Cassidy Statement on Financial Services Hearing on NFIP


WASHINGTON – November 20, 2013 – (RealEstateRama) — Today, at the request of Congressman Bill Cassidy, M.D. and members of the Congressional Home Protection Caucus, the House Financial Services Committee held a hearing on the National Flood Insurance Program.  Dr. Cassidy released the following statement on the hearing:

Congressman Bill Cassidy in
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Congressman Bill Cassidy in
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“This hearing is an important step forward in addressing the affordability of the National Flood Insurance Program.  The House has put forth several solutions to make flood insurance affordable, including passing the Cassidy Amendment.   I will continue to work with the committee to find a permanent solution to this issue.”

Congressman Randy Neugebauer, chairman of the House Subcommittee on Housing and Insurance, offered the following statement: “I would like to thank Representative Bill Cassidy and his staff for assisting this Committee in navigating and responsibly addressing this issue.”

A copy of Dr. Cassidy’s Statement for the Record is below.


“Implementation of the Biggert-Waters Flood Insurance Act of 2012:

Protecting Taxpayers and Homeowners”
Tuesday, November 19, 2013 1:30 PM in 2128 Rayburn HOB

Congressman Bill Cassidy, M.D.

Statement for the Record

On July 6, 2012 the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12) was signed into law, reauthorizing the National Flood Insurance Program (NFIP) through 2017 with significant reforms. Congress acted to make the NFIP rates more risk-based, reducing existing subsidies. As of October 2013, the NFIP owed the U.S. Treasury $24 billion. This debt was largely accrued due to the failure of federal flood walls/levees in New Orleans during Hurricane Katrina in 2005 and compounded by Hurricane Sandy’s destruction in 2012.

Key provisions of the legislation require the NFIP to phase out subsidized and grandfathered rates so that policy premiums reflect true actuarial risk. These changes aim to make the NFIP solvent and ensure its long-term sustainability.  However, the legislation created an affordability challenge for policyholders in communities across the country.

The economic ramifications surrounding unaffordable flood insurance has the potential to devastate home values, small businesses, and entire communities across the country.  Since the U.S. House of Representatives took action in early June to delay certain flood insurance rate hikes, FEMA has released its Specific Rate Guidelines; confirming fears of sudden and steep rate increases for many Americans.

In several cases around the country, the sale or purchase of a home has already begun to trigger significant rate increases. In these situations, a homeowner could find themselves having to pay up to $10,000 or $15,000 more in flood insurance premiums depending on FEMA’s classification of the property and the position of the structure relative to base flood elevation.

Meanwhile, FEMA is years away from completing the affordability study mandated by the Biggert-Waters Flood Insurance Reform Act of 2012.  FEMA has only begun to administer its revised Levee Analysis and Mapping Procedure designed to take into account levee and flood protection structures when assessing a community’s true flood risk. To this point, FEMA’s risk analysis fails to factor in the protection these levees afford communities.

In addition, flood mapping inaccuracy continues to be a prevalent concern within communities across the country. Many map accuracy problems and successful map appeals resulted from FEMA having used inaccurate or outdated data concerning land elevation and landscape features, in some cases data that is decades old. As an example, Louisiana’s coastal landscape is changing due to erosion and restoration. In many cases FEMA’s use of “best available data” results in “mis-mapping” because the data is old and inaccurate. It is also of great concern that FEMA has not yet administered a program that would allow homeowners to make monthly installments on their insurance premiums. Instead, FEMA expects skyrocketing flood insurance premiums to be paid all at once.

FEMA has rushed to implement rate hikes on homeowners without implementing the portions of BW12 that could help offset the costly premium increases. Many policyholders cannot afford nor will pay exorbitant flood insurance premiums and a depopulation of the program could threaten NFIP’s solvency. This sporadic implementation of BW12 is destroying home values, real estate markets, and the overall fiscal stability of the National Flood Insurance Program.

My colleagues and I have put forth several solutions to make flood insurance more affordable; including solutions to reduce FEMA’s overhead expenses and ideas to increase the private sector’s role in financing flood losses. It is incumbent upon us as Members of Congress to work together in finding a comprehensive legislative solution. I thank the Chairman for holding this hearing today and for his attention and work on this important issue impacting the livelihood of millions of Americans across the country. I look forward to working with you and the Committee on efforts to balance flood insurance accessibility and solvency with consumer affordability.

Thank you


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