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Menendez Leads Bipartisan, Comprehensive Flood Insurance Reform Bill

U.S. Senator Bob Menendez (D-N.J.) today led a bipartisan group of Senators in unveiling new, comprehensive legislation to extend the National Flood Insurance Program (NFIP) for five years while instituting a series of sweeping reforms to address the waste, abuse and mismanagement plaguing the system. More than five million American families depend upon the NFIP, which Congress must reauthorize before it expires after Sept. 30, 2019.

The National Flood Insurance Program Reauthorization and Reform Act of 2019 (NFIP Re) tackles systemic problems with flood insurance, puts it back on solid fiscal ground, and reframes the nation's entire disaster paradigm to one that focuses more on prevention and mitigation in order to spare the high cost of rebuilding after flood disasters.

The NFIP Re of 2019 is being introduced with broad, bipartisan support including the following original cosponsors: Bill Cassidy (R-La.); Cory Booker (D-N.J.); John Kennedy (R-La.); Elizabeth Warren (D-Mass.); Marco Rubio (R-Fla.); Kirsten Gillibrand (D-N.Y.); Jack Reed (D-R.I.); and Chris Van Hollen (D-Md.).

Bipartisan companion legislation is being introduced in the House of Representatives by Reps. Frank Pallone, Jr. (D-N.J.) and Clay Higgins (R-La.) and is co-sponsored by Reps. Bill Pascrell, Jr. (D-N.J.), Albio Sires (D-N.J.), Mikie Sherrill (D-N.J.), Jeff Van Drew (D-N.J.), Bonnie Watson Coleman (D-N.J.), Donald Payne, Jr. (D-N.J.), Josh Gottheimer (D-N.J.), Tom Malinowski (D-N.J.), Donald Norcross (D-N.J.), Chris Smith (R-N.J.), Andy Kim (D-N.J.), Debbie Mucarsel-Powell (D-Fla.), Charlie Crist (D-Fla.), and Stephanie Murphy (D-Fla.).

"We've witnessed the NFIP fail our constituents in their greatest hour of need and, after countless reauthorizations that simply kick a broken can down the road, we want real reform," said Sen. Menendez, a senior member of the Senate Banking Committee that oversees the NFIP and chair of the Sandy Task Force. "With the National Flood Insurance Reauthorization and Reform Act of 2019, we can make the program more sustainable, more affordable, hold FEMA and private contractors accountable, and invest in the kind of forward-looking mitigation that reduces risk and prevents costly flooding in the first place."

"This legislation ensures the NFIP works for the homeowners that depend on it," said Dr. Cassidy. "The reforms in this bill are critical to any reauthorization effort to make the program sustainable and prevent families from being hit with drastic premium increases."

"More than five million Americans depend on the National Flood Insurance Program to protect their homes and businesses. For many people, this program is as essential as air and water," said Sen. Kennedy. "Louisiana has been home to people for centuries. Louisiana energy jobs are helping the U.S. end its reliance on foreign oil. Through common sense reforms, we can create a flood insurance program that continues to protect people's homes at affordable rates while remaining solvent."

"With rising sea levels and heavier rainfalls bearing down on our communities, it's critical that we reform our flood insurance program to reduce financial risk for families and bring people the peace of mind they deserve," said Sen. Warren. "That's why I'm pleased to support this legislation, which would take several steps to improve resiliency, and tackle the waste, and mismanagement plaguing our current flood insurance system."

"Our National Flood Insurance Program is broken, and New Yorkers who live and work in coastal communities are demanding that Congress solve this problem now. With hurricane season already here and sea levels rising on our coasts, we must act quickly to fix the program and give Americans the relief they need," said Sen. Gillibrand. "I am proud to be an original cosponsor of this bipartisan bill to make our National Flood Insurance Program stronger, and I urge all of my colleagues to join me in fighting to pass it."

"The National Flood Insurance Program is vitally important to my home State of Florida as it holds more than one-third of total policies nationwide," Sen. Rubio said. "This bill provides long-term stability, while delivering much needed reforms to protect the program's policyholders. The federal government must take a more proactive approach in addressing the underlying risk affecting flood prone communities, and unfortunately, instability has long plagued the program. I am proud to have worked with this bipartisan group to make our National Flood Insurance Program more practical, sustainable and accountable."

"Reauthorizing our national flood insurance program is crucial to protecting our communities from severe weather. From hardening our infrastructure to helping our towns rebuild, this legislation includes critical updates that will allow FEMA to better serve families and businesses in Maryland and across the country. It is particularly important for areas like Ellicott City, which has been ravaged by historic floods, and low-lying communities along the Chesapeake Bay. I will continue working to strengthen our state's flood infrastructure so communities in our state have the security they need and deserve," said Sen. Chris Van Hollen.

"Every American homeowner, renter, businesses, and community is at risk of a substantial loss due to flooding. The National Flood Insurance Program provides a way to protect against such risk, but the program can be vastly improved to better protect the public," said Sen. Reed. "This bill would provide a comprehensive, long-term reauthorization that will ensure property owners know their flood risk and have an appropriately priced but affordable way to insure against it. Most important, it includes new tools to help property owners mitigate risk before a flood occurs."

"This legislation is an important and common sense approach to make flood insurance more affordable and extend coverage to communities who need it the most. Investing in the National Flood Insurance Program will ensure that New Jersey families are protected should disaster strike," Sen. Booker said. "It's important that residents know there is a safety net that can not only help rebuild communities, but prevent and eliminate waste and mismanagement."

"My constituents know all too well that a fair flood insurance program is critical for rebuilding in the wake of destructive storms. After Superstorm Sandy, insurance companies outright refused to make good on their promises to policyholders and instead pointed to the fine print while denying families who had lost everything. New Jerseyans deserve a long-term flood insurance program reauthorization that improves the program based on the realities of major weather events like Sandy," Rep. Pallone said. "This legislation will go a long way to strengthen our flood insurance program so that homeowners in my district are protected from the devastating effects of future flooding."

"Home and business owners in South Louisiana and across the country rely on the NFIP to protect their property and provide affordable flood insurance," said Rep. Higgins. "A long-term reauthorization, in the form of the SAFE NFIP Act, will provide policyholders with greater certainty and allow necessary reforms to improve the program. The SAFE NFIP Act protects affordability, prioritizes pre-disaster mitigation, improves flood plain mapping, and ensures long-term sustainability. Our legislation has bipartisan support from many coastal lawmakers, and I want to thank Congressman Pallone for his continued work on this issue."

"I remember touring the devastation of Sandy like it was yesterday. Homes damaged. Businesses destroyed. The mold. The sand. The debris. I spoke with my constituents who saw their entire lives swept away in an instant. I vowed that day never to stop fighting for them," said Rep. Pascrell. "Our bipartisan, bicameral legislation will do a lot. Thanks to the hard work of Senator Menendez and Congressman Pallone, our bill helps people prepare prior to a storm with accurate maps and flood prevention investments. It strengthens the claims process so survivors get what they need to rebuild. It gives affordability safeguards to stop premiums from being jacked up. And it brings much-needed accountability to the Write Your Own program. We will be fighting hard to make sure we pass these changes into law. We owe it to Sandy victims."

"Under a month ago, South Jersey was hit with severe rain and flooding, and many families are still struggling to put their lives back together. These families and tens of thousands of others in New Jersey who rely upon the National Flood Insurance Program (NFIP) need us to take action and tackle systematic problems with the NFIP," said Rep. Donald Norcross. "After Superstorm Sandy's devastation, there was unfortunately confusion and mismanagement -- and it was painfully clear that commonsense, bipartisan solutions were needed. This bill will extend coverage and keep it affordable while strengthening resiliency and mitigation efforts that will help South Jerseyans, New Jerseyans and all Americans.

"Flood insurance isn't a policy decision in our communities, it's one that's deeply personal to those still recovering from Superstorm Sandy in Ocean County and the recent floods in Burlington County," said Rep. Kim. "I'm proud to support this bipartisan effort that will strengthen the National Flood Insurance Program and put it on a path to better serve people in our community when the next storm hits."

"I've been able to see first-hand how essential the National Flood Insurance Program is to the hardworking people of New Jersey's Fifth District, not to mention our state's economy. Our flood-prone communities cannot continue to live in uncertainty when it comes to getting or affording flood insurance," said Rep. Gottheimer. "That's why I'm proud to stand with the entire New Jersey delegation to support this bipartisan legislation. Our homeowners deserve long-term certainty that expands coverage, improves mapping, and most importantly, lowers costs."

"New Jersians are all too familiar with extreme weather, damaging floods, and the problems associated with the National Flood Insurance Program," said Rep. Malinowski. "This bipartisan bill closes loopholes used to deny policyholders' claims and protects our state's residents from dramatic premium increases. We need more transparency, accountability, and fairness in the this program--our bill helps us get there."

"Our community knows the devastating impact of flooding to our homes and to our businesses. Wayne, New Jersey, has experienced some of the worst flooding in our state, and residents rely on the National Flood Insurance Program for financial protection," said Rep. Sherrill. "I am a proud co-sponsor of this crucial bipartisan legislation, which will provide New Jerseyans with a sense of certainty and security. As storms become more intense and more frequent, it is more important than ever to ensure that communities in New Jersey and across the country have access to flood insurance."

The National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019

Long-Term Certainty. Reauthorizes the NFIP for five years, providing certainty for communities.

No Steep Rate Hikes under Risk Rating 2.0. Protects policyholders from exorbitant premium hikes by capping annual increases at 9%. Currently, premiums can more than double every 4 years or less and FEMA's new methodology called Risk Rating 2.0 will fundamentally alter premiums on every policy in the country. This untested and unknown methodology could cause a rate shock and lead to unaffordability premiums, forcing homeowners to drop coverage or lose their homes. We saw all too clearly the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket, hurting policyholders and disrupting the real estate market. This will put guardrails on FEMA's new rating methodology, known as Risk Rating 2.0, and safeguard policyholders from sudden rate shocks.

Affordability for Low- and Middle-Income Policyholders. Provides a comprehensive means-tested voucher for millions of low- and middle-income homeowners and renters if their flood insurance premium causes their housing costs to exceed 30% of their Adjusted Gross Income, significantly increasing the affordability of the NFIP program.

Path to NFIP Solvency. Freezes interest payments on the NFIP debt and reinvests savings towards mitigation efforts to restore the program to solvency and reduce future borrowing

Limits on Private Insurance Company Profits. Caps Write Your Own (WYO) compensation at the rate FEMA pays to service its own policies and redirects the savings to pay for the means-tested affordability program.

Increased Cost of Compliance (ICC) Coverage. Increases the maximum limit for ICC coverage to better reflect the costs of rebuilding and implementing mitigation projects. In addition, ICC coverage eligibility is expanded in order to encourage more proactive mitigation before natural disasters strike.

Strong Investments in Mitigation. Provides robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk.

More Accurate Mapping. Authorizes funding for Light Detection and Ranging (LiDAR) technology for more accurate mapping of flood risk across the country, reducing confusion and generating better data.

Oversight of Write Your Own (WYO) Companies. Creates new oversight measures for insurance companies and vendors, and provides FEMA with greater authority to terminate contractors that have a track record of abuse.

Claims and Appeals Process Reforms Based on Lessons from Sandy. Fundamentally reforms the claims process based on lessons learned in Superstorm Sandy and other disasters, to level the playing field for policyholders during appeal or litigation, bans aggressive legal tactics preventing homeowners from filing legitimate claims, holds FEMA to strict deadlines so that homeowners get quick and fair payments, and ends FEMA's reliance on outside legal counsel from expensive for-profit entities.

Better Training. Provides for increased training and certification of agents and adjusters to reduce mistakes and improve the customer experience.

Here is what others are saying about the legislation:

Amy Bach, Esq., Executive Director of United Policyholders

"Senator Menendez has been in the flood recovery and insurance trenches with home and business owners for many years. His proposed legislation distills lessons learned into reforms that will restore confidence and integrity to this essential program."

George Kasimos, Founder of StopFEMANow

"This is a bold bill that represents the policyholders interests not the special interest groups. The Jersey Shore is still trying to recover after Sandy. Senator Menendez has always been in Sandy Survivors' corner. This bill shows Senator Menendez keeps fighting for all, not just Sandy Survivors, but all flood policyholders. From affordable premiums, to paying flood claims fairly, to re-mapping correctly, to raising ICC to $60,000, to mitigation funding to help prevent future flooding -- this bill has it all."

Krista Sperber, Co-founder of New Jersey Organizing Project

"The NFIP-RE Act is vital to making the program work for policy holders and taxpayers. By making the program affordable for working families and funding mitigation, policy holders and tax payers will have a stronger program where no one is priced out of protection. And, every dollar invested in mitigation saves $4 - $6 dollars in disaster relief money - so it's a win for all of us. NFIP-RE takes critical measures to ensure flood insurance is fair to policy holders. Eliminating the bad actors responsible for fraudulent engineering reports and underpayment, granting policyholders the right to collect attorney and expert fees, and shifting lawsuits to the DOJ to defend are a giant leap forward in leveling the playing field so unscrupulous insurance companies and their contractors cannot take advantage of disaster survivors on our dime."

Chad Berginnis, Executive Director of The Association of State Floodplain Managers

"The NFIP reform and reauthorization bill being introduced by Senator Menendez has several strong proposals and is a good starting point for NFIP reform in the Senate. The Association of State Floodplain Managers are especially pleased to see several very strong and innovative proposals relating to flood hazard mitigation including positive changes to Increased Cost of Compliance, a robust proposal to address repetitive loss properties, and an innovative low-interest mitigation loan program. Additionally, ASPFM is supportive of strengthening disclosure requirements regarding flood risks. ASFPM looks forward to working with Senator Menendez and other co-sponsors to address several pressing needs related to the NFIP going forward."

Kevin Walsh, Executive Director of the Fair Share Housing Center

"This legislation would protect homeowners from the kind of abuses New Jerseyans saw after Superstorm Sandy. The bill would help speed payments to homeowners trying to rebuild after a natural disaster, while also ensuring that they are fairly compensated and giving them avenues to appeal insurance company decisions. This proposal would also keep the Jersey Shore affordable to working families by limiting increases in homeowner insurance premiums.

Susan Marticek, Executive Director, Ocean County Long-Term Recovery Group

"Very excited to see Sen. Menendez's legislation because it takes into account all of the hard-learned lessons from Sandy, and implements changes that will directly benefit policyholders in the aftermath of a disaster and expedite recovery for both the individual as well as the community at large. The pre-disaster aspects of this bill will go a long way to make our communities more resilient and save a tremendous amount of tax dollars in disaster recovery aid. The post-disaster reforms show the admirable degree to which Senator Menendez truly listened to the advocates and Sandy victims on the ground, carrying those lessons into his bill to ensure that disaster victims are at the center of FEMA's response and that the failures of the NFIP claims process following Sandy are not replicated in the future. We fully endorse this bill and need it now more than ever."

Melissa H. Luckman, Esq., Director of the Disaster Relief Clinic at Touro Law Center

"The NFIP reauthorization bill introduced by Senator Menendez speaks directly to the shortfalls of the NFIP post Sandy. This bill will ensure that the fraud, deceit, and mismanagement of the NFIP faced after Sandy never happen again. Senator Menendez has been relentlessly advocating on behalf of all Sandy survivors since immediately post-Sandy through the Sandy Task Force, which forced FEMA to re-open all 144,000 NFIP insurance claims and to date has paid out over $208 million. This bill is the culmination of four-and-a-half years of spending countless hours listening to boots-on-the-ground constituent circumstances, and providing real and thorough reforms to ensure that policyholders have a voice and are protected in future flooding events. I completely support all of the protections afforded to homeowners in this bill."

Doug Quinn, Executive Director of American Policyholder Association

"The American Policyholder Association strongly endorses the national flood insurance program reauthorization and reform act of 2019. The bill has vital protections for consumers and taxpayers alike. We are particularly enthusiastic about the provisions allowing FEMA to ban individuals and companies involved in unethical conduct, as well as eliminating the fraudulent manipulation of engineering reports. This bill provides for a more stable and reliable NFIP while ensuring affordable premiums for American families. The APA urges passage of the National flood insurance reauthorization act of 2019."

The NFIP Re Act of 2019 builds upon bipartisan, comprehensive reform legislation originally introduced in 2017 by Sens. Menendez, Kennedy, Van Hollen, Warren, Rubio, and the late-Thad Cochran (R-Miss.). It addresses critical problems with the program, administered by the Federal Emergency Management Agency (FEMA), following Superstorm Sandy and other disasters: unsustainability, low participation rates, inaccurate flood maps, indifference to the benefits of flood control infrastructure, agency mismanagement, unsustainable debt service costs and contractor profiteering.

Sen. Menendez first exposed the problem of widespread lowballing of flood insurance claims during Congressional hearings he chaired in 2014, and then successfully pushed FEMA to reopen every Sandy flood insurance claim for review, which compensated Sandy victims with more than $230 million in additional payments they were initially denied.

Sen. Menendez authored the Superstorm Sandy Relief and Disaster Loan Program Improvement Act, which extended and expanded access to federal disaster loans through the U.S. Small Business Administration (SBA). His Homeowner's Flood Insurance Affordability Act was signed into law in 2014 to address skyrocketing rates many Sandy survivors were encountering. In 2013, he shepherded the original $60 billion federal Sandy aid package through Congress.


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