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November 22
House Committee Holds Hearing on Rising Flood Insurance Rates

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 letter to the Federal Emergency Management Agency (FEMA) Administrator Craig Fugate asking the Administrator to convene a NFIP summit in order to address BW-12 concerns.

Contact: Julie Ufner at jufner@naco.org or 202.942.4269

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