WASHINGTON (AP) — Less than two years after Congress
approved a landmark bill to overhaul the federal flood insurance
program, lawmakers are poised to undo many of the changes after
homeowners in flood-prone areas complained about sharp increases in
premiums.
The House overwhelmingly passed a bill Tuesday night
that would allow sellers to give their subsidized, below-market
insurance rates to new buyers and lower the cap on how much flood
insurance premiums can rise each year.
Rep. Michael Grimm, a New
York Republican who co-sponsored the bill, said it would ensure that
families across the country, including those still struggling to recover
from Superstorm Sandy, can avoid "a wave of devastating premium hikes
and foreclosures."
The Senate could soon follow. Sen. Robert
Menendez, D-N.J., says he supports the House measure, which mirrors a
bill he sponsored and the Senate approved in January.
The House
bill "will end the most egregious problems with the flood insurance
program and bring some real relief to thousands of homeowners who
desperately need our help," Menendez said in a statement Tuesday night.
"I’m encouraged by this progress and hope we can bring the bill over the
finish line very, very soon."
A White House spokesman declined to
comment on the House bill, but the White House said during debate on
the Senate measure that it strongly supports a phased transition to
risk-based flood insurance rates to help ensure that the federal flood
insurance program has adequate resources to pay future claims.
"The
administration recognizes that many policyholders may be challenged
financially by the new rates and remains committed to working with the
Congress to develop approaches that ensure economically distressed
policyholders are not unduly burdened while maintaining the financial
stability" of the flood insurance program, the White House said in a
Jan. 27 statement.
Both the House and Senate measures are aimed at
weakening a 2012 law designed to wean hundreds of thousands of
homeowners off subsidized flood insurance rates. The federal flood
insurance program is now some $24 billion in the red, mostly because of
huge losses from Sandy and Hurricane Katrina. The 2012 law required
extensive updating of the flood maps used to set premiums.
Rep.
Maxine Waters, D-Calif., co-sponsored the 2012 law as well as the latest
fix to what she called the original law’s "unintended effects" of
dramatic rate increases for homeowners.
"Relief is on the way,"
Waters said Tuesday night, adding that the new bill would make insurance
premiums more affordable while making the Federal Emergency Management
Agency, which administers the flood program, more accountable.
Some
GOP lawmakers complained that the Republican-controlled House was going
along with a measure widely supported by Democrats. A total of 180
Democrats joined 126 Republicans in supporting the bill. The measure was
approved 306-91.
Rep. Jeb Hensarling, R-Texas, chairman of the
House Financial Services Committee, called the flood insurance program
poorly run and doomed to failure, noting that it charges just 70 percent
of what officials say is needed to break even.
The program uses a
faulty model that understates flood risks, with the result that a
single mother in Dallas who works at a grocery store subsidizes a
millionaire’s beachfront home, Hensarling said. "That is the definition
of unfair," he said.
Implementation of the 2012 law has stirred
anxiety among homeowners along the Atlantic and Gulf coasts and in other
flood plains. Many homeowners have complained they face unaffordable
rate increases. Anger over the higher rates has fueled a bipartisan
drive to delay or derail many of the 2012 changes. The Senate bill
approved in January delays implementation of the insurance overhaul for
four years.
The House bill would permanently repeal a provision
that imposes sharp rate increases on people who buy homes in flood-prone
areas. The bill also preserves below-market rates for people whose
homes meet federal flood map standards.
Rates imposed by the 2012
law are particularly high in older coastal communities in states such as
Florida, Massachusetts, New York and New Jersey and have put a damper
on home sales as prospective buyers recoil at the higher premium rates.
The
House bill was brought to the floor under special rules that limited
debate and required two-thirds support from those voting. That standard
proved little challenge for bill supporters, despite opposition from tea
party groups and other conservatives who said the measure would
continue unfair federal subsidies for people who choose to live in
flood-prone areas. Some environmental groups also opposed the bill,
saying that climate change has increased the risk of flooding in coastal
areas, making it illogical to continue to rebuild in flood zones.
The
House measure would also give relief to people who have bought homes
after the 2012 overhaul and therefore face sharp, immediate jumps in
their premiums. Those homeowners would see rate increases capped at an
average of 15 percent, with a maximum of 18 percent per year.
People
whose second home is in a flood zone and those whose properties have
repeatedly flooded would continue to see their premiums go up by 25
percent a year until reaching a level consistent with their real risk of
flooding.
FEMA would retain the ability to increase premiums each
year, but the increases wouldn’t be as steep as mandated under the 2012
law. A surcharge on each of 5.6 million policyholders would offset the
cost of continued subsidies for about 1.1 million homeowners.
The
changes proposed by the House dismayed supporters of the 2012 law, who
said it began to remove incentives for people to live in costly,
flood-prone areas.
"Nobody wants to see their rates go up. But
taxpayers across the country don’t want to support a program that is $24
billion in debt and climbing," said Steve Ellis, vice president of
Taxpayers for Common Sense, a Washington-based watchdog group, of the
federal flood insurance program.
A far better solution than either
the House or Senate bill would be to slow down the rate increase, even
dramatically, "but still allow rates to continue to move toward their
risk-based" level, Ellis said.
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