WASHINGTON—U.S. Senators Bill Cassidy, M.D. (R-LA) and John Kennedy (R-LA) led a bipartisan group of senators and representatives in unveiling a new, bipartisan and bicameral piece of legislation to extend the National Flood Insurance Program (NFIP) for five years while instituting a series of critical reforms to address the waste, abuse and mismanagement plaguing the system. More than five million American families depend upon the NFIP, which Congress must reauthorize before it expires on Sept. 30, 2019.
The National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act takes important steps to improve the accountability, affordability, and sustainability of the NFIP. It also puts an emphasis on supporting prevention and mitigation efforts to avoid costly damage caused by flood disasters. The legislation also reflects the principles outlined in last month’s letter to the Senate Banking Committee, led by Cassidy and signed by Kennedy, demanding action on NFIP reauthorization and reform.
“This legislation ensures the NFIP works for the homeowners that depend on it,” said Dr. Cassidy. “The reforms in this bill are critical to any reauthorization effort to make the program sustainable and prevent families from being hit with drastic premium increases.”
“More than five million Americans depend on the National Flood Insurance Program to protect their homes and businesses. For many people, this program is as essential as air and water,” said Senator Kennedy. “Louisiana has been home to people for centuries. Louisiana energy jobs are helping the U.S. end its reliance on foreign oil. Through common sense reforms, we can create a flood insurance program that continues to protect people’s homes at affordable rates while remaining solvent.
Cassidy and Kennedy held a press conference today to discuss the introduction of this legislation.
Joining Cassidy and Kennedy in introducing this legislation to the U.S. Senate are U.S. Senators Bob Menendez (D-NJ), Cory Booker (D-NJ), Chris Van Hollen (D-MD), Marco Rubio (R-FL), Elizabeth Warren (D-MA), and Kirsten Gillibrand (D-NY).
U.S Representatives Clay Higgins (R-LA-03) and Frank Pallone, Jr. (D-NJ) and are also introducing bipartisan companion legislation to the U.S. House of Representatives along with U.S. Representatives Bill Pascrell, Jr. (D-NJ), Albio Sires (D-NJ), Mikie Sherrill (D-NJ), Jeff Van Drew (D-NJ), Bonnie Watson Coleman (D-NJ), Donald Payne, Jr. (D-NJ), Josh Gottheimer (D-NJ), Tom Malinowski (D-NJ), Donald Norcross (D-NJ), Chris Smith (R-NJ), Andy Kim (D-NJ), Debbie Mucarsel-Powell (D-FL), Charlie Crist (D-FL), and Stephanie Murphy (D-FL).
The NFIP Re Act builds upon the bipartisan, comprehensive Flood Insurance Affordability and Sustainability Act introduced by Cassidy and the Sustainable, Affordable, Fair, and Efficient (SAFE) National Flood Insurance Program Reauthorization Act introduced by Kennedy. The new legislation addresses critical problems with the program, administered by the Federal Emergency Management Agency (FEMA), including: unsustainability, low participation rates, inaccurate flood maps, indifference to the benefits of flood control infrastructure, agency mismanagement, unsustainable debt service costs and contractor profiteering.
The National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019
Reauthorizes the NFIP for five years, providing certainty for communities.
No Steep Rate Hikes under Risk Rating 2.0.
Protects policyholders from exorbitant premium hikes by capping annual increases at 9%. Currently, premiums can more than double every 4 years or less and FEMA’s new methodology called Risk Rating 2.0 will fundamentally alter premiums on every policy in the country. This untested and unknown methodology could cause a rate shock and lead to unaffordability premiums, forcing homeowners to drop coverage or lose their homes. We saw all too clearly the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket, hurting policyholders and disrupting the real estate market. This will put guardrails on FEMA’s new rating methodology, known as Risk Rating 2.0, and safeguard policyholders from sudden rate shocks.
Affordability for Low- and Middle-Income Policyholders.
Provides a comprehensive means-tested voucher for millions of low- and middle-income homeowners and renters if their flood insurance premium causes their housing costs to exceed 30% of their Adjusted Gross Income, significantly increasing the affordability of the NFIP program.
Path to NFIP Solvency.
Freezes interest payments on the NFIP debt and reinvests savings towards mitigation efforts to restore the program to solvency and reduce future borrowing
Increased Cost of Compliance (ICC) Coverage.
Increases the maximum limit for ICC coverage to better reflect the costs of rebuilding and implementing mitigation projects. In addition, ICC coverage eligibility is expanded in order to encourage more proactive mitigation before natural disasters strike.
Strong Investments in Mitigation.
Provides robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk.
More Accurate Mapping.
Authorizes funding for Light Detection and Ranging (LiDAR) technology for more accurate mapping of flood risk across the country, reducing confusion and generating better data.
Oversight of Write Your Own (WYO) Companies.
Creates new oversight measures for insurance companies and vendors, and provides FEMA with greater authority to terminate contractors that have a track record of abuse.
Claims and Appeals Process.
Fundamentally reforms the claims process to level the playing field for policyholders during appeal or litigation, bans aggressive legal tactics preventing homeowners from filing legitimate claims, holds FEMA to strict deadlines so that homeowners get quick and fair payments, and ends FEMA’s reliance on outside legal counsel from expensive for-profit entities.
Provides for increased training and certification of agents and adjusters to reduce mistakes and improve the customer experience.