Flood insurance bill seeks to prevent policy rate increases


New bill would block some provisions set forth in a 2012 bill

New legislation was recently passed in the U.S. Senate that seeks to block planned flood insurance premium increases for primary residents and businesses nationwide.

About 20 percent of the homeowners required to carry flood insurance on their property have historically been subsidized or grandfathered at a lower rate by the National Flood Insurance Program (NFIP). However, in 2012, Congress passed the Biggert-Waters Act, which aimed to reduce or phase out the NFIP subsidy at a rate of up to 25 percent per year.

The Homeowner Flood Insurance Affordability Act, which passed in late January, seeks to delay the rate increases.

“While the Senate continues to work toward a long-term solution to flood insurance, Oregon families shouldn’t be hit with drastic flood insurance rate hikes that are unaffordable or will make their homes impossible to sell,” said Sen. Jeff Merkley (D-Oregon). “I urge the House to act immediately to provide relief to homeowners.”

The bill would delay implementation of rate increases on all homeowners and businesses that were built to code then remapped into a higher risk area, all property owners who purchased a new policy after July 6, 2012, and all properties sold after July 6, 2012.

The delay would remain in force untilt FEMA completes an affordability study mandated by the Biggert-Waters Act, proposes a draft affordability framework for Congressional review, and Congress has a chance to give FEMA affordability authority. In addition, the FEMA administrator would have to certify that the agency has implemented a flood mapping approach that utilizes sound scientific and engineering and engineering methodologies to determine varying levels of flood risks in all areas participating in the NFIP.

Much of Prineville lies in the flood plain, including much of the southern half of the community. Outside the city limits, it extends east along Ochoco Creek to the dam behind Ochoco Reservoir and west on most the land between Lamonta Road and U.S. Highway 26, prior to Gumpert Road.

The City of Prineville updated the flood plain map in 2012 as part of a push by FEMA to complete map upgrades nationwide. As a result, some properties were added to the local flood plain, but others were removed.

“It was kind of a wash,” said City of Prineville Senior Planner Josh Smith, adding that most of the properties brought into the flood plain were located around Northwest Deer and Third streets.

“It included a few more businesses.”

In addition to its provisions regarding policy premiums, the Flood Insurance Affordability Act would allow FEMA to utilize the National Flood Insurance Fund to reimburse policy holders who successfully appeal a map determination.

While that is the case, few local property owners appealed their inclusion in the flood plain after the 2012 update. Smith could only recall five such appeals, although he noted that all of them were successful, as is usually the case.

“The flood study does this generic flood plain,” he explained. “They don’t go to every property. So, you can do your own survey of your own property and prove to FEMA that your property is not in the elevation the flood maps say.”

Smith said that once the surveys and studies have been completed, the property owner already knows whether the appeal will be successful or not.

As the Flood Insurance Affordability bill awaits further action, the House has begun work on a revised version of Biggert-Waters Act.

“This legislation addresses flood insurance affordability through what appears to be a better and more practical glide path than the recently-passed Senate bill or even the original HR 3370 (Biggert-Waters Act), which simply delay implementation of most increases for about four years,” said City Planning Director Phil Stenbeck.

While that is the case, the legislation reform includes other provisions that Stenbeck finds troubling, including the removal of a section of the bill regarding grandfathered properties.

“The elimination of Section 207 in its entirety means that administrative grandfathering will continue,” he said, “and the surcharge on all flood insurance policies to essentially subsidize policies already getting a discount is very disturbing.”

Stenbeck, who is a member of the Association of State Floodplain Managers, said that the organization would instead prefer an approach that addresses long-term affordability and reduces flood risk.

“HR 3370 does nothing to provide assistance to homeowners to undertake mitigation, which is the only measure that reduces premiums and makes people and properties safer,” he said.