Flood Insurance Rate Relief Hits Congressional Roadblock
Congress has adjourned for 2013 without reversing flood insurance premium hikes as mandated by the Biggert Waters Flood Insurance Reform (Biggert-Waters) Act. The premium increases, which will be implemented in phases, are already impacting homeowners across the country.
In the waning hours of the 2013 congressional session, attempts to force a vote on flood insurance rate relief failed in both the U.S. Senate and House of Representatives. In the Senate, supporters of the Homeowner Flood Insurance Affordability Act (HFIA) were unable to overcome opposition from the Republican leadership of the Senate Banking Committee. In the House, HFIA supporters successfully blocked a last minute attempt to undermine their momentum, but ultimately were unable to bring HFIA to a vote.
Despite these seeming setbacks, the prospects for flood insurance rate relief may have improved for 2014. In a key development, HFIA supporters have picked up a key ally in the Senate.
Prior to adjourning the Senate for 2013, Senate Majority Leader Harry Reid (D-NV) announced he will bring HFIA to the Senate floor in 2014. Specifically, the Majority Leader plans to gauge support for HFIA by filing a cloture motion on the legislation. For a cloture motion to be successful at least 60 Senators must vote in the affirmative. Once cloture has been invoked, the Majority Leader can structure debate on HFIA and schedule a final vote on the legislation without concern for a legislative filibuster.
Given HFIA’s broad support among both Democratic and Republican Senators, there is a clear path to securing the 60 votes required for the Senate to take up and pass the legislation. Unfortunately, unrelated factors could impede HFIA’s progress.
Relationships between Democratic and Republican Senators are at an all-time low due to a recent change in Senate procedural rules to prohibit the filibuster of most presidential nominees. This schism has derailed consideration of routine, non-controversial business in the Senate. At present there is no reason to expect that flood insurance rate relief would be immune from this controversy.
In the House of Representatives, the ability of HFIA supporters to derail a fast-tracked vote on legislation offering only the barest minimum of flood insurance rate relief has proven critical. This pro-HFIA victory shows that members of the House want a vote on meaningful flood insurance rate relief, which may, in turn, provide the necessary momentum for HFIA to be successful in the Senate.
CAI position on the National Flood Insurance Program supports actuarially sound premiums for flood insurance policies.
The Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) is a law passed by Congress and signed by the President in 2012 that extends the National Flood Insurance Program (NFIP) for five years, while requiring significant program reform. The law requires changes to all major components of the program, including flood insurance, flood hazard mapping, grants, and the management of floodplains. Many of the changes are designed to make the NFIP more financially stable, and ensure that flood insurance rates more accurately reflect the real risk of flooding. The Biggert-Waters Flood Insurance Reform Act requires a 5-year transition to actuarially sound premiums for federal flood insurance policies and updates flood insurance rate maps.
CAI supports a more financially stable NFIP that more accurately reflects the real risk of flooding. However, under the current law, the sale of a property removes the 5-year transition to actuarially sound premiums and requires the new or current owner to immediately pay full risk rates. This can be a significant financial hit on the current or new owner that may stop the sale of the home. As the housing market is making minor improvements, this creates another hurdle for sales in these communities. This is causing hardship in Alabama California, Connecticut, Delaware, Florida, Georgia, Massachusetts, New Jersey, New York, North Carolina, South Carolina, Texas and other communities that were not affected by the re-mapping, but are affected by this potential unintended consequence of the new law.
CAI will continue to monitor the debate on flood insurance rate relief and advise members of key votes on HFIA in 2014. If you have any questions or comments on flood insurance or other governmental issues affecting community associations, please send an email to government@caionline.org or call (888) 224-4321.
