March 14, 2022

Cassidy, Gillibrand Introduce Bipartisan Flood Insurance Pricing Transparency Act

WASHINGTON – U.S. Senators Bill Cassidy, M.D. (R-LA) and Kirsten Gillibrand (D-NY) today introduced the Flood Insurance Pricing Transparency Act. Cassidy’s bill requires Federal Emergency Management Agency (FEMA) to publish the formulas used to calculate mitigation credits for policyholders under Risk Rating 2.0. It also requires FEMA to release a toolkit that could be used to estimate the cost of insurance for new construction, without compromising proprietary information. Senator John Kennedy (R-LA) is a cosponsor of the legislation.

FEMA is continuing its plans to allow Risk Rating 2.0 to go into full effect on April 1, 2022 despite the widespread uncertainty as to how it will impact homeowners.

“FEMA continues leaving Louisianans and five million Americans in the dark about rising premiums and changes to NFIP,” said Dr. Cassidy. “Our bill requires FEMA to provide clear information to policyholders to help lower premiums and reduce flood risk.”

Thousands of New Yorkers rely on the National Flood Insurance Program to protect their property when a flood occurs,” said Senator Gillibrand. “This bipartisan bill would ensure that the flood insurance rating process is significantly more transparent, which would in turn help policyholders lower their premiums and flood risk.”

“With FEMA set to institute new National Flood Insurance Program premium rates on April 1 under its Risk Rating 2.0 program, NAHB commends Sens. Bill Cassidy and Kirsten Gillibrand for introducing bipartisan legislation to provide transparency to this process,” said Jerry Konter, Chairman of the National Association of Home Builders. “By allowing home owners to determine how FEMA sets premium rates for insured properties based on their location, elevation and other factors, this bill will enable consumers to estimate in advance any changes in their premium rates. It also provides property owners the ability to assess if and how much their insurance rates might decline if they take actions to reduce their homes’ risk of flooding.”

“Nationally, stakeholders agree that greater transparency and continued public education are crucial to the equitable implementation of Risk Rating 2.0,” said Michael Hecht of the Coalition for Sustainable Flood Insurance. “RR 2.0 premiums are generated based on complicated calculations, combining numerous geographic factors and property factors. Active and prospective policyholders, alongside builders, bankers, real estate professionals, and local officials alike will all benefit from a tool that clearly illustrates the weight of each factor. Ultimately, this calculator will empower users to better understand their flood risk and grasp the new rating system, while encouraging NFIP participation and even adoption of mitigation measures.”

“The bipartisan Flood Insurance Pricing Transparency Act would provide greater clarity on the long-term impacts of FEMA’s new Risk Rating 2.0 system under the National Flood Insurance Program and provide our residents with greater transparency into their premiums,” said National Association of Counties Executive Director Matthew Chase. “We thank Senators Cassidy and Gillibrand for introducing this legislation and call on Congress to swiftly pass the bill.”

“The National Association of Professional Insurance Agents (PIA) thanks Senators Cassidy and Gillibrand for their leadership on flood issues and for their introduction of this important bill. As Risk Rating 2.0 has been implemented, it has become clear that independent insurance agents need more information about how the new methodology uses its rating factors to calculate NFIP premiums, especially when they involve mitigation credits. Agents have requested such transparency on behalf of themselves and their policyholders, who deserve to understand how their data is being used to calculate premiums and whether mitigation efforts could change those premiums,” said Jon Gentile of PIA, Vice President, Government Relations. “PIA is also pleased that the legislation would require FEMA to create a tool that could be used to estimate the cost of an NFIP policy without compromising proprietary information. Such a tool would not allow unlicensed members of the public to produce quotes, but it would be helpful to agents for policyholders to be able to see for themselves how their rates will change. This tool would enhance public understanding of Risk Rating 2.0 and is a common-sense way of addressing our transparency concerns. We again thank the senators for introducing this legislation, and we will encourage its passage.”

The National Flood Insurance Program (NFIP) provides flood insurance for over five million policyholders, including roughly 500,000 in Louisiana, and provides over $1.3 trillion in coverage.

Last month, FEMA publicly acknowledged the existence of an internal study finding that the implementation of Risk Rating 2.0 to the National Flood Insurance Program (NFIP) could cause 20% of policyholders to drop out of the program due to skyrocketing premiums. This followed a Cassidy letter to FEMA demanding a delay in Risk Rating 2.0.