I’ve written a lot lately about various problems with the National Flood Insurance Program. To briefly summarize, in light of decades of failures Congress passed the Biggert-Waters Flood Insurance Reform Act in July of 2012, which promised to meaningfully reform the NFIP (for details, see my earlier posts on this topic). Biggert-Waters promised to phase out subsidized premiums for flood insurance, and thus have individuals and businesses actually pay for their own risk, update Flood Insurance Rate Maps (FIRMs), to name only two of its most important components. Biggert-Waters came under fire very quickly after its passage, however. Property owners around the country began to complain when they realized that Biggert-Waters would cause their flood insurance premiums to rise – in some cases, by very large amounts.
On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act of 2014 into law. This new law repeals several key provisions of Biggert-Waters, and modifies or delays other provisions. The Flood Insurance Affordability Act lowers the rate increases under Biggert-Waters – and even promises refunds to many people whose rates went up after Biggert-Waters went into effect. The new law preserves the premium subsidies that Biggert-Waters would have phased out, and extends the “grandfather clause” for pre-FIRM properties. The Flood Insurance Affordability Act also enacts a number of new protections for persons who own property in flood zones, including increased deductibles, assistance based on “ability to pay,” opportunity for discounts based on flood mitigation actions, and provision of FEMA “Flood Insurance Advocates” who will be tasked with advocating for the “fair treatment” of policy holders. On balance, the Flood Insurance Affordability Act undoes most of the (modest) good that Biggert-Waters promised.
The repeal of Biggert-Waters underscores several of the points I raised in earlier posts. Most importantly, real reform of NFIP will not be possible until we begin to address underlying causes of our present flood problems, and stop merely treating the symptoms – such as “high” premiums.
For a policy brief on the full details of the Homeowner Flood Insurance Protection Act of 2014, see this FEMA publication.