LEGISLATIVE AFFAIRS: Congress Needs to Act on the National Flood Insurance Program

The National Flood Insurance Program expires on July 31st of this year. Congressional action is needed. We thank the House for passing H.R. 2874, the 21st Century Flood Reform Act that would comprehensively reform and reauthorize the National Flood Insurance Program for five years. We urge the Senate to take up H.R. 2874 to avoid a program lapse on July 31st 2018.

Congress must not let the NFIP lapse. Each lapse costs 40,000 sales per month. Without the reauthorization, the NFIP cannot issue or renew policies in 22,000 communities where flood insurance is required for a mortgage. The Senate should take up and amend the House bill to strengthen the flood mapping and mitigation, but retain key provisions including the private-market and NFIP rate reforms.

The House bill includes the text of the Flood Insurance Market Parity and Modernization Act, which unanimously passed the House 419-0 in the last Congress. Private market options must be included because NFIP premiums are based on national averages that overcharge the below-average risk properties. The private market is offering better coverage at lower cost than the NFIP.

The best way to keep FIP rates reasonable is to reduce risk. The House bill better aligns NFIP rates to inland vs. coastal risk, capped at no more than $10,000 per year, and provides $1 billion to strengthen properties against future flooding. Elevating a property by two feet can cut flood insurance premiums by two thirds. The federal government now spends more than $1 billion a year on grants to homeowners to repair flood damage. Mitigating, elevating or relocating these homes would save taxpayers $6 for every $1 spent. Currently, property owners cannot access mitigation grant dollars until after the property floods despite it being more cost effective to elevate or relocate beforehand.

The House bill allows state and local governments to develop more granular flood maps. However, NFIP should also be required to use modern mapping technology to produce building-specific risk assessments. Currently, homeowners bear the burden of amending the maps to remove low-risk assessments. Map amendments require homeowners to buy 25,000 land surveys each year at $500 each. The current method of flood mapping and amendments puts the burden on property owners when states can supply the data more efficiently using light detection and ranging (LiDAR).

Stay tuned for further updates on this issue.

Philip Weiden
Legislative Affairs columnist Philip Weiden is the Government Affairs Director for the Hudson Gateway Association of Realtors.