President Obama has signed a measure that overturns much of the effect of the Biggert-Waters Act, a measure passed in 2012 to reform the financially troubled National Flood Insurance Program (NFIP). Senators and Congressional Representatives pushing the reversal of Biggert-Waters (even though many of them had voted for the act or even sponsored it) celebrated their success this weekend, reports the New Orleans Times-Picayune (see: "'Louisiana families finally have peace of mind' -- President Obama signs flood insurance bill into law," by Bruce Alpert).
""We fought the good fight and we won and thousands of middle class families in Louisiana and throughout the nation are going to get immediate relief," said Louisiana Senator Mary Landrieu. "Most importantly, we re-established in this arduous legislative process that affordability is important to the long-term stability of the flood insurance program."
Senator Charles Schumer said, "To be a homeowner is to have their piece of the rock. If you are a middle-class person, it is all you own…To have that taken away from you by an irrational Washington force called Biggert-Waters made no sense. Yet when people's flood insurance bills went up from $500 to $4,000, when they were told if they sold their house it might go up to $10,000, their piece of the rock, their home was in true jeopardy."
The Senate passed the measure by a vote of 72 to 22. The Times-Picayune summarized the main effect of the new law in a March 13 story (see: "Senate passes bill averting largest flood insurance increases under Biggert-Waters," by Bruce Alpert). Writes the Times-Picayune: "The legislation, passed 306-91 last week by the House, limits yearly premium increases to an average of 15% per year for each of the nine property categories listed by FEMA, and stipulates that no individual policyholder pay an increase of more than 18% per year. It calls on FEMA to 'strive' to reach the goal that most policyholders have a premium of no more than 1% of the value of their coverage -- in other words, $2,000 for a $200,000 policy. The bill also reinstates the flood insurance program's grandfathering provision, meaning homes that complied with previous flood maps would not be hit with large increases when new maps show greater risk of flooding. It also ends a provision that required an immediate hike to actuarial levels when a home changes ownership -- slowing home sales in many communities designated high risk by FEMA flood maps. It also provides refunds of premiums for people who purchased homes after Biggert-Waters became law in July, 2012, and found that the change in ownership marked a sudden end to subsidized flood insurance premiums -- sometimes resulting in dramatic increases when policy renewals were due."
Does this mean that George Kasimos, the "unlikely activist" from New Jersey who founded the grassroots group "Stop FEMA Now," will have to find a new federal agency to try to stop? Not necessarily. The sharp rate hikes resulting from Biggert-Waters have not been FEMA's only unpleasant surprise for coastal homeowners in recent years. Redrawn flood-plain maps, which place many coastal homes in flood hazard areas for the first time, are another change in the landscape. On Kasimos' Stop FEMA Now Facebook page, his fans made note of that fact. Commented one: "Remember the fight isn't over. This buys some time. Next battle is to challenge mapping. My home was 'Sandy tested' with no flood damage but new BFE ["Base Flood Elevation"] still increases the rate. Kudos to George Kasimos-stopFemanow and everyone who contributed to the success. Now back to work!"
Flood-zone homeowners with long-term mortgages to pay off know that the issue will be back. Another Stop FEMA Now fan explained: "The [NFIP] program was only extended to 2017 [under Biggert-Waters] anyway. Biggert-Waters was trying to get out of debt and have a huge reserve within that 5 year period by charging us unaffordable premiums that would make us lose our homes. Now they are only charging 18% and 25% for second homes annually against pre-Biggert rates and with grandfathering returned. This is until 2017 when they need to revise the entire program all over again and we are back in the fight once again. While this legislation requires you to increase to actuarial rates, it is impossible to achieve with these terms over the next five years now for primary homes."
In other words, by 2017 — and perhaps sooner — financial realities, along with the real risk of coastal and river-bottom flooding, mean that the problem of insuring against flood damage will be back in front of Congress again.