Amid intense political jockeying and behind-the-scenes finger pointing, it appears that Congress will adjourn for the year without agreeing on action to curb steep hikes in flood insurance premiums for thousands of homeowners now and many more beginning in October 2014.
An attempt on Thursday to push a standalone bill through the House of Representatives before Christmas, led by Republican Reps. Vern Buchanan of Florida, Bill Cassidy of Louisiana and Jeb Hensarling of Texas, ran aground without reaching the floor when key Democrats balked.
But a large, bipartisan group in the House and the Senate is still pushing measures to slow the effects of an overhaul enacted just last year that was aimed at stabilizing and updating the financially insolvent Federal Flood Insurance Program. The 2012 law would do little in the short term, however, to reduce the program’s $24 billion deficit, of which $16 billion stemmed from the 2005 ravages of Hurricane Katrina.
In June, the House passed a bipartisan measure delaying some of the premium hikes as part of a Homeland Security appropriations bill, but that measure stalled in the Senate.
About 5.5 million Americans own homes in floodplains, and thus are required to buy a federal flood insurance policy covering up to $250,000 in claims, and rates have been suppressed over the years to encourage property owners to comply. But Katrina and concerns about rising seas forced tougher measures.
The 2012 law’s severest premium shocks to hit so far affect people who’ve bought or sold a home in a floodplain who are already paying the lower insurance rates. The homebuyer is required to immediately pay a premium reflecting the actual flood risk, a change that can raise the insurance cost by thousands of dollars and drive down the selling price by tens of thousands of dollars.
This fall, the owners of second homes, commercial properties or properties with multiple flood-related insurance claims began paying increases covering 25 percent of the gap between their artificially low rates and rates reflecting the true risks of buildings in their flood zones.
On Oct. 1, 2014, a portion of the remaining 4.4 million homeowners who live in floodplains will begin to face higher annual premium increases for the next five years until their premiums match the true risk of flooding.
Members of Congress have been hearing howls from property owners since the overhaul took effect.
“Neither Democrats nor Republicans envisioned it would inflict the pain and concern that many Americans are experiencing,” Democratic Rep. Maxine Waters of California, one of the law’s co-authors, said last month.
For example, the Federal Emergency Management Agency’s current maps show as many as 40 percent of the property owners covered by the program are in Florida, including at least 238,000 highly likely to face sharp premium hikes along the Gulf Coast and in Miami-Dade and Broward County.
Congressional aides, who would not be identified because they lacked authorization to speak for the record, heaped much of the blame for the brouhaha on FEMA, which oversees the flood insurance program. The law required FEMA to conduct an affordability study to assess its impact, but the aides said the agency has yet to begin the study.
In addition, many of FEMA’s maps identifying the flood risks of properties from Florida to Oregon also are out of date, undermining confidence that rates are being correctly calculated, the aides said.
Mississippi’s insurance commissioner has filed a federal court suit seeking to block the rate hikes until FEMA completes the affordability study, which the law required within 270 days of its July 6, 2012, passage. Several other states, including Florida, Alabama and Massachusetts, have joined the suit.
FEMA said in a statement Friday that Congress directed that the study of the law’s economic impact on property owners be conducted by the National Academy of Sciences, whose $1.5 million cost estimate and two-year time frame both exceeded the law’s allotments.
“However, FEMA is moving ahead to begin work on the study with the academies,” the statement said.
Multiple bills to relax the law have been proposed in both chambers. Republican Rep. Steven Palazzo of Mississippi, for example, introduced a bill to stretch out the premium hikes for 10 years.
Waters circulated a letter opposing Thursday’s attempt to usher through relief before Christmas. It would only freeze premium increases due to take effect in October 2014 – a month before the next congressional election – and expires five months later.
The bill that seems to have the most backing imposes a four-year freeze on premium hikes pending the results of the affordability study. It’s championed by in the House by Waters and Republican Rep. Michael Grimm of New York, with 170 co-sponsors. Democratic Sen. Robert Menendez of New Jersey is pushing a companion bill and has rounded up 23 co-sponsors, including eight Republicans.