Under Pressure, Landrieu Again Seeks to Block NFIP Rate Increases

Sen. Mary Landrieu, D-La., late Tuesday introduced legislation that would roll back a number of National Flood Insurance Program reforms passed last year.

However, an industry official cautioned that “any effort to delay the reforms enacted last year could ultimately weaken the NFIP.”

Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies said the reforms were designed to move the NFIP towards fiscal stability and at the same time to show policyholders the true risk they face from flooding.

“We understand that some policyholders may require assistance during the move toward risk-based rates, but we believe that any subsidy for flood insurance coverage must be done transparently rather than through suppressed rates,” Grande said. “Artificially reduced rates are a major part of the problems facing the NFIP in recent years, and why it required a loan from the Treasury."

And, another industry lobbyist who has talked to members of both the House and Senate financial services committees, said there is “less than a zero appetite” for reopening the bill for debate.

The Landrieu bill is the Strengthen, Modernize and Reform the National Flood Insurance Program (SMART NFIP) Act.

The legislation Landrieu seeks to significantly amend, the Biggert-Waters Act, was the result of a five-year effort to provide long-term certainty to the NFIP. 

Landrieu is acting under intense pressure from angry voters in Louisiana who would see their rates increase.

Similar pressures are being brought on legislators from New York and New Jersey as a consequence of Superstorm Sandy.

Landrieu is also acting as a potential rival for her Senate seat, Rep. Bill Cassidy, R-La., forms a coalition of members of the Senate and House, excluding Landrieu, whose objective is to seek a rollback or delay in some of the NFIP rate increases scheduled to go into effect.

The Landrieu bill would delay flood insurance premium increases authorized in  the 2012 legislation, including the requirement that flood insurance subsidies on second homes and businesses be phased out over four years.

It would also block a mandate to start phasing out subsidies on properties whose rates were grandfathered when the Federal Emergency Management Agency, which runs the program, was ordered to develop maps in 1974 showing the risks of flooding in a particular area, and to base rates on those maps. 

The legislation would also bar the NFIP from raising rates up to 20 percent a year, effective in 2014, from the current maximum of 10 percent a year.

Those increases would be blocked until six months after FEMA conducts an affordability study on the higher premiums.

The Landrieu bill would also repeal provisions in the 2012 federal flood insurance bill that ended subsidized flood insurance rates when a parcel in a high risk area is sold. 

That would make many Louisiana homes unsellable, she said.

Additionally, her bill would strike a provision blocking the rebuilding of community facilities destroyed in a disaster when the location is in a high-risk area.

Landrieu aides said the delay, along with the completed study, would provide Congress with the information it needs to develop a law that helps make the flood insurance program more sustainable without putting insurance out of the price range of homeowners and businesses.

“Flood insurance must be affordable, accessible and self-sustainable. Biggert-Waters only addressed self-sustainability at the cost of homeowners in Louisiana and across the country living around water,” Landrieu said.

“The SMART NFIP Act is a better way to achieve all three of these goals and will allow families and businesses to continue working and living securely around water,” Landrieu added.

“Flood insurance is not just about business and commerce. It is about culture; it is about a way of life; it is about preserving coastal communities; and it is about being resilient in storms,” she concluded.

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