Garamendi Introduces Flood Insurance for Farmers Act

Congressman John Garamendi, D-Walnut Grove, Calif., on Tuesday introduced the Flood Insurance for Farmers Act of 2012 to help offset the cost of flood insurance that will likely be required in many of the state’s farmlands as aging levee systems across the U.S. are downgraded.

The bill, H.R. 4020, addresses the cost of insurance for farmers who produce crops and raise livestock in floodplains.

Many of the levees that protect agricultural land have been downgraded as a result of studies conducted by the Federal Emergency Management Agency and the Army Corps. of Engineers continues their studies of the levee systems.

Garamendi was California’s Insurance Commissioner from 1991 to 1995, and is also a rancher.

Many U.S. farmlands are being designated as special flood hazard areas if it’s found that the levees in those areas do not provide the required 100-year flood protection.

As a result, all property owners with mortgages in those areas would be required to purchase flood insurance and face higher rates, and new construction or improvements to existing structures would be required to meet stricter building requirements.

And in many of those areas considered to be high flood danger areas, no flood insurance is available.

Garamendi’s bill proposes possible subsidies for insurance for farmers in these areas, a study of how much is being paid in insurance by these people and the bill would enable agricultural operations in uninsurable areas to get insurance.

Until the levees are improved, farmers in many places are unable to build new or upgrade existing agricultural structures necessary to conduct or increase production and business, Garamendi said.

“The need for this bill is a result of the Army Corps. of Engineers downgrading flood protection of many levees in the nation, particularly California,” Garamendi, who is also a rancher, told the Insurance Journal. “That downgrading has placed large portions of California, particularly agricultural areas, where they are unable to rebuild, replace or modify existing or new agriculture facilities, at a disadvantage.”

Garamendi noted that many of the levees have been in existence for decades, and some for more than a century.

“I would argue that many of these levees have not been breached, and they’ve been there for 100 years and withstood many floods,” he said. “The actuarial and risk concerns would justify a low premium.”

His bill has wide bipartisan support, but Garamendi noted that “as it goes through the process, I’m sure that questions will arise as to the cost of the insurance.”

The bill would also look at the cost of flood insurance for farmers, particularly in California, where large premiums are paid with very little paid out in return, he said.

“Californians have been paying flood insurance for 30, 40 years now, and have received perhaps 20 percent of the payoff for floods that have occurred in California,” he said. “California is a net donor to the rest of the nation on flood insurance.”

The fiscal impact of the bill is not yet known, he said, adding, “it depends on the cost of the insurance and the actuarial implications.”

Topics California Flood Agribusiness