WASHINGTON, DC – By a vote of 67-32, the U.S. Senate today passed the Homeowner Flood Insurance Affordability Act, which includes an amendment authored by U.S. Senator Jack Reed.  The legislation would delay for up to four years the implementation of abrupt increases in premiums for homeowners in older homes or in homes newly mapped into the floodplain.  The bill will also require the Federal Emergency Management Agency (FEMA) to complete an affordability study and develop recommendations for a policy to assist homeowners who cannot afford their premiums.  The legislation also establishes a new Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process.  The Rate Map Advocate will be responsible for educating policyholders about their individual flood risks, assisting property owners through the map appeals process, and improve outreach and coordination with local officials and community leaders.

“This is a positive step that will address the very real worries of Rhode Island property owners who were facing potentially abrupt and unaffordable increases in their flood insurance premiums,” said Reed.  “The National Flood Insurance Program is vital to protecting Rhode Island homeowners, businesses, and property values throughout the state.  Both taxpayers and flood insurance policy holders deserve financial stability in the NFIP and this legislation should help strike a better balance among risk, affordability, and solvency.” 

In 2012, the Biggert-Waters Flood Insurance Reform Act was enacted as part of the highway and transit reauthorization bill in order to prevent the National Flood Insurance Program (NFIP) from lapsing and leaving thousands of property owners without access to flood insurance protection.  The law sought to phase out or eliminate federal subsidies for certain flood-prone properties in order to address the program’s growing debt.  But since taking effect in October of 2013, FEMA’s implementation of the law has raised concerns about potential premium increases on some properties, particularly in coastal states like Rhode Island.

To date the program owes $24 billion to the U.S. Treasury for funds it borrowed to pay claims from past disasters, including Hurricanes Katrina, Rita and Sandy.  By law, the program may only borrow $31 billion from taxpayers in order to pay claims.  Since 1978, the program has paid more than $117 million claims in Rhode Island, with approximately $70 million in the last four years as a result of Superstorm Sandy and the historic floods of 2010.

Included in the legislation is a key amendment authored by Senator Reed requiring FEMA to study the possibility of making voluntary, community-based flood insurance policies available through the National Flood Insurance Program.  This kind of voluntary, community-based flood insurance plan could potentially give communities the option to purchase blanket policies for all properties in their communities or a portion of their communities.  This could help localities to offer more affordable insurance policies to all their residents and provide greater incentives for community-wide mitigation activities to help reduce risk and insurance costs.  Indeed, Reed’s amendment specifically requires FEMA to develop a strategy that incorporates mitigation into its recommendations for community-based policies.

More than 5.5 million people currently hold flood insurance policies in more than 21,800 communities across the country.  According to a report by the Rhode Island Emergency Management Agency (RIEMA), there are currently more than 16,000 NFIP issued policies in Rhode Island (county-by-county breakdown: Bristol: 2,141; Kent: 2,439; Newport: 3,016; Providence: 2,668; Washington: 5,859) and the average premium in Rhode Island is $1,343 annually.  About 6,800 of those policies are subsidized, according to FEMA.  In general, FEMA and GAO have reported subsidized premiums represent only about 40-45 percent of the full flood risk.

“Today, the Senate passed a bipartisan bill to help keep premiums down in the near term to give FEMA time to develop options to help owners who cannot afford their premiums.  I hope today’s bipartisan vote in the Senate spurs the House to take action and lawmakers on both sides must continue working toward a more comprehensive, long-term solution,” said Reed, who supported a provision in the fiscal year 2014 Consolidated Appropriations law that is already postponing some of the increases until September 30, 2014. 

Now that the bill has passed the Senate, it must be approved by the U.S. House of Representatives.  A House companion bill has been introduced by U.S. Representatives Maxine Waters (D-CA) and Michael Grimm (R-NY) and has 180 bipartisan cosponsors.