CRIST, PASCRELL, GRAVES, ROUZER, MUCARSEL-POWELL, ROONEY DEMAND CHANGES TO NATIONAL FLOOD INSURANCE PROGRAM REAUTHORIZATION

Sixty-four bipartisan members stress need for affordable insurance rates in letter

Washington, DC – U.S. Representatives Charlie Crist (D-FL-13), Bill Pascrell, Jr. (D-NJ-09), Garret Graves (R-LA-06), David Rouzer (R-NC-07), Debbie Mucarsel-Powell (D-FL-26), and Francis Rooney (R-FL-19) led a letter signed by 64 Members of Congress demanding affordable insurance rates in a long-term National Flood Insurance Program (NFIP) reauthorization. In the letter addressed to congressional leadership, the Members cite a failure to address expected NFIP premium increases under the Federal Emergency Management Agency’s (FEMA) new methodology for assessing risk, which will become effective next year.

“This new methodology, known as Risk Rating 2.0, will no longer use flood maps and zones to determine a homeowner’s premium rate, but rather a series of models that will ‘fundamentally change’ a property’s individual flood risk assessment and therefor their insurance price,” the Members wrote. “While FEMA intends Risk Rating 2.0 to provide more accurate and transparent flood insurance pricing, this untested proposal could lead to increased premiums, forcing homeowners to drop coverage, or even worse, lose their home.”

The Members continue, “we know the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket, hurting policyholders and a chill was sent through the real-estate market. With Risk Rating 2.0 on the horizon, we encourage you to do everything possible to prevent premium spikes for our constituents. Our constituents cannot suffer from a double-digit rate increase in addition to the fees and surcharges FEMA could impose on policy holders under Risk Rating 2.0.”

The Members’ full letter can be viewed here, the text of which appearing below.

 

November 1, 2019

 

The Honorable Nancy Pelosi                                      The Honorable Kevin McCarthy

Speaker                                                                       Minority Leader

U.S. House of Representatives                                   U.S. House of Representatives

Washington, DC 20515                                              Washington, DC 20515

 

The Honorable Steny Hoyer                                       The Honorable Steve Scalise

Majority Leader                                                          Minority Whip

U.S. House of Representatives                                   U.S. House of Representatives

Washington, DC 20515                                              Washington, DC 20515

 

 

Dear Speaker Pelosi, Majority Leader Hoyer, Minority Leader McCarthy and Minority Whip Scalise:

We write because our constituents and all Americans deserve a long-term National Flood Insurance Program (NFIP) reauthorization that enhances the affordability, efficiency, fairness, accountability, and sustainability of the program. These reforms should be based on the realities experienced in the aftermath of major flooding and storms our constituents have experienced. Since the last long-term reauthorization, the NFIP has been subjected to 13 short-term extensions. This uncertainty has created significant anxiety for homeowners, renters, and small business owners in our states. We appreciate Chairwoman Waters and Ranking Member McHenry’s commitment to a long-term reauthorization and the extensive work they put into bipartisan legislation that reforms the program.

However, we are concerned this proposal does not address premium increases our constituents expect under FEMA’s new methodology for determining risk that is poised to become effective in October 2020. This new methodology, known as Risk Rating 2.0, will no longer use flood maps and zones to determine a homeowner’s premium rate, but rather a series of models that will “fundamentally change” a property’s individual flood risk assessment and therefor their insurance price.[1] While FEMA intends Risk Rating 2.0 to provide more accurate and transparent flood insurance pricing, this untested proposal could lead to increased premiums, forcing homeowners to drop coverage, or even worse, lose their home.

In addition, there are many questions surrounding how FEMA will implement this program, including but not limited to the types and sources of any data that will be used to calculate risk, how risk would be factored in areas behind levee systems, and impacts to grandfathered policies. Congress has not been fully briefed on all aspects of this new proposal that will inject an enormous degree of uncertainty for the over five million NFIP policy holders. Given these uncertainties and lingering questions, the current premium caps will be insufficient to ensuring the NFIP is affordable for all our constituents under Risk Rating 2.0.

As you know, the maximum annual increase for primary residences is 18 percent, with a 15 percent maximum for a rate class. According to FEMA, renewal premiums will increase an average of 11.3 percent, Severe Repetitive Loss Premiums are increasing to 10 percent, and annual premium increases of 14.9 percent for preferred risk policies and 14.8 percent for newly mapped procedure policies are on the horizon.[2] While we recognize it is the only data available, we caution against using historical average rate increases as a barometer for expected rate increases under Risk Rating 2.0 because risk determination is not currently individualized. Additionally, the 18 percent premium cap only includes building and contents coverage, Increased Cost of Compliance (ICC) coverage, and the reserve fund assessment. Not included is the Federal Policy Fee, the HFIAA surcharge, a 5% premium on severe repetitive loss (SRL) properties, and a possible probation surcharge.

Since FEMA is designing a system to reflect individual property’s unique flood risk, we remain concerned that the 15 percent cap on rate classes and grandfathered properties protections are irrelevant. Some policyholders are eligible for a newly mapped subsidy if their property is newly mapped into a Special Flood Hazard Area (SFHA). This grandfathering policy is in place to protect policyholders from unexpected rate increases due to risk adjustments reflected in zone changes under new Flood Insurance Rate Maps. But the individual risk rating system proposed in Risk Rating 2.0 threatens this structure.

We know the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket, hurting policyholders and a chill was sent through the real-estate market. With Risk Rating 2.0 on the horizon, we encourage you to do everything possible to prevent premium spikes for our constituents. Our constituents cannot suffer from a double-digit rate increase in addition to the fees and surcharges FEMA could impose on policy holders under Risk Rating 2.0. They also cannot bear a backdoor attempt to remove grandfathered policies. We urge you to work with us to ensure the Waters-McHenry package reflects our priorities for premiums caps and delays the impacts of Risk Rating 2.0 before it comes to the House floor for a vote.

We look forward to working with you to address this affordability issue in a long-term NFIP reauthorization.

Sincerely,

_______________________________                      _______________________________

Bill Pascrell, Jr.                                                           Garret Graves

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

David Rouzer                                                              Charlie Crist

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Debbie Mucarsel-Powell                                             Francis Rooney

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Ralph Abraham                                                           Brian Babin D.D.S.

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Lisa Blunt Rochester                                                  Vern Buchanan

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Cheri Bustos                                                               Bradley Byrne

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Matt Cartwright                                                          Angie Craig

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Joe Cunningham                                                         Val Demings

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Ted Deutch                                                                 Mario Diaz-Balart

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Michael Doyle                                                            Neal Dunn

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Brian Fitzpatrick                                                         Lois Frankel

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Matt Gaetz                                                                  Josh Gottheimer

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Alcee L. Hastings                                                       Clay Higgins

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Bill Keating                                                                Andy Kim

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Dave Loebsack                                                           Elaine Luria

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Tom Malinowski                                                         Doris Matsui

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

A. Donald McEachin                                                  Seth Moulton

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Stephanie Murphy                                                       Gregory F. Murphy, M.D.

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Jerrold Nadler                                                             Donald Norcross

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Pete Olson                                                                   Steven Palazzo

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Frank Pallone, Jr.                                                        Donald Payne, Jr.

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Stacey E. Plaskett                                                       Tom Rice

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Kathleen M. Rice                                                        Max Rose

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

C.A. Dutch Ruppersberger                                          Bobby L. Rush

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Bradley S. Schneider                                                  Robert C. “Bobby” Scott

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Donna E. Shalala                                                         Mikie Sherrill

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Albio Sires                                                                  Christopher H. Smith

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Darren Soto                                                                 Thomas R. Suozzi

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

David Trone                                                                Jefferson Van Drew

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Filemon Vela                                                              Debbie Wasserman Schultz

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Bonnie Watson Coleman                                            Randy Weber

Member of Congress                                                  Member of Congress

 

_______________________________                      _______________________________

Susan Wild                                                                  Robert J. Wittman

Member of Congress                                                  Member of Congress

 

 

CC       Chairwoman Maxine Waters and Ranking Member Patrick McHenry

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