.
The rate hikes were a key part of the Biggert-Waters Flood Insurance Reform Act of 2012, as the NFIP is more than $24 billion in debt.
The Biggert-Waters Act was passed to ensure the National Flood Insurance Program moves closer to solvency and sound underwriting. It tried to incorporate a more risk-based approach when setting premiums for insurance offered through NFIP.
Opponents of Biggert-Waters’ rate hikes said that they would have a disparate impact on lower income homeowners.
“Today, many months of hard work, negotiation and bipartisan compromise have culminated in a law that will end skyrocketing flood insurance costs for hundreds of thousands of homeowners. Though the measure isn’t perfect, it ensures there will be no more dramatic rate increases for families currently facing unaffordable premiums,” said U.S. Rep. Maxine Waters, D-Calif.
Opponents of the rate hike delay said that continuing to subsidize flood insurance through the NFIP is not the answer, and that affordability concerns are valid but there are better ways to help homeowners, particularly low-income and fixed-income property owners, rather than also subsidizing high-income and vacation beach home owners.
They said the 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.