Flood Insurance Premium Hikes from New Maps Could Be Delayed Until 2015

By Andrew Taylor | February 10, 2014

Some flood insurance premiums required under a 2012 law now won’t be raised until the fall of 2015 at the earliest.

The Federal Emergency Management Agency (FEMA) said the $1 trillion bipartisan funding bill passed by Congress last month contains a provision that will put off higher premiums required by new flood maps. A provision in the spending bill blocks FEMA from using any funds to implement premium increases due to re-mapping, at least through the end of September when when the fiscal year ends.

However, it now appears that it will take FEMA another year or longer to get its re-mapping and rating program back on track after, and if, Congress unlocks the funding related to remapped properties in the next fiscal year.

The issue affects hundreds of thousands of homeowners who pay “grandfathered,” below-market rates for insurance because their homes were in compliance with earlier flood codes. Many of them were facing large increases over the five years due to new maps being drawn up.

The remapping and other changes being delayed were required under the Biggert-Waters Flood Insurance Reform Act of 2012, a bipartisan law intended to reform the money-losing National Flood Insurance Program. But the higher premiums required under the new law have spooked many homeowners living near coastlines or in flood plains, threatening them with, in some cases, multifold increase in their premiums.

FEMA was ordered to delay work on implementing new premium increases on grandfathered properties by a provision written by Rep. Bill Cassidy, R-La., and Sen. Mary Landrieu, D-La., and attached to last month’s omnibus spending bill. Cassidy is running to unseat Landrieu this fall.

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Other flood insurance changes would still take place as planned, including higher premiums for frequently flooded properties and businesses and on second homes.

Also, people getting subsidized premiums still won’t be able to pass them on to people who purchase their homes.

The Senate has already passed broader legislation requiring delays of most premium increases on a sizable bipartisan vote, 67-32. House Speaker John Boehner, R-Ohio, has said that the House would address the issue this year but he and other Republican leaders in the House do not support the sweeping delays passed by the Senate. The White House has also raised concerns about the Senate’s broad delay, as well as about an insurance agent and broker licensing reform that is part of the Senate bill.

According to Rep. Steven Palazzo, (R-Miss.), one of the sponsors of original legislation in the House to delay the reforms and increases, a memo from FEMA acknowledges that the provision in the spending bill could set the agency back 12 to 18 months in addressing rates for grandfathered policies after the spending prohibition is lifted.

“In the initial delay language that was crafted in the House, we made sure to halt all FEMA activity to implement these drastic rate increases on some homeowners,” Palazzo said in a statement. “Because of that language, FEMA admitted today that our actions will have much further reaching impact on their ability to enact rate increases. This could buy homeowners as much time as two extra years as we continue to fight flawed and unfair FEMA practices and work to enact further reforms in both houses of Congress.”

 –Andrew Simpson contributed to this story.

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Latest Comments

  • February 12, 2014 at 10:34 pm
    M says:
    Yes but those of us with flood insurance where we contribute 4 times what we get back because of a lower frequency of real events are subsidizing Katrina and Sandy areas? Are ... read more
  • February 12, 2014 at 4:21 pm
    Libby says:
    We can argue whether 30% is too much, but the WYO carrier does incur expense in servicing these policies. They should be paid something. The "normal" expense ratio of P&... read more
  • February 12, 2014 at 1:05 pm
    steve says:
    You should learn more about a subject before you comment. 30% of all premiums go to big insurance companies to sell insurance, but they assume no risk. All you have to do is s... read more
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