Legislation would reform NFIP and ensure long-term affordability, senators say

WASHINGTON, DC – U.S. Senators Bob Menendez (DN.J.) and Bill Cassidy (R-La.) Today announced the introduction of their bipartite and bicameral legislation to extend the National Flood Insurance Program ( NFIP) for five years, while implementing a series of sweeping reforms to tackle the waste, abuse and mismanagement that plague the system. More than five million Americans depend on NFIP, including 220,000 New Jerseyans. Congressman Frank Pallone, Jr. (DN.J.) sponsored the bill in the House of Representatives.

“It’s time for Congress to stop kicking the box with reauthorizations that fail to address the systemic issues plaguing this program. With this legislation we can make the NFIP more sustainable, we can make the assurance more affordable, and we can hold FEMA and its private contractors more accountable, “said Senator Menendez.” And instead of waiting for the next disaster to happen, we can invest in mitigation measures that in the first place prevent costly flood damage. “

“We need to reform NFIP to make sure it is affordable and accessible to the owner, accountable to the taxpayer, and sustainable for the future,” said Dr. Cassidy. “This bill is full of real solutions to achieve these goals.”

The National Flood Insurance Program Reauthorization and Reform Act tackles systemic flood insurance issues, puts it back on a sound fiscal footing, and reframes the country’s entire disaster paradigm. into a paradigm that focuses more on prevention and mitigation in order to save the high cost of reconstruction after catastrophic floods.

Risk Rating 2.0, the Federal Emergency Management Agency’s (FEMA) new rating system, went into effect earlier this month, which is expected to increase premiums by 80% of NFIP policyholders nationwide. About 900,000 policyholders are expected to abandon their insurance because of the increases. Last month, Senator Menendez called on FEMA to delay implementation of the 2.0 risk rating.

Sense. John Kennedy (R-La.), Cory Booker (DN.J.), Cindy Hyde-Smith (R-Miss.), Marco Rubio (R-Fla.), Roger Wicker (R-Miss), Chris Van Hollen ( D-Md.) And Kirsten Gillibrand (DN.Y.) are the co-authors of the legislation.

“About half a million Louisianans depend on flood insurance to protect their homes and businesses,” Senator Kennedy said. “The National Flood Insurance Program protects workers and families who have to deal with their biggest investments – their homes. We need to expand this program and protect it from political games.

“After experiencing devastating and historic flooding over the past few months, New Jersey residents know how important flood insurance is to their long-term stability and peace of mind,” said Senator Booker. “I am proud to join this bipartite, bicameral legislation to re-authorize our country’s flood insurance program and make it more affordable for low-income families while ensuring that we invest in the efforts of flood mitigation to make communities more resilient to the growth and devastating effects of climate change. “

“Flooding is a constant threat across Mississippi and fundamental problems within the national flood insurance program are causing unnecessary economic and emotional trauma to thousands of families,” said Senator Hyde-Smith. “It is time we took resolving what is wrong with the program seriously, while implementing reforms that will benefit taxpayers and policyholders in the long run.”

“Flood insurance is a necessity in Florida, and getting the National Flood Insurance Program (NFIP) on track is critical to ensuring fiscal sustainability to ensure that millions of policyholders maintain their. blanket, ”said Senator Rubio. “In light of the Biden administration’s decision to proceed with the chaotic risk rating 2.0 rollout, Congress must take concrete action now to reform the program. This legislation would provide a five-year reauthorization and create stability for the program. millions of policyholders across the state and nationwide. “

“The NFIP is a lifeline for many communities in Mississippi that remain at risk of flooding,” said Senator Wicker. “After an active flood season, it is clear that the NFIP not only needs to be re-authorized, but also needs to be reformed to make it work better for taxpayers and policyholders.”

“In this climate crisis, extreme weather events and the resulting flooding are unfortunately now the norm, causing substantial damage and havoc,” said Senator Gillibrand. “It is critical that Congress reduce the cost of flood insurance, streamline the program to make it easier for families to navigate, and refocus the program on prevention and mitigation. This bill will help us lay the foundations for a stronger and more sustainable system. future.”

Senators Menendez and Booker and Congressman Bill Pascrell, Jr. (NJ-09), co-sponsor of the bill in the House, introduced the bill at a press conference in Paterson, NJ last week to the occasion of the ninth anniversary of Storm Sandy.

The law on the re-authorization and reform of the national flood insurance program provides:

* Long-term certainty. Re-authorizes NFIP for five years, providing certainty to communities.

* No sharp rise in rates under the 2.0 risk rating. Protects policyholders against exorbitant premium increases by capping annual increases at 9%. Currently, premiums can almost double every 4 years and FEMA’s new methodology called Risk Rating 2.0 will fundamentally change the premiums for every policy in the country. This new methodology is expected to cause a rate shock and lead to unaffordable premiums, forcing homeowners to abandon their coverage or lose their home. CBO and FEMA believe the 2.0 risk rating will cause nearly 900,000 policyholders to drop NFIP coverage due to rapidly rising premiums. We have seen all too clearly the negative consequences of rising premiums after the Biggert-Waters Act of 2012 skyrocketed costs, hurting policyholders and disrupting the real estate market. This will put safeguards on FEMA’s new rating methodology, known as Risk Rating 2.0, and protect policyholders from sudden rate shocks while responsibly disclosing all of the flood risk.

* Affordability for low and middle income policyholders. Provides a comprehensive means-tested voucher for millions of low and middle income homeowners and renters if their flood insurance premium becomes too high, dramatically increasing the affordability of the NFIP program.

* Path to NFIP solvency. Freezes interest payments on NFIP debt and reinvests savings in cost mitigation efforts to restore program solvency and reduce future borrowing

* Limits on the profits of private insurance companies. Write Your Own Caps (WYO) compensation at the rate FEMA pays to manage its own policies and redirects savings to pay for the means-tested affordability program.

* Increased coverage of compliance costs (CCI). Increases the maximum limit of ICC coverage to better reflect the costs of reconstruction and implementation of mitigation projects. In addition, eligibility for ICC coverage is broadened to encourage more proactive mitigation before natural disasters occur.

* Strong investments in mitigation. Provides strong funding levels for profitable investments in mitigation, which have a significant return on investment and are the most effective way to reduce flood risk.

* More precise mapping. Increases funding for FEMA’s Flood Mapping Program to implement Light Sensing and Telemetry (LiDAR) technology for more accurate flood risk across the country, generating data that will enable better use buildings and soils.

* Supervision of Write Your Own (WYO) companies. Creates new oversight measures for insurance companies and suppliers, and gives FEMA greater authority to terminate contractors who have a history of abuse.

* Complaints and appeals process reforms based on lessons from Sandy. Fundamentally reform the claims process based on lessons learned from Storm Sandy and other disasters to level the playing field for policyholders during appeals or litigation, prohibit aggressive legal tactics preventing homeowners from filing legitimate claims, keeps FEMA within strict deadlines so that homeowners get prompt and fair payments, and ends FEMA’s reliance on external legal counsel from costly for-profit entities.

Senator Menendez has been the leading advocate in Congress for an overhaul of the National Flood Insurance Program (NFIP), since Storm Sandy devastated New Jersey nearly nine years ago.

In June, Senators Menendez and Kennedy introduced the National Flood Insurance Program Consultants Liability Act, which would strengthen the ability of the Federal Emergency Management Agency (FEMA) to protect homeowners from parties found guilty of fraud involving the assessment of property damage by the NFIP.

In 2019, he introduced the National Flood Insurance Program Re-Authorization and Reform Act (NFIP Re) of 2019 to reform the NFIP and ensure affordability.

Senator Menendez first exposed the problem of the widespread reduction in flood insurance claims during congressional hearings he chaired in 2014, and then successfully pushed FEMA to reopen every insurance claim against it. Sandy’s flood for review, which compensated Sandy’s victims with more than $ 260 million in additional payments that they were initially denied.

Senator Menendez is the author of the Superstorm Sandy Relief and Disaster Loan Program Improvement Act, which extended and broadened access to federal disaster loans through the United States Small Business Administration (SBA). Owner’s Flood Insurance Affordability Act was enacted in 2014 to deal with the skyrocketing rates of many Sandy survivors. In 2013, he led the initial Sandy $ 60 billion federal aid program through Congress.

A copy of the invoice text can be found here https://www.menendez.senate.gov/imo/media/doc/nfip_bill_text.pdf. A copy of the bill section by section is available here https://www.menendez.senate.gov/imo/media/doc/nfip_section_by_section.pdf.

Read this original document on: https://www.menendez.senate.gov/newsroom/press/menendez-cassidy-introduce-bicameral-bipartisan-bill-to-reform-national-flood-insurance-program

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