There have been several articles (Washington Post, NYT) published today that provided details on the US Senate's passage of a bill to delay the implementation of Biggert-Waters Flood Insurance Reform Act of 2012, or BW12. There has been discussion about a possible repeal or delays of the BW12 bill for several months. However, this discussion seems to have gained more steam as homeowners and other people with structures located within the Special Flood Hazard Area are starting to receive their new flood insurance premiums. More information from ASFPM about some of the efforts that are being made to consider or include other options in any bill that may be brought to the floor in the US House of Representatives.
For anyone who is not familiar with the BW12 bill, the insurance reform act had several goals including changes to flood mapping, flood grants and reauthorizing the National Flood Insurance Program (NFIP) for an additional five years. However, the changes that BW12 is best known for are changes to the flood insurance aspect of the National Flood Insurance Program. Many of the flood insurance changes were designed to make the flood insurance fund more stable by reducing the fund's current deficit to the US Treasury, as well as beginning to create extra savings to help the fund to be able to withstand large scale disaster declarations like Hurricanes Katrina, Ike and Sandy. Another aspect of the flood insurance reforms was to phase in actuarial rates for flood insurance policies which resulted in some groups of people losing the subsidy that they may have for their policy or losing any subsidy when a new policy was written. Past posts by Ned include some information about how BW12 would impact flood insurance policies within the State of Vermont. FEMA's website also has quite a bit of information that goes into much fuller detail about these flood insurance changes.
Many people have recognized that the original bill had issues in implementation and execution of the stated goals and objectives, specifically that the phase in of higher rates happened at a relatively fast rate, that some home or other building owners may go right from a subsidized rate directly to a full actuarial rate overnight and while many policy holders may not want to pay the higher premiums for many reasons, there was a definite contingent of people who would not have an actual ability to pay for the higher rates.
Despite the myriad of issues with the implementation of BW12, the reasons for the passage of BW12 still remains - trying to have the National Flood Insurance Program be able to be fiscally solvent and support itself by the premiums that are paid into the program and to keep general taxpayers for funding flood recovery efforts. A third very compelling reason for BW12 focused on having people in a flood hazard area recognize and pay for the true cost and risk of living in a hazard area, especially as we have been seeing more frequent and intense flood events and sea level rise starting to impact properties that may have been less vulnerable in the past. The idea was that if a person living or working in a hazard area had to pay the actuarial flood insurance rate for living in this risky zone, then more structure owners would undertake mitigation efforts to help reduce their yearly premiums.
The Association of State Floodplain Managers (ASFPM) released a Policy Paper in October of 2013 that included 9 recommendations of how BW12 could be altered to improve implementation but cautioned against repeal. This was in order to help keep moving the NFIP towards fiscal solvency as well as continue to focus on the growing demand for mitigating homes and other infrastructure that is located within the FEMA-mapped Special Flood Hazard Area. Many of the 9 ASFPM recommendations that had been made focused on continuing to promote and encourage meaningful mitigation of flood prone homes in a variety of ways. This included:
- finding more ways to fund mitigation projects and existing hazard mitigation grant programs;
- exploring ways to better incentivize mitigation efforts through tax incentives or long-term flood insurance policy benefits;
- recognizing partial mitigation efforts by homeowners; and
- making loans more available to home and other building owners who may be looking for ways to mitigate their structure from future floods.