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Senate Begins Amending Bill to Halt Flood Insurance Rate Increases

The Senate has begun adopting amendments to the bill (S.1926) that seeks to delay flood insurance premium increases called for under the Biggert-Waters Flood Insurance Reform Act of 2012.

The Senate bill would halt premium hikes by retaining most flood insurance subsidies for four years to give the Federal Emergency Management Agency (FEMA) time to complete an affordability study and guarantee that its flood maps are accurate. The bill would also grandfather low rates for homeowners placed into a flood zone for the first time or moved into a higher-risk flood zone due to remapping.

S.1926 also includes a provision to establish the National Association of Registered Agents and Brokers (NARAB) and a system to make it easier for agents and brokers to be licensed in states other than their own.

The bill appears to have enough bipartisan support to pass the Senate, although its fate in the House is uncertain.

The Senate yesterday agreed to adopt seven amendments to the flood insurance portion of S.1926, while an amendment to the agency licensing section that supporters feared would have undermined the whole purpose was defeated when the Senate resumed consideration today.

Those flood insurance amendments already agreed to by voice votes, and their sponsors, are:

• Sen Kirsten Gillibrand, D- N.Y.: To require FEMA to issue guidelines for methods, other than building elevation, that owners of certain urban residential buildings may implement to mitigate against flood risk.
• Sen. Marco Rubio, R-Fla.: To require FEMA to make publicly available data that provide the basis for risk premium rates for flood insurance, to allow monthly installment payments for premiums, and to ensure that mitigation activities completed by an owner or lessee of real property are accounted for when determining risk premium rates for flood insurance.
• Sen. Roy Blunt, R- Mo.: To increase the amount of substantial improvement to a property that triggers the loss of flood insurance subsidies.
• Sen. Kay Hagan, D-N.C.: To exempt certain loans from the escrow requirement under the flood insurance law.
• Sen. Jack Reed, D-R.I.: To require FEMA to conduct a study to assess voluntary community-based flood insurance options.
• Sen. Sheldon Whitehouse D- R.I.: To exempt natural resource agencies from fees for flood insurance rate map change requests.
• Sen. Angus King, I-Maine: To clarify that communities that successfully appeal flood elevation determinations based on errors by FEMA through the Scientific Resolution Panel are eligible for reimbursements for expenses incurred in such appeals.

Other amendments have been proposed but not yet accepted. They include ones by Sen. Pat Toomey, R-Pa., to allow rate increases but cap most of them at 25 percent per year until the premium reflects actuarial pricing; by Sen. Dean Heller, R-Nev., to clarify that any private flood insurance policy accepted by a state shall satisfy the mandatory purchase requirement under the flood insurance law; and by Sen. Jeff Merkley , D-Ore. to establish limitations on force-placed insurance.

In addition, Sen. Tom Coburn, R. Okla., yesterday proposed his amendment to allow states to opt out of participation in the National Association of Registered Agents and Brokers (NARAB). This amendment was defeated by a vote today. Sen. John McCain, R.-Ariz., was co-sponsor of Coburn’s amendment.

Coburn’s amendment was opposed by supporters of the NARAB legislation who said it would undermine the purpose of the registry by denying agents and brokers in some states the opportunity to join. Coburn’s amendment was the main reason supporters of what had been an separate NARAB bill pushed to have it become part of the flood insurance bill. They calculated that support for the flood provisions would override any opposition to the NARAB bill.

“Adding the opt-out provision proposed by Senator Coburn would only preserve an unacceptable status quo and make it impossible to achieve true reciprocity and efficient compliance with state licensing requirements. NARAB was drafted to create a one-stop licensing compliance mechanism for the thousands of insurance agents and brokers who operate on a multi-state basis, and must be passed without further delay by the Senate,” said Bernd G. Heinze, executive director of the American Association of Managing General Agents (AAMGA), a supporter of the NARAB provision.

The House of Representatives has passed the NARAB bill on three prior occasions.

Earlier this week, the White House expressed budgetary and constitutional concerns with both the flood insurance delay and the NARAB proposal, although the Obama Administration did not threaten a presidential veto.