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Bipartisan Deal Reached to Delay Most NFIP Rate Increases Four Years

Key House and Senate members have reached a bipartisan deal to delay changes to the National Flood Insurance Program (NFIP) that are raising premiums for many homeowners.
October 31, 2013

Key House and Senate members have reached a bipartisan deal to delay changes to the National Flood Insurance Program (NFIP) that are raising premiums for many homeowners. The bill would require regulators to address affordability of the coverage before implementing rate hikes. Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, said the deal will assure that “changes are implemented affordably.”

A date has not yet been set for a vote on the bipartisan legislation, which is expected to be introduced this week. Pending changes, the legislation will:

  • Delay, for a period of four years, most of the new rate increases.

    The delay applies to primary, non-repetitive loss residences that are currently grandfathered; all properties sold after July 6, 2012; and all properties that purchased a new policy after July 6, 2012.
  • Require the Federal Emergency Management Agency (FEMA) to complete an affordability study and propose regulations to address affordability.
  • Allow FEMA to utilize National Flood Insurance Funds to reimburse policyholders who successfully appeal a map determination.
  • Eliminate the 50% cap on state and local contributions to levee construction and reconstruction.
  • Protect the so-called “basement exception,” which allows the lowest proofed opening in a home to be used for determining flood insurance rates.
  • Establish a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process.
  • Require FEMA to certify that the agency has fully adopted a modernized risk-based approach to analyzing flood risk.


What It Means to Agents: The expiration of the proposed rate-delay (four years) will coincide with the overall re-authorization of the NFIP. This compromise would ‘kick the can down the road’ for four years. PIA supports risk-based flood insurance rates that take consumer affordability into consideration.

In the past year, it has become apparent that some of the rate increases in some coastal communities are of a magnitude that they threaten to create an unintended consequence of economic dislocation. The question is how to address affordability in a manner that does not further jeopardize the fiscal soundness of the NFIP, or that of the people whose property needs protection.

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