GNO, Inc. Sunday Night Highlight – Hecht Testifies in Senate on Flood Insurance
This morning, GNO, Inc. President and CEO Michael Hecht provided testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on the policy priorities that should be included in the reauthorization of the National Flood Insurance Program (NFIP). The hearing, “Reauthorization of the National Flood Insurance Program: Local Perspectives on Challenges and Solutions,” is ahead of a March 2, 2024 deadline for continuing funding for the program to avoid a lapse in FEMA’s authority to sell flood insurance and borrow funds.
Hecht was joined by Dr. Daniel Kaniewski, Managing Director, Public Sector at Marsh McLennan, and The Honorable Steve Patterson, Mayor, City of Athens, Ohio, who was representing the National League of Cities. Additionally, Sen. Bill Cassidy provided remarks in support of NFIP renewal as well as the need for reforms to reduce costs, make generational investments in communities to reduce flood risk.
“A consistent theme throughout Mr. Hecht’s career is that he specializes in lifting up communities after tragedy strikes. Now in his current role at GNO, Inc., he continues that effort, bringing business and economic development back to New Orleans and Southeast Louisiana,” said Dr. Cassidy. “Mr. Hecht’s testimony highlighted this need for serious NFIP reform. His knowledge and experience was an excellent resource for the committee.”
“NFIP should be reauthorized to fulfill its original objectives, and administered in a manner that respects these objectives,” said Michael Hecht, President and CEO of Greater New Orleans, Inc. “NFIP’s policyholders are often misperceived as rich, second-home owners in beachfront communities. However, in 2017, a CSFI study found that that 98.5% of all NFIP policies are in counties with a median household income below $100,000, and 62% with a median household income below the national average of $53,889.”
These thoughts are part of the ongoing work performed by the Coalition for Sustainable Flood Insurance, which GNO, Inc. created in 2013 to support NFIP reform as a federal priority. Previous efforts led to the signing of the Homeowner Flood Insurance Affordability Act in 2014 and continued reauthorization of this essential program.
“I’m thankful to Mr. Hecht for his testimony at the Senate Banking hearing on the National Flood Insurance Program. Of the 5 million Americans who rely on the NFIP, half-a-million are Louisianans who need it to cover their homes and businesses,” said Senator Kennedy. “The program is not perfect, but it is an economic necessity for Louisianians.”
NFIP covers nearly five million policyholders with an annual premium of $3.5 billion and $1.3 trillion insurance in force. Each of today’s witnesses recommended prioritizing affordability and sustainability of flood insurance and discussed ways to mitigate flood risks in coastal and inland communities.
“NFIP serves as a critical tool in protecting homeowners, businesses and municipalities from the devastating financial consequences of flooding,” said Steve Patterson, Mayor, City of Athens, Ohio. “Flooding events have become increasingly frequent and severe, posing a significant threat to the stability and well-being of communities across the nation. Without the support and provisions offered by NFIP, the financial burden on our residents would be overwhelming, hindering our ability to recover and rebuild in the aftermath of such disasters.”
Additionally, the panel discussed the need for community resilience to reduce risk of flooding, an emphasis of the proposed National Flood Insurance Program Reauthorization Act. The proposed legislation was penned by U.S. Senators Bill Cassidy, M.D. (R-LA) and Bob Menendez (D-NJ) and U.S. Representatives Clay Higgins (R-LA-03) and Frank Pallone (D-NJ-06). If passed, it would implement a series of sweeping reforms to reduce costs, make generational investments in communities to reduce flood risk, and establish a fairer claims process for policyholders in addition to issuing a mandate for FEMA to create transparency of policy rates and risk determination.
“Flood risk in the US is systematically underestimated, contributing to gaps in the insurance coverage and the resilience measures that can help communities minimize and recover from losses,” said Dr. Daniel Kaniewski, Managing Director, Public Sector at Marsh McLennan. “Federal, state, and local officials need a clear vision that strikes a balance between addressing crises and fostering resilience. Insurance and risk transfer have an important role to play, but must be combined with a broader, coordinated resilience strategy that includes risk reduction measures.”
The need for reauthorization is great, as NFIP provides stability for homeowners, small business owners, and the real estate market as the nation continues to struggle with inflationary pressures. Moreover, the program provides a social good to the working coasts that drive our nation’s economy. Today’s hearing can be viewed online.