House flood insurance bill spares homeowners higher rates

Posted by Renee Schoof on February 25, 2014 

The Republican leadership of the House of Representatives has scheduled a vote for Wednesday or Thursday on legislation that would spare some homeowners of higher flood insurance rates under a 2012 law.

The 2012 Biggert-Waters Act brought higher rates to reflect true flood risk. It also changed how the Flood Insurance Rate Map updates affect rates. The changes would mean rate increases for some policyholders. The law also would end subsidies for flood insurance premiums when houses are sold. That provision raised objections from many people who said that they were unable to complete home sales once the potential new owners found out how much their insurance rates would increase.

The House bill would permanently ensure that there would not be a rate increase when a primary residence was sold. It also would prevent rate increases when the Federal Emergency Management Agency updates its flood risk maps. And it would provide refunds to people who bought homes after the law went into effect.

The National Flood Insurance Program is $24 billion in debt after the ravages of hurricanes Katrina and Sandy.

Rep. Mike McIntyre, a Democrat from Lumberton, has been working on bipartisan efforts to provide relief to eastern North Carolina homeowners from what he said were “the crippling effects of skyrocketing flood-insurance premiums.”

“I’m pleased that we will have a chance to vote on this legislation and move these essential flood insurance reforms forward,” McIntyre said in a statement.

Others oppose the legislation.

The libertarian R Street Institute, a policy research group, said in a statement that the measure doesn’t solve the flood insurance program’s deficit problem and doesn’t rely on free-market principles.

“Thanks to rising sea levels those risky areas are getting riskier all the time, so we have to start the process of weaning people off these subsidies because in 50 years or so some of these properties will be under water all the time,” R Street senior fellow R.J. Lehmann said in a phone interview.

And the Club for Growth on Tuesday put pressure on conservatives to vote No, saying it would include the vote on its 2014 scorecard of how conservative lawmakers are. The Club, which supports limited government, said in an email that the bill partly repeals “much-needed” reforms in the 2012 law. It recommended that Congress go further and get rid of the National Flood Insurance Program altogether, and let the private sector handle the insurance.

The Senate passed a bill on Jan 30 to delay the premium increases for four years.

The Congressional Budget Office projected that the Senate bill would cost taxpayers about $2.1 billion over 10 years. House Republicans said that the CBO had advised them their bill would not worsen the program’s deficit. The House legislation puts a surcharge of $25 per year on primary-residence policies and about $250 per year on businesses and other policies.

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