Rep. Waters, Author of Flood Reform Act, Calls for Delay in Implementation

A Congresswomen whose name adorns the now-controversial federal flood insurance reform bill passed in 2012 says she wants the law changed to deal with “unintended consequences” including big premium hikes for some homeowners.

Rep. Maxine Waters, (D.-Calif.), co-author along with Rep. Judy Biggert, (R-Ill.), of the Biggert-Waters Flood Insurance Reform Act, released a statement saying she is “outraged by the increased costs of flood insurance premiums that have resulted from the Biggert-Waters Act. I certainly did not intend for these types of outrageous premiums to occur for any homeowner.”

According to Waters, “Neither Democrats nor Republicans envisioned it would reap the kind of harm and heartache that may result from this law going into effect.”

Last June, the House passed the bipartisan bill 373-52 and sent the measure to the Senate, which passed it, 74-19. President Barack Obama signed sign it into law in July.

Biggert is no longer in Congress, having decided not to run for re-election.

Waters, ranking member of the House Committee on Financial Services, said she is committed to fixing the “unintended consequences” of the law and passing legislation to delay most rate changes for three years “to give FEMA the opportunity to ensure its maps are accurate and allow Congress to make certain rates are affordable.”

“Since the law was enacted, we have seen a slew of confusion in FEMA mapping. In addition, many families now face increased costs that will make homeownership so expensive that many would be forced from their homes or find it impossible to sell. This is unacceptable,” she stated.

In the past few months as rate increases have begun to be announced, lawmakers from both parties have called for a delay in the law’s effects.

Craig Fugate, director of the Federal Emergency Management Agency (FEMA), which administers the National Flood Insurance Program (NFIP), told Congress last week that he does not have the authority to stop the increases and the law needs to be changed for FEMA to delay any premium hikes.

Mississippi Insurance Commissioner Mike Chaney has filed suit against the government to try to stop the increases. Chaney argues that FEMA failed to issue a report on the affordability of the premium increases and should be stopped from implementing the rest of the law until it does so.

The Biggert-Waters act was an attempt to shore up the flood insurance program by moving it towards risk-based pricing. The law eliminates premium subsidies for repetitive loss properties, property owners who do not take steps to mitigate, secondary homes and certain properties that have been protected from risk-based rates by grandfathering.

The NFIP collects more than $3.5 billion in annual premium revenue, and FEMA estimates that an additional $1.5 billion annually is needed from subsidized policyholders for it to get financially even.

FEMA estimates that about 20 percent of its 5.5 million policyholders — about 1.1 million — currently receive subsidies. Under Biggert-Waters, about 250,000 of them will see immediate increases: business owners, those owning second homes and people with frequently flooded properties, according to FEMA.

An additional 578,000 policyholders living in hazardous areas will retain their subsidies until they sell their homes or suffer severe, repeated flood losses. The same is true for people in condominiums.

NFIP began implementing higher rates for second homes in January. In October, rates on businesses in flood zones and homes that have been severely or repeatedly flooded are supposed to start going up 25 percent a year until the rates reach actuarial indications.