House bill would delay some Biggert-Waters impacts

by Sam Wilson
Wednesday, October 30, 2013

Lumina News file photo 

A new bill in the U.S. House of Representatives would delay implementation of parts of the Biggert-Waters Flood Insurance Reform Act.

Lawmakers in the U.S. House of Representatives and Senate have announced new plans to delay implementation of parts of the Biggert-Waters Flood Insurance Reform Act, which caused skyrocketing insurance rates for certain property owners in flood-prone areas.

Signed into federal law July 6, 2012, Biggert-Waters was an effort to balance the National Flood Insurance Program’s budget, currently estimated at $25 billion in debt, by phasing out subsidies for some flood insurance policies.

However, flood-prone communities nationwide immediately began working to mitigate or delay the legislation, the effects of which are starting to be felt.

Beginning July 2012, non-primary residences, business properties, new policyholders, newly purchased properties and properties meeting certain criteria for damage claims began losing subsidized rates. Those subsidies are being phased in at an annual rate of 25 percent.

Grandfathered rates, for properties that were built to code then remapped into higher-risk areas, are also being phased out at an annual rate of 20 percent. 

During a Tuesday, Oct. 29 telephone interview, Business Alliance for a Sound Economy (BASE) Governmental Affairs Director Ryan McAlister said this has resulted in substantial increases in some local property owners’ annual insurance bills.

“In the past couple days we have started to see some of the effects in business properties since they were one of the first implementation steps that were out there when the bill was signed,” McAlister said. “What we’re seeing is in the pre-FIRM policies, the structures built before the original flood maps, policy increases in the range from $30,000 to $60,000.”

Wrightsville Beach Town Manager Tim Owens said when he checked into an elevation certificate for town hall, he found that the town would see a $15,000 rate increase for the main building alone.

Earlier in 2013, the Wrightsville Beach Board of Aldermen passed a resolution opposing Biggert-Waters, which has also been passed by the New Hanover County Board of Commissioners, Wilmington City Council and Carolina and Kure beach town councils. Owens expressed optimism with the new bill, but warned it was far from a done deal.

“We still don’t know what the outcome is going to be or what the increases may or may not be,” Owens said. “Obviously, it allows folks to step back, take a look at it again and address affordability, which was one of our biggest concerns.”

In an Oct. 29 press release, Rep. Mike McIntyre announced he had cosponsored a new bill in the House, which would delay some insurance rate increases for an estimated four years. McIntyre’s aid Andrew Simpson said in a phone interview that the legislation would not just help coastal property owners.

“[McIntyre] and [Rep.] Walter Jones co-led a letter recently to the entire North Carolina delegation helping to just raise awareness about what these increases in insurance rates would mean, to not only coastal folks but folks who are inland, who may live along a floodplain [or] a river bank,” Simpson said.

The new legislative initiative, titled The Homeowner Flood Insurance Affordability Act, would delay the phasing-in of some unsubsidized rates by providing funding for an affordability study required by the original Biggert-Waters Act, but which Federal Emergency Management Agency (FEMA) Director Craig Fugate said in September the agency could not afford to conduct.

That study is expected to take two years. The new bill would push the implementation of rate hikes back an additional two years by requiring FEMA to develop and submit an “affordability framework” to Congress for review.

The delay would apply to primary residences that are currently grandfathered into the subsidy program and are not classified as “repetitive loss,” as well as properties sold after July 6, 2012 or policies purchased after that date. Repetitive losses are defined by FEMA as two or more claim payments of more than $1,000 from the National Flood Insurance Program within any rolling 10-year period.

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