‘Louisiana families finally have peace of mind’ — President Obama signs flood insurance bill into law
By: Bruce Alpert | The Times Picayune | 3/21/2014
It was widely expected the president would sign the legislation into law, after it won final congressional approval last week with a resounding 72-22 vote by the U.S. Senate.
Still, there was relief, Sen. Mary Landrieu, D-La., said, when a White House official called Friday afternoon with word the president had indeed approved the legislation minutes earlier.
“We fought the good fight and we won and thousands of middle class families in Louisiana and throughout the nation are going to get immediate relief,” Landrieu said. “Most importantly, we re-established in this arduous legislative process that affordability is important to the long-term stability of the flood insurance program.”
The president’s signature culminates a nearly two-year effort to combat large premium increase for some of the 5.5 million flood insurance policyholders resulting from enactment of a 2012 bill — Biggert-Waters — that was intended to make the program fiscally solvent.
But some of the increases were dramatic — double or in some cases 10 times current premiums — threatening to make the program unaffordable to some middle-class homeowners. Rep. Maxine Waters, D-Calif., said the increases were “unconscionable,” and never intended when she and former Rep. Judy Biggert, R-Ill., helped draft the law.
The fight to undo portions of Biggert-Waters ended Friday with the president’s signature on the Homeowner Flood Insurance Affordability Act.
“Louisiana families finally have the peace of mind in knowing that a real solution to the long-fought battle to provide flood insurance relief to homeowners has been signed into law,” said Rep. Steve Scalise, R-Jefferson.
The Homeowner Flood Insurance Affordability Act limits yearly premium increases to an average of 15 percent per year for each of the nine property categories listed by FEMA, and stipulates that no individual policyholder pay an increase of more than 18 percent per year. It calls on FEMA to “strive” to reach the goal that most policyholders have a premium of no more than 1 percent of the value of their coverage — in other words, $2,000 for a $200,000 policy.
The bill also reinstates the flood insurance program’s grandfathering provision, meaning homes that complied with previous flood maps would not be hit with large increases when new maps show greater risk of flooding. It also ends a provision that required an immediate hike to actuarial levels when a home changes ownership — slowing home sales in many communities designated high risk by FEMA flood maps.
It also provides refunds of premiums for people who purchased homes after Biggert-Waters became law in July, 2012, and learned the change in ownership marked a sudden end to subsidized flood insurance premiums — sometimes resulting in dramatic increases when policy renewals were due.
And it requires the Federal Emergency Management Agency, as it completes new flood maps, to obtain input from local communities and account for non-federal levees and other locally funded flood protection. It also requires FEMA to complete a study on how to keep the program affordable as it moves to make the program more solvent.
The retention of subsidized rates in the House bill is funded by a $25 surcharge for most homeowner policyholders, and a $250 fee for non-residential property or non-primary residence homeowners. Still, the bill retains a provision in Biggert-Waters to eventually make the program self-sufficient by moving toward actuarial rates.
Louisiana lawmakers said the legislation provides important protections for Louisiana residents who faced large increase in premiums under the 2012 Biggert-Waters law. Before it passed the Senate 72-22 last week, it won House approval, also by a large margin, 306-91 on March 4.
“Today is a great day for Louisiana,” said Rep. Bill Cassidy, R-Baton Rouge, who helped write the legislation with lead House sponsor, Rep. Michael Grimm, R-N.Y.
Landrieu, who is running against Cassidy in the 2014 Louisiana Senate race, said for a Congress that has a hard time getting bipartisan support for a “Happy Birthday” resolution, a unified Louisiana delegation, backed by a national coalition established by Michael Hecht of Greater New Orleans Inc., and the Stop FEMA Now group, founded by New Jersey homeowner George Kasimos, achieved a big legislative victory.
They did so with a relentless campaign, making sure that any member on the fence about the legislative fix heard directly from homeowners in their districts or states concerned whether they could afford premium increases resulting from Biggert-Waters, and realtors and bankers warning that that immediate rate hikes to actuarial levels when a house changes ownership was tanking some important real estate markets.
“The President’s signature of H.R. 3370 is a monumental victory for hard-working Americans across the country,” said Hecht, the president and CEO of Greater New Orleans, Inc. who led the 32-state Coalition for Sustainable Flood Insurance. “This law protects homeowners who played by the rules and keeps real estate markets alive while putting the NFIP on a more realistic path to solvency. We thank the President for signing this legislation into law and our Congressional delegation for their tireless leadership on this issue.”
Said Sen. David Vitter, R-La. “This huge victory saves families in Louisiana and across the country from losing their homes.”
Rep. Cedric Richmond, D-New Orleans, helped add affordability language to the legislation, which also included key elements of a bill that passed earlier in the Senate.
“This is a great day for the people of Louisiana, and for Americans living in flood zones all across the country,” Richmond said. “From the very beginning homeowners and small business owners made their voices heard that the rate increases stemming from Biggert-Waters were causing unreasonable hardship. My colleagues and I heard your calls…”
Still, it wasn’t easy. Conservative groups, such as Americans for Prosperity and Heritage Action, joined by insurance firms, which faced lower commissions, opposed the bill as an unwise retreat from a law drafted just two years ago to make the debt ridden flood insurance program solvent. At one point, the White House Office of Management and Budget also expressed concerns about moving away from Biggert-Waters reforms.
But Landrieu quickly got a personal commitment from the president that he would not veto a bill intended to keep the program affordable for middle-class constituents.
Still, there were detractors.
Sen. James Inhofe, R-Okla., said the bill “abandons the much-needed reforms to the National Flood Insurance Program that were instituted in the Biggert-Waters Reform Act of 2012.”
“That bill set the NFIP on a course to quickly remove federal subsidies from the program and make it actuarially sound,” Inhofe said.