Today, U.S. Rep. Bill Pascrell, Jr. (D-NJ-09) joined a bipartisan group of colleagues in introducing the "Homeowner Flood Insurance Affordability Act," legislation that would delay the skyrocketing flood insurance rate hikes that went into effect on October 1, 2013 as a result of the Biggert-Waters Flood Insurance Reform Act of 2012. The new legislation calls for a four-year delay in most rate increases until FEMA to complete an affordability study and proposes regulations that address affordability issues. A companion bill was also introduced in the Senate.
"Homeowners in storm-ravaged communities like Little Ferry and Moonachie have enough on their plates already. Skyrocketing insurance costs should not be one of them," said Rep. Pascrell. "Many middle class families are simply not going to be able to afford their homes due to the unintended consequences of the Biggert-Waters Act. This bipartisan, bicameral legislation will delay these rate hikes while we address these affordability issues."
Homeowners in flood zones are required to purchase flood insurance, administered through the National Flood Insurance Program (NFIP). Under the Biggert-Waters Flood Insurance Reform Act of 2012, the maximum rate increase the NFIP could impose in a given year was raised from 10 to 20 percent, and in some cases up to 25 percent. On June 5th, Rep. Pascrell voted for an amendment to the Homeland Security Appropriations Act sponsored by Rep. Cassidy, which would have preserved the current grandfathered rates for existing policy holders. The amendment passed by a vote of 281-146, although the final bill never became law. On October 1st, rates around the country skyrocketed and some homeowners saw rates multiply tenfold.
The "Homeowner Flood Insurance Affordability Act" will delay the implementation of rate increases for 2 years while FEMA completes its affordability study mandated in Biggert-Waters for grandfathered primary, non-repetitive loss residences; all properties sold after July 6, 2012; and all properties that purchased a new policy after July 6, 2012.
The bill also requires FEMA to promulgate regulations that address the identified affordability issues within 18 months after the completion of the study and establishes a 6 month moratorium thereafter to provide for Congressional review. In total the bill could delay the rate hikes for up to 4 years.
The new legislation also allows FEMA to utilize National Flood Insurance Funds to reimburse policyholders who successfully appeal a map determination; establishes a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process; and requires FEMA to certify that the agency has fully adopted a modernized risk-based approach to analyzing flood risk.