Tag: Flood Insurance

Bipartisan Bill to Extend and Reform National Flood Insurance Program Introduced in Senate, House

Posted on by Trey Jackson

National Flood Insurance Program (NFIP) logo

Bipartisan legislation recently introduced in the Senate and House would reauthorize and extend the National Flood Insurance Program (NFIP) for five years, providing greater stability for real estate markets, homeowners, and small business owners as the nation continues to struggle with inflationary pressures and increased threats of extreme weather. The National Flood Insurance Program Reauthorization (NFIP-RE) Act of 2023 would also implement a series of sweeping reforms to reduce program costs, make generational investments in communities to reduce flood risk, and establish a fairer claims process for policyholders. (Legislative text and PoliticoPro, June 22)

Risk Mitigation

  • A new flood rating methodology (Risk Rating 2.0) established by the Federal Emergency Management Agency (FEMA) attracted the attention of policymakers from coastal and flood-prone areas after it was reported that resulting rate hikes may result in the loss of coverage for hundreds of thousands of policyholders. (Associated Press, July 22)
  • Sens. Bob Menendez (D-NJ) and Bill Cassidy (R-LA), alongside Reps. Frank Pallone (D-NJ) and Clay Higgins (R-LA), introduced the NFIP-RE Act (S. 2142 and H.R. 4349) to put the program on solid fiscal ground. The Senate Banking Committee is leading this bicameral and bipartisan reform effort. (One-page summary of the bill)
  • The Roundtable is a long-standing supporter of a long-term reauthorization of the NFIP with appropriate reforms that create long-term stability for policyholders, improved accuracy of flood maps, mitigation reforms, enhanced affordability, and the acceptance of non-NFIP policies for commercial properties. (Roundtable Weekly, May 27, 2022)

Proposed Changes

Person building sandbag barrier

  • Congress has enacted 25 short-term NFIP reauthorizations since 2017. The NFIP-RE Act of 2023 would:
    • Extend the program for five years and cap annual rate increases at 9%.

    • Provide a comprehensive means-tested voucher for millions of low- and middle-income homeowners and renters if their flood insurance premium becomes prohibitively expensive.

    • Increase the maximum limit for Increased Cost of Compliance (ICC) coverage to reflect more accurately the costs of rebuilding and implementing mitigation projects.

    • Boost funding for mitigation grants and modernize mapping to identify and reduce flood risks.

    • Create new oversight measures for insurance companies and vendors.

    • Reform the claims process based on lessons learned from Superstorm Sandy and other disasters, to level the playing field for policyholders during appeal or litigation, hold FEMA accountable to strict deadlines so that homeowners get quick and fair payments, and ban aggressive legal tactics preventing homeowners from filing legitimate claims.

Sen. Menendez said, “With disastrous flooding events becoming all the more common, we must work to create a more sustainable, resilient, and affordable flood insurance program that invests in prevention and mitigation efforts, and all while ensure hard-working Americans can have peace of mind in the event of a disaster.” (Menendez news release, June 22)

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Hurricane Ian Raises Issues on Natural Catastrophe Risk and Reform of National Flood Insurance Program

Posted on by Trey Jackson

Hurricane Ian aftermath

The catastrophic damage revealed this week in the wake of Hurricane Ian shows the need for Congress to address natural catastrophe risk and pass a long-term reauthorization of the National Flood Insurance Program (NFIP). The Real Estate Roundtable has long advocated for a long-term program extension to avoid lapses that create uncertainty in both the insurance and housing markets.

NFIP & CRE

  • Originally enacted in 1968, the NFIP has been extended under 22 short-term congressional reauthorizations, including last week’s stopgap funding bill that extended government operations until Dec. 16. (Congressional Research Service report, Oct. 3 and Roundtable Weekly, Sept. 30)
  • The total potential debt exposure to properties in the path of Ian could be as high as $52 billion. (Trepp, Sept. 29 “Hurricane Ian Makes Landfall: Mapping the Commercial Real Estate Exposure”)
  • Recovery from storms could take longer and cost more to rebuild amid continued supply chain constraints and inflationary pressures. Media coverage included:
    • “Property Damage from Hurricane Ian Now Estimated Between $41 Billion to $70 Billion” (WorldPropertyJournal, Oct. 7)
    • “The Impact Hurricane Ian Could Have on CRE” (GlobeSt, Oct. 3)
    • “’Never Seen Anything Like This’: CRE Assesses Impact Of Hurricane Ian” (BisNow, Oct. 2)
    • “Ian will ‘financially ruin’ homeowners and insurers” (PolitcoPro, Oct. 1)

The Roundtable continues to work with lawmakers and coalition partners to address catastrophic risk issues and enact a long-term extension to the NFIP that includes effective reforms.

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New Legislation to Reauthorize the National Flood Insurance Program Released Before House Committee Hearing

Posted on by Trey Jackson

urban Flood Hurricane Sandy

The House Subcommittee on Housing, Community Development, and Insurance held a hearing on May 25 to address the reauthorization and reform of the National Flood Insurance Program (NFIP). Funding for the program is set to expire on Sept. 30 if reauthorization is not passed by Congress. (Hearing Webcast and Committee Memorandum)

  • Since the last major reauthorization expired at the end of fiscal 2017, there have been 19 short-term NFIP extensions and several brief lapses, according to the committee’s memo.
  • Five draft bills were released in conjunction with the hearing, including two from House Financial Services Committee Chair Maxine Waters (D-CA). Her first bill would reauthorize the program for five years, renew flood risk mapping and mitigation funds, and offer discounted rates to lower-income households. Water’s second bill would cancel the indebtedness of the NFIP. 

The Roundtable View
 NFIP logo

  • The Roundtable supports a long-term reauthorization of the NFIP with appropriate reforms that create long-term stability for policyholders, improved accuracy of flood maps, improved mitigation, enhanced affordability, and the acceptance of non-NFIP policies for commercial properties. (Roundtable website)
  • Under the current NFIP, commercial property flood insurance limits are very low – $500,000 per building and $500,000 for its contents. Lenders typically require this base NFIP coverage, and commercial owners must purchase Supplemental Excess Flood Insurance for coverage above the NFIP limits.
  • The Roundtable and its coalition partners support NFIP reauthorization with the inclusion of provisions that permit a voluntary “commercial exemption” for mandatory NFIP coverage if commercial property owners currently maintain adequate flood coverage.
  • Given the low coverage amounts provided to commercial properties, it is important to permit larger commercial loans to be exempt from the mandatory NFIP purchase requirements.

Congress will face the possibility of yet another NFIP funding extension before September 30 if policymakers cannot agree on reforming the program through legislation.

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New Data Shows Greater Flood Risk Across America, National Flood Insurance Program Funding Scheduled to Expire September 30

Posted on by Trey Jackson

Flood Data map First Foundation

Properties across much of the United States face a far greater risk of flood damage then current estimates maintained by the Federal Emergency Management Agency (FEMA), according to new data from the First Street Foundation, a non-profit research and technology consortium.  (New York Times, June 29)

  • FEMA administers the National Flood Insurance Program (NFIP), which aims to reduce the impact of flooding on private and public structures by providing affordable federal insurance to property owners, renters and businesses and by encouraging communities to adopt and enforce floodplain management regulations.
  • Funding for NFIP is currently scheduled to expire on September 30, after numerous temporary extensions.  The federal government’s current flood maps guide homebuilders, owners and mortgage lenders about flood risk.
  • The First Street Foundation’s report, “The First National Flood Risk Assessment: Defining America’s Growing Risk” classifies 14.6 million properties as being at substantial risk from flooding, whereas FEMA classifies 8.7 million properties as facing the same risk.  (Axios, June 29)
  • In current climate conditions, 21.8 million properties are classified as at risk, according to the new report.  “When adjusting for future environmental changes, by 2050, this will raise the number of properties with any risk across the country by 7.7% percent to 23.5 million,” the report states.
  • Any home can be searched on First Street’s FloodFactor.com website, which will soon integrate its data with Realtor.com.

Matthew Eby, founder and executive director of First Street Foundation said, “There are millions of Americans who have substantial flood risk and have no idea and now they’ll be able to access that … Having that data available will change the perspective of flood risk in this country.”

The National Flood Insurance Program (NFIP)

On May 14, 2019, the House Financial Services Committee unanimously approved a five-year flood insurance reform and reauthorization bill – the National Flood Insurance Program Extension Act of 2019 (H.R. 2578).

  • The bill would renew the NFIP until Sept. 30, 2024; forgive the NFIP’s remaining $20 billion debt and boost funding for mapping, floodplain management, and mitigation for homes, businesses and infrastructure.  It has not yet made it to the floor for a vote due to pressure from coastal state interests.
  • Meanwhile, the Trump Administration plans to overhaul government-subsidized flood insurance, in a sweeping proposal that could raise rates on more expensive properties and those in higher-risk areas. The proposal would take effect on Oct. 1, 2020. (Wall Street Journal, March 23, 2019)
  • Under the current NFIP, commercial property flood insurance limits are very low – $500,000 per building and $500,000 for its contents.  Lenders typically require this base NFIP coverage, and commercial owners must purchase Supplemental Excess Flood Insurance for coverage above the NFIP limits. 
  • Only a niche market of carriers typically provides this type of excess coverage and The NFIP’s low commercial limits make it problematic for most commercial owners.
  • The Roundtable and its coalition partners support NFIP reauthorization with the inclusion of provisions that permit a voluntary “commercial exemption” for mandatory NFIP coverage if commercial property owners currently maintain adequate flood coverage.

Congress will face the possibility of yet another NFIP funding extension before September 30 if policymakers cannot agree on reforming the program through legislation.

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President Trump Signs Spending Bill to Fund Government Until Dec. 20

Posted on by Trey Jackson

President Trump signing legislation

Congress this week passed a four-week spending bill that was by signed President Trump last night to fund the government beyond Nov. 21 and avoid a shutdown.

  • The Continuing Resolution (CR) locks in current funding levels for government operations until Dec. 20 – including the National Flood Insurance and EB-5 investment programs.
  • The measure, passed by the House on Tuesday and the Senate on Thursday, gives Congress three weeks after the Thanksgiving recess to agree on allocating $1.37 trillion for the 2020 fiscal year, which began Oct. 1.  (Roundtable Weekly, Sept. 27)
  • To avoid future stopgap measures for FY2020, policymakers will need to settle the contentious issue of funding for a wall along the U.S.-Mexico border.  Last Dec. 22, the government shutdown for 35 days when Congress and President Trump could not reach agreement on border-security funding for a wall.  (Wall Street Journal, Nov. 22)
  • Senate Appropriations Chairman Richard Shelby (R-AL) commented on recent efforts to reach an agreement for funding the Department of Homeland Security, which oversees border security. “We gotta deal with the wall, too,” Chairman Shelby said this week. “The wall is still there.”  (Politico, Nov. 21)
  • The CR’s extension for the EB-5 investment program until Dec. 20 does not include any legislative reforms.  However, long-anticipated regulatory changes to key elements of the EB-5 regional center program took effect Nov. 21.  (Roundtable Weekly, March 8, 2019).
  • Negotiations to modernize the investment visa program are expected after the Thanksgiving recess in light of a comprehensive EB- reform bill introduced earlier this month (Roundtable Weekly, November 8, 2019).  

The Real Estate Roundtable, U.S. Chamber of Commerce, EB-5 Investment Coalition, and other real estate organizations sent a letter on Nov. 15 in support of the bipartisan Immigrant Investor Program Reform Act (S. 2778) – sponsored by Senate Judiciary Chairman Lindsey Graham (R-SC), Democratic Leader Charles Schumer (D-NY), and Sens. Mike Rounds (R-SD) and John Cornyn (R-TX).

The Senate is scheduled to return on Dec. 2 and the House on Dec. 3.

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