CRAMER: House Reforms National Flood Insurance Program
WASHINGTON, D.C. - Congressman Kevin Cramer supported the passage of the 21st Century Flood Reform Act, which puts the National Flood Insurance Program (NFIP) on a fiscally sustainable path and promotes the private flood insurance marketplace.
The taxpayer-backed NFIP was created in 1968 to provide government insurance protection against flood risks for both homeowners and commercial businesses. 50 years later, the federal program in effect has a monopoly, has borrowed over $30 billion from taxpayers, operates a $1.4 billion annual deficit and lacks the innovation expected of a company with $1.2 trillion of insurance coverage.
The 21st Century Flood Reform Act is a collection of seven bills reauthorizing the NFIP for five years and modernize the program. “Given the risk of flooding in many North Dakota communities we’re very aware of the federal flood insurance program,” said Cramer. “While it’s served many well, it’s also been a source of frustration, illogical cost, and dissatisfaction for others. By providing an affordable path to more accurate risk-based premiums and improved mitigation policy, consumers and taxpayers alike will be better served. Most importantly, bipartisan reforms to establish a strong private flood insurance market will bring consumer choice, broaden the financial risk, and, as we’ve seen in several cases, save consumers money.”
Specifically, the bill would:
· Decrease the cap on individual annual rate increases from 18% to 15%.
· Limit the chargeable risk premium of any residential property to no more than $10,000 per year.
· Leave in place the current practice of grandfathering.
· Consider differences in flood risk for coastal and inland properties in premium rates.
· Reduce annual surcharges from $250 to $125 for certain non-owner occupied low-risk residential properties.
· Allow for the continued coverage of new construction.
· Include the Ross-Castor Flood Insurance Market Parity and Modernization Act [H.R. 1422] to provide greater private market access, competition and consumer choice.
· Allow localities, who elect to use their own resources, to develop their own map alternatives to NFIP flood maps using better and cost-effective technology at an accelerated pace, subject to FEMA standards and approval.
· Simplify FEMA’s approach to designating and addressing multiple-loss properties.
· Require prioritization in maintaining its Reserve Fund, which would avoid NFIP borrowing from the U.S. Treasury.
· Require due process protections for consumers pursuing their NFIP contract rights
· Allow for more efficient claims processing
· Provides each policyholder a disclosure sheet that provides general information about the policyholder’s standard NFIP policy
Cramer spoke at length about the opportunities for private flood insurance in a recent opinion editorial to the Fargo Forum. “Just like health care, or any other insurance market, we need extensive private sector competition to drive consumer choice and affordability,” said Cramer in the editorial. “Now with improved mapping and risk modeling developed in recent years, the flood insurance market should be included.”
The bill is supported by the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), the Property Casualty Insurers Association of America (PCI), the Mortgage Bankers Association (MBA), the National Association of Mutual Insurance Companies (NAMIC), the National Taxpayers Union (NTU), and many other groups.