After a public outcry from homeowners in flood-prone areas, lawmakers from coastal states and districts have been working to postpone sharp increases in flood insurance premiums that will otherwise start taking effect. Louisiana Senator Mary Landrieu was frustrated last month in her attempt to attach an amendment to a farm policy bill that would have postponed rate increases for already-insured homeowners, and required FEMA to re-study the issue.
This month Senator Landrieu is trying again, reports Congress-watching newsletter The Hill ("Landrieu inserts controversial flood insurance provision into spending bill," by Erik Wasson). "Sen. Mary Landrieu (D-La.) on Tuesday revealed that her 2014 Homeland Security spending bill includes a policy rider that delays increases in flood insurance premiums for one year," The Hill reports, noting, "Congress approved those hikes last year in an NFIP reauthorization bill."
It's a little more complicated than that, however. While the "Biggert-Waters" reform bill reauthorizing the FEMA-run National Flood Insurance Program (NFIP) did pass with large bi-partisan majorities last year, Representatives and Senators now say they did not anticipate the scale of the insurance hikes. Even Congresswoman Maxine Waters, one of the authors of the bill, says she didn't expect such big rate increases, and she signed a letter to FEMA Administrator Craig Fugate last month urging the agency to postpone and moderate the premium hikes.
The Hill says Landrieu based her moratorium on a similar measure that passed the House recently with large majorities from both parties: "She said the language, which is still not public though the subcommittee approved the bill, is based on provisions in the House spending bill for the Department of Homeland Security." Said Landrieu: "I've included some language based on what was passed in the House by a large bipartisan vote to delay only for one year the flood insurance rate increase for grandfathered properties. There is no cost to this bill, nothing was taken out of this bill to pay for it."
For homeowners in the high-hazard flood zone, the threat of insurance premiums higher than their mortgage payments — perhaps as high as $30,000 per year, for coverage that is capped at $250,000 and is full of exclusions and limitations — has triggered howls of outrage. But it's not clear that the actual premium increase for most policyholders will be nearly as drastic as press reports speculate. Tom Costello, owner of OBPM Construction, Inc., in Ocean Beach, New Jersey, told Coastal Contractor in June, "They threw that $30,000 number out there, but we have not been able to substantiate that. We've been through the flood insurance rating manual, and I don't know where that number came from, but it was a scare tactic. There might be some instance where you're going to hit that $30,000, but we have not been able to figure it out. It could happen, but you'd have to be in the VE zone, with a fully enclosed foundation, below the Base Flood Elevation — it's gotta be the perfect storm."
But for now, confusion reigns in the coastal communities where new flood maps, combined with new flood insurance rates, have thrown everybody's calculations into doubt. Even if Landrieu's proposed moratorium takes effect, premiums would eventually rise. But if the House and Senate can come to terms on a delay in the proposed hikes, at least coastal homeowners will have another year to figure it out.