On November 19, the House Financial Services Committee’s Housing and
Insurance Subcommittee held a hearing on “Implementation of the Biggert-Waters Flood
Insurance Act of 2012 (BW-12): Protecting Taxpayers and Homeowners.” BW-12 was
enacted last year to address the rising costs of the National Flood Insurance
Program (NFIP) in order to make the program financially solvent – NFIP
currently carries a $24 billion dollar debt. One of the unintentional
consequences of BW-12 was a significant increase in insurance premiums for
residents and businesses who live in a floodplain.
Within the committee, there was a split of opinion. Some members
felt the NFIP program should be financially solvent. If insurance rates
go up, in the natural order of things, people will move out of floodplains, and
lessen the risk to the program. Other members felt strongly the provision
authorizing the rate increases should be overturned at least until a more
affordable alternative could be studied.
When the new insurance rate increase took effect on October
1, a number of properties’ annual insurance rates rose into the tens of
thousands. These new insurance rates are not limited to just Gulf Coast areas,
but impact both homes and businesses nationally. Counties have been
concerned about the impact the new rates will have on their housing markets.
Property owners, many in low and middle class areas, will have a difficult time
paying the new rates. They could also face challenges selling the
property. Many local governments are concerned that property owners may
walk away from existing properties, rather than paying the new rates. This, in
turn, impacts both property taxes and other taxing mechanisms in a community.
On November 15, NACo along with several other groups, sent a
to the Federal Emergency Management Agency (FEMA) Administrator Craig Fugate
asking the Administrator to convene a NFIP summit in order to address BW-12
Contact: Julie Ufner at email@example.com