Policy Brief

Reauthorize the National Flood Insurance Program

ACTION NEEDED:

Urge your Senators to support the Sustainable, Affordable, Fair and Efficient National Flood Insurance Program Reauthorization Act (S. 1368) (SAFE NFIP) that will reauthorize the National Flood Insurance Program (NFIP) for six years and ensure the program is accessible and affordable for all county residents.

BACKGROUND:

The National Flood Insurance Program (NFIP) was created by Congress under the National Flood Insurance Act of 1968 (P.L. 90-448) to provide insurance coverage to property owners for damages and losses due to catastrophic flooding.

Today, the NFIP is administered by the U.S. Department of Homeland Security (DHS) through the Federal Emergency Management Agency. The program aims to reduce the impact of flooding on private and public structures by providing affordable insurance to property owners, and by encouraging communities to adopt and enforce floodplain management regulations.

The NFIP was last reauthorized in 2012 when President Obama signed the Biggert-Waters Flood Insurance Reform Act of 2012 (P.L. 112-141). The NFIP’s five-year reauthorization ended on September 30, 2017, and since then, the program has been funded by a series of short-term funding measures. The program is currently operating under an extension that will expire November 30, 2018.

The purpose of the 2012 Biggert-Waters Act was to make the NFIP solvent, as the program faced a $24 billion deficit. However, the law resulted in some unintended consequences for local governments, residents and businesses: multiple counties, both coastal and inland, reported that homeowners and businesses experienced dramatic increases in annual NFIP flood insurance premiums due to phase-outs of subsidized premium rates. Additionally, due to a provision contained in the Biggert-Waters Act, FEMA began to update Flood Insurance Rate Maps (FIRMs), which included new low-lying areas that also began to face drastic rate increases.

In 2014, with NACo’s support, Congress passed the Homeowner Flood Insurance Affordability Act (P.L. 113-89), which included several key reforms to the Biggert-Waters Act favorable to counties, including: grandfathering of premiums for properties built to code prior to the release of the updated Flood Insurance Rate Maps (FIRMs); retroactive refunds to NFIP policyholders if they paid a higher premium under Biggert-Waters and  the removal of a sales trigger that fully actualized premium rates at the point of sale for properties that were added to new flood zones.

As Congress works to reauthorize the NFIP, NACo is focused on engaging key Members of Congress on the unintended negative impacts of the Biggert-Waters Act and highlighting NACo’s four policy priorities related to the flood insurance program: rates, program administration, flood zone mapping and mitigation.  

Rates: NACo’s primary concern with rates is ensuring that they remain affordable for all eligible county residents and policy holders.  Specifically, NACo supports ensuring all properties built prior to the release of Flood Insurance Rate Maps for their area continue to be eligible to receive rate-subsidies.

Program Administration: NACo is focused on engaging Congress to ensure that local property owners are not negatively affected by the programs administration.  Specifically, counties are concerned with ensuring that claims and premium payments on policies are processed in a timely manner.

Mapping: NACo is focusing efforts on ensuring that accurate flood maps are made available, and that a transparent process is used in updating flood-maps nationwide.  Through FEMA’s flood hazard mapping program, the federal government assesses flood hazards as well as flood risks, and uses the data to help guide mitigation efforts.

Ensuring that proper funding is allocated to update flood insurance risks maps is a key priority as it helps to determine which areas are eligible to receive grant funding for mitigation. 

Mitigation: NACo is focusing efforts on ensuring that funding for flood-mitigation is increased.

Under section 1366 of the National Flood Insurance Act, FEMA is authorized to administer the Flood Mitigation Assistance grants program which provides responsible for, decreased economic development, higher taxes or higher user fees. In FY 2016, Congress appropriated $200 million for Flood Mitigation Assistance, and counties urge Congress to increase that figure to $250 million.

NACo also urges Congress to allow NFIP premiums paid by policy-holders to count towards community and homeowner mitigation efforts.

SAFE NFIP ACT

During the 115th Congress, there have been multiple proposals to reauthorize and reform the NFIP, however NACo supports the Senate’s SAFE NFIP Act, which includes policies important to counties

Introduced by Sens. John N. Kennedy (R-La.) and Bob Mendez (D-N.J.), SAFE NFIP has strong bi-partisan support and would reauthorize NFIP for six years. The bill also incorporates NACo’s four policy priorities for NFIP reauthorization:

Rates: The bill would cap all premium rate hikes at 10 percent per year. Currently, premiums can increase by as much as 25 percent per year.

Program Administration: The bill would require FEMA to process all flood claims within 30 days after filing, and extends the deadline to appeal a claim determination by FEMA to one year after the determination was made.

Mapping: the bill authorizes $800 million per year for six years to fund Light Detection and Ranging (LiDAR) and mapping of the entire country. LiDar is a remote sensing method used to generate precise, three-dimensional models of the surface of the Earth.

Mitigation: The bill requires FEMA to offer zero or low-interest loans to fund mitigation projects by homeowners, like elevation and flood-proofing. The bill also authorizes $1 billion for Flood Mitigation Assistance and funds the Pre-Disaster Mitigation program $500 million per year for six years.

On July 31, 2018, Congress approved a short-term extension of NFIP, giving federal lawmakers until November 30, 2018 to agree on a long-term reauthorization bill or pass another extension. Members of Congress have been grappling over potential reforms to the program since the previous long-term authorization lapsed in September 2017. The main point of contention among federal lawmakers involves proposed reforms that would accelerate premium increases on currently subsidized policies.  

Key Talking Points:

  • Congress should enact a long-term reauthorization of the NFIP. When the federal government uses short-term funding extensions, counties are often unable to effectively plan and implement a workable budget. The NFIP is currently operating under a short-term extension that will expire November 30, 2018.
  • Congress should act now and pass the SAFE NFIP Act. The SAFE NFIP Act would reauthorize NFIP for six years and has strong bi-partisan support. The bill caps all premium rate hikes at 10 percent, provides funding for local mitigation projects and streamlines the administration of the NFIP.    
  • Flood insurance policy surcharges should be limited to maintain accessibility and affordability for homeowners. New surcharges could make flood insurance unaffordable for some policyholders. 

For further information, contact: Jacob Terrell at 202.942.4236 or jterrell@naco.org