In an effort to deflect consumer outrage from mandated flood insurance rate increases, House members touted a provision in legislation passed June 5. But it apparently won't accomplish what they want it to do.
The amendment, included in legislation funding the Homeland Security Department for 2014, would bar use of federal funds to implement a section of the Biggert-Waters Flood Insurance Reform Act of 2012 requiring phased-in rate increases for grandfathered properties.
The amendment passed 281-146, and the appropriations bill was later approved by the full House and sent to the Senate.
However, a top agency official said he has no idea how the provision would bar the agency from implementing the rate increases because FEMA uses flood insurance premiums–not federally-appropriated funds–to administer the National Flood Insurance Program.
The official, who declined to be identified, said Congress has appropriated taxpayer funds for NFIP purposes only once, $1 billion appropriated in the 2003 legislation extending the program for five years. The funds were used to finance remapping for areas feared to be at greater risk for flooding.
The amendment to the Homeland Security appropriations bill Wednesday was introduced by Rep. Bill Cassidy, R-La.; Rep. Cedric Richmond, D-La., Rep. Michael Grimm, R-N.Y., and Rep. Steven Palazzo, R-Miss.
The statement issued afterward by Cassidy said that, "This amendment will block those rate increases and give us time to carefully modify the Biggert-Waters Act. It is important to have a self-sustaining flood insurance program."
However, Cassidy added, "it must account for the flood protections throughout south Louisiana that make massive flood insurance rates unnecessary. I will lead in making sure that occurs."
He also called the amendment "a win for south Louisiana and the nation. The reforms under the Biggert-Waters Act have created flood insurance rates which could destroy south Louisiana homes. They would also be devastating for coastal communities around the country."
But Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, says, "Delaying the reforms enacted under Biggert-Waters will not solve the problems facing either homeowners or the NFIP."
"The amendment is a step back to a program that was financially unsustainable due to hidden subsidies that also created a false sense of security for property owners who, in reality, faced severe risk from flooding," he continues "A fiscally unstable NFIP helps nobody, and we hope Congress will resist efforts to further delay the phasing in of actuarially sound rates."
The House amendment would prohibit officials of the Federal Emergency Management Agency from using appropriated funds to implement rate-increase provisions of the Biggert-Waters Flood Insurance Reform Act of 2012.
Sen. David Vitter, R-La., cimultaneously proposed an amendment to legislation creating a National Association of Registered Agents & Brokers, which is being debated by the Senate Banking Committee, aimed also at stopping the rate increases.
He immediately withdrew it after winning a commitment to hold a hearing on flood rate increases by the committee early in July from the committee chairman and ranking minority member.
Late Tuesday, Sen. Mary Landrieu, D-La., proposed an amendment to the bill that would delay implementation of rate increases for three years. It would also require FEMA to provide Congress a detailed study of how the rate increases would impact the affordability of living in flood zones before any rate increases were applied.
Sec. 207 of the Biggerts-Waters directs FEMA to increase rates over a five year period on any community that receives a revised or new flood maps.
It would impact grandfathered rates, some grandfathered dating back to 1969, when basing rates based on maps detailing the likelihood of a flood impacting a community were first imposed, on second homes, businesses and areas deemed most likely to be impacted by a storm.
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