Today, Congressman Frank Pallone (D-NJ6) and U.S. Senator Robert Menendez (D-NJ) and toured a neighborhood in North Middletown that was largely spared by Superstorm Sandy, yet its residents were facing skyrocketing flood insurance rates as a result of newly redrawn Federal Emergency Management Administration (FEMA) flood maps. They discussed how these residents will benefit from reforms contained in the Menendez-authored and Pallone-sponsored Homeowners Flood Insurance Affordability Act (HFIAA) that was signed into law last week. Sen. Menendez and Rep. Pallone were joined by Middletown's Mayor Stephanie Murray.
"I say to you--with confidence--that relief is on the way," declared Sen. Menendez, speaking to Port Monmouth residents. "You have been spared from making the difficult choice between paying for flood insurance and paying your mortgage, buying medicine or putting food on the table. You don't have to walk away from your home."
"This new law will bring much needed relief to so many homeowners living in flood prone regions. These hardworking individuals played by the rules, purchased flood insurance responsibly, and were still facing the prospect of exorbitant rates that they could not have foreseen," said Congressman Pallone. "This law will lessen the burden that middle class families face when purchasing flood insurance and make it easier for them to stay in their homes."
The two praised President Obama for signing HFIAA into law, bringing relief to flood-weary New Jersey residents and protecting thousands from the financial tsunami that would have resulted from soaring flood insurance rates.
Congressman Pallone said today that he plans to press FEMA to set up a "National Flood Insurance Program (NFIP) Consumer Bill of Rights" so that homeowners know exactly what their policy covers. While consumers have this info in the fine print of their policy, Pallone said that efforts should be made to better educate homeowners on flood insurance policies.
As a member of the Senate Committee on Banking, Housing and Urban Affairs, Sen. Menendez today announced plans to call for hearings into the insurance claims process, citing numerous complaints from Sandy survivors that insurance companies have low-balled homeowners and given them the runaround.
Sen. Menendez authored and first introduced HFIAA last October on the one-year anniversary of Superstorm Sandy. It addressed the egregious problems with FEMA's National Flood Insurance Program (NFIP), bringing relief to homeowners who desperately needed help, while not significantly impacting the program's solvency. Rep. Pallone was an original co-sponsor in the House and worked to secure its passage in early March 2014. The bill passed with overwhelming bipartisan support.
Specifically, the HFIAA:
Creates a Firewall on Annual Rate Increases -- Prevents FEMA from raising the average rates for a class of properties above 15% and from raising rates on individual policies above 18% per year for virtually all properties.
Repeals the Property Sales Trigger -- Repeals the provision in Biggert-Waters that required homebuyers to pay the full-risk rate for pre-FIRM properties at the time of purchase. This provision caused property values to steeply decline and made many homes unsellable, hurting the real estate market. Under the Menendez/Grimm Bill, homebuyers will receive the same treatment as the home seller.
Repeals the New Policy Sales Trigger -- Repeals the provision in Biggert-Waters that required pre-FIRM property owners to pay the full-risk rate if they voluntarily purchase a new policy. This provision disincentivizes property owners from making responsible decisions and could hurt program participation. The Menendez/Grimm Bill allows pre-FIRM property owners to voluntarily purchase a policy under pre-FIRM conditions.
Reinstates Grandfathering -- Repeals the provision in Biggert-Waters that would have terminated grandfathering. If grandfathering was terminated, property owners mapped into higher risk would have to either elevate their structure or have higher rates phased in over 5 years. The Menendez/Grimm Bill allows grandfathering to continue and sets hard caps on how high premiums can increase annually.
Refunds Homeowners who Overpaid -- Requires FEMA to refund policyholders for overpaid premiums.
Affordability goal -- Requires FEMA to minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.
The law also establishes a Flood Insurance Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process and flood insurance rates. In addition, it requires FEMA to certify its mapping process is technologically advanced and to notify and justify to communities that the mapping model it plans to use to create the new flood map are appropriate.
Menendez and Pallone also publicly thanked their constituents, who brought the issue of skyrocketing flood insurance rates to their attention and joined them in the fight for reform. The two reaffirmed their commitment to help New Jersey residents as they continue to recover from Sandy.