-9999

Floor Speech

BREAK IN TRANSCRIPT

Mr. CASSIDY. Madam President, I am here to talk about flood insurance, an issue facing Louisiana, and, I am sorry to say, an issue now facing the Presiding Officer's State.

Floods can occur anywhere--for example, on the top of a mountaintop. People don't realize that, but you have this gully going down from the top to the bottom, and if it gets a big rain--boom--going down from the top of that mountain, you will have a flood.

And that has occurred, unfortunately, in California. I spent several years in Southern California, and I can relate to that.

But it happens regularly in my State. Now, why in my State? Well, folks think of hurricanes as wind, rain, and lightning, but one of the greatest threats is actually the risk of flooding. And these floods can destroy homes, businesses and leave them--if they don't destroy them right away, they can leave them moist. And when it is moist, it begins to rot from the inside. And homes that families have lived in for over 50 years that have never flooded before can become unlivable.

So if you come down to Louisiana or California or Pennsylvania or West Virginia or other things, and you ask folks in the bottom of a riverbed, for example, if a flood can upend their life, they will say emphatically yes.

So if we know the answer is an emphatic yes, then what can Congress do about it, if anything? Well, we have a mechanism to address it, the National Flood Insurance Program which currently ensures 4.7 million American families. It is a Federal program, and we are the ones that can change it to make it more reliable, more affordable, more sustainable.

But the challenge is that it is a tough topic. A lot of folks in Congress just don't understand the issue. And so we need to have the understanding, but then we also need the political will.

Now, this has just kind of--boom--up, up, up in urgency. The Federal Emergency Management Agency recently implemented a new risk assessment called Risk Rating 2.0. Now Risk Rating 2.0 affects Louisiana, the Gulf Coast--frankly, all coasts and anyplace where there is a river or stream that can overflow, and it particularly affects folks who are lower income.

Sometimes people say that the flood insurance program is a program for rich people. Not true; 62 percent of all NFIP policies are in parishes or counties where the median household income is below the national average of $54,000. And truth be told that, as we again just saw in California--what you think of as a desert State--flooding can occur in any State.

So if we look here, here are NFIP claims by cost: 44 out of 50 States have had over $50 million of National Flood Insurance Program claims from 1978 to 2021. And there are only 6 States that have less than $50 million in claims; 13 States have had over a billion in damage, and they are all over the map. It is Virginia--and not just the coastal states--it is Missouri; it is the States on the gulf; it is California; it is going up the northeast. This is geographically distributed.

And, by the way, these are the States hit hardest, but they are not the only States. Every State has had at least an NFIP claim somewhere, sometime, because every State is affected by flooding.

Now, the way the program is currently being conducted, however, is putting it into what is called an actuarial death spiral. Rising premiums mean fewer can afford the insurance. So let's set this up. Right now, you have people at high risk; and the way insurance works is it spreads it over plans over homes that have a lower risk. But if you raise everybody's premiums dramatically, the people who are at lowest risk will drop their coverage. And so you have the same amount of risk, but now it is concentrated upon a smaller pool of homes. That concentration raises the rates even more. And those who are the lowest risk in that pool drop their insurance, which further concentrates. That is called an actuarial death spiral.

I hate to put it this way, but it is visual. Think of when you flush the toilet and it begins to spin, and then that spin goes down. Well, that spinning is that death spiral, and the water in the pool gets smaller and smaller and smaller until it is gone and there is no one left who can afford the cost for the insurance, and it ceases to exist.

Now, by the way, this is true of every insurance program. I am describing the National Flood Insurance Program, but this actuarial death spiral is actually known to be just an insurance--that is just how insurance works. If your pool gets too small, risk too concentrated, the whole thing goes away.

But the problem is, what is happening to the National Flood Insurance Program ignores the fact that the program is actually a bargain. And this is the real problem: When I have telephone townhalls and meeting with constituents, they tell me that their property--their property insurance, their casualty insurance--if you add that to their flood insurance, it is now more than their mortgage. So they are making the tough decision: Do I either leave my home, or do I drop my coverage?

So let's just talk a little bit more about Risk Rating 2.0. First, recognize that this rate hike that we are currently going under could have been stopped with the stroke of a President's pen. Either President Biden or President Trump could have told FEMA to delay or cancel the implementation.

In 2019, my staff worked with and my office worked with the Trump administration to successfully delay the implementation because of concerns about how FEMA was calculating costs. The concern remains, but the Biden administration has decided to go forward, ignoring the concerns of people in Louisiana and elsewhere.

The results are that about 900,000 people have dropped their insurance because they cannot afford it--900,000. That is the beginning of this death spiral we spoke of.

Now, there is some promising news. The Banking Committee recently had a hearing on the National Flood Insurance Program that I put forward, and we got excellent input. There is a consensus that no family in America should be forced to move because of unaffordable flood insurance premiums, that flood insurance premiums should remain affordable, accessible, and accountable to the taxpayer and sustainable to the future.

So my challenge to my colleagues: Designate somebody on your staff. This is a complicated topic. But whether a Californian, a Virginian, a Missourian, you name a State that is in yellow of some tint, ask somebody on your staff to become familiar with the flood insurance program. Then let's come together and move the legislation that will reform it.

The first issue is to gain understanding, then the second issue is to have the political will. If we do this, we can maintain a program which has meant so much to Americans in every State--but certainly in 43 out of 50 States--to enable them to maintain the coverage to protect them should their home flood, that they would be able to build back.

BREAK IN TRANSCRIPT

Source