Homeowner Flood Insurance Affordability Actby Representative Glenn Thompson
Posted on 2014-01-08
THOMPSON of Pennsylvania. Mr. Speaker, I appreciate the gentleman
for yielding, and I appreciate my good friend from Pennsylvania for
hosting this Special Order on a very serious issue.
Biggert-Waters, I think, was a piece of legislation that we all had great hopes for in terms of the National Flood Insurance Program. As the commercial insurance industry really exited the insuring of flood risk, it was left to the Federal Government; and with the recent flooding, obviously, over the past number of years, that fund has been decimated. Last year, on a bipartisan basis, Congress passed the Flood Insurance Reform Act of 2012. The measure included some long overdue reforms that strengthened the financial solvency and administrative efficiency of the National Flood Insurance Program.
The rationale for the 2012 law was the need for the National Flood Insurance Program to more accurately reflect flood risk. Historically, most low-risk States have subsidized higher risk States, mostly coastal. Similarly, low-risk areas within the States have tended to subsidize those areas with a higher risk, more prone to flooding. The linchpin of the 2012 law, however, was to use true actuarial rates in order to prevent very low-risk areas from subsidizing moderate to high- risk areas. The unintended consequences have been drastic premium increases for those plans that were traditionally subsidized by the National Flood Insurance Program.
Under the law, Congress mandated that the Federal Emergency Management Agency complete an affordability study to further evaluate any unintended consequences as a result of the changes. The study was to be completed before the rate increase went into effect. I want to repeat that. The law that was passed in 2012 had a safeguard in there that the administration, through the agency FEMA, was to do affordability studies before rates went up. That is not what happened, Mr. Speaker. That would have been critical to understanding the full scope of the new risk model. FEMA has failed to complete the affordability study that was required under the law. Additionally, there remains a huge concern that FEMA does not have the data that it needs to accurately determine risk under this new policy regime and that it is incapable of creating a new mapping system that truly reflects true actuarial rates.
Now, while 80 percent of the policyholders in this country will not see an increase as a result of the new policy, a small portion of the properties in this country--actually, I think it is a significant portion of properties--are being hit with staggering increases. This is a serious concern for communities and individuals across the country, including many from the Fifth District of Pennsylvania.
Just recently, I have heard from counties, communities and homeowners from Cameron County and Erie County--Clinton, McKean, Crawford, Potter, Huntington, and Centre--and [[Page H57]] that is just in recent days. I think we are at risk of creating ghost towns as homes have lost so much value. You may be able to afford the mortgage, but you can't afford the flood insurance. As my good friend said, the number one assets that individuals have in their lives are their properties--their homes, their real estate. When it comes time to be able to sell them, they are not able to liquidate them because there is no one out there who is able to buy. So we are really at risk of creating these ghost towns unless we make the necessary changes, I think, to have the administration comply with the law as it was passed in 2012 in terms of affordability rates.
Colleagues on both sides of the aisle have come together to correct this critically important issue. I am an original cosponsors of the Homeowner Flood Insurance Affordability Act, H.R. 3370. I know my good friend Mr. Marino has introduced another bill that would completely repeal Biggert-Waters, most recently introduced within the past couple of days.
H.R. 3370 is a bill to terminate the rate increase under the Flood Insurance Reform Act of 2012 until 2 years after the Federal Emergency Management completes the rate affordability study originally mandated under the law. The bill also makes structural changes to FEMA to ensure that there are advocates for homeowners when flood maps are drawn or adjusted.
Mr. Speaker, improving the financial viability of the Nation's flood insurance program while ensuring that program protects those it was designed to support is something every Member of this body should support.
I encourage my colleagues to join in this commonsense effort to protect and improve our Nation's flood insurance program but also to make sure that our real estate market remains strong and viable and that that important asset that individuals have remains able to be bought and sold.
I thank the gentleman for hosting this Special Order.