Senators demand affordable and affordable flood insurance during hearing

WASHINGTON, Jan. 25 (UPI) — Lawmakers on Thursday stressed the urgent need to renew the National Flood Insurance Program with reforms to curb ever-rising premiums that are becoming more difficult for homeowners.

The Senate Banking Committee is working to reauthorize the National Flood Insurance Program before its March 8 expiration date, which has already been extended multiple times as Congress struggles to pass a budget and other legislation.

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The latest version of the bill proposes to limit rate increases, ensure prompt payments for homeowners and increase oversight for insurance providers.

“Congress cannot allow the NFIP to expire,” said Sen. Tim Scott, RS.C. “Whether you’re in Ohio, California, or the New Jersey-New York area, the number of flood insurance policies is practically non-existent. Flooding doesn’t just happen when you live near water. Today, flooding is happening all over the country. “

Destructive hurricanes and torrential rains and other weather disasters increase the need to provide affordable insurance in all coastal and inland states.

Sen. Sherrod Brown, D-Ohio, pointed to drastic flooding from coast to coast this month alone, including in Rhode Island, California and Louisiana.

The insurance program, funded by the Federal Emergency Management Agency, serves residents with rates based on the elevation of their property within a Flood Insurance Rate Map area.

Homeowners with a federal mortgage living in designated flood zones must purchase flood insurance, while those living outside the mapped areas can choose a federal or private plan.

The proposed legislation intends to counter the premium increases from FEMA’s Risk Assessment 2.0, which was introduced in April 2023. The new program includes more factors in calculating premiums, including how close a home is to a body of water and the estimated cost of rebuilding after damage.

Of the 3.4 million single-family homes with policies under the federal program, only about 625,000 homeowners will see their rates drop.

After the risk assessment change was introduced, senators expressed concern about policyholders reducing their cover because of the higher rates, even though the risk of flooding for all homes is increasing as a result of climate change.

Sen. Bob Menendez, DNJ, noted that the program has lost 100,000 policyholders so far, and FEMA estimates it could lose 1 million by the end of the decade.

“Families who are forced to drop their flood insurance because of rising costs and later suffer damage in future disasters, that’s the biggest catastrophe for them,” Menendez said.

FEMA’s rate of restrictions is increasing 18% per year, as informed by flood mapping data and disaster models. The proposed reauthorization would introduce tighter interest rate caps of 9 percent, protecting policyholders from price spikes.

Senators from both sides of the aisle have criticized the premium increases, noting that they are becoming less affordable for working, middle-class American families.

“This is just an excuse to raise premiums,” said Sen. John Kennedy, R-La., adding that he has seen price increases between 300 percent and 500 percent in various Louisiana counties.

“The whole point of the National Flood Insurance Program is to provide a product that people can afford. FEMA lied and will not do better,” Kennedy said.

In response to a question from a lawmaker, Michael Hecht, president of the Greater New Orleans Inc. Economic Development Agency, said only about 4 percent of U.S. homeowners have flood insurance, “although that number should be many, many bigger’.

Daniel Kanewski, managing director of insurance company Marsh McLennan, also called for the legislation to get ahead of flood damage by including incentives to build in areas with less flood risk in the first place.

“Avoiding danger is at the center of our universe,” he said.