Washington, DC – With the National Flood Insurance Program (NFIP) set to expire at the end of this month, U.S. Senator Kirsten Gillibrand today urged Senate leadership to extend the NFIP without delay and to ensure that any legislation includes her reforms to fix the current broken system and make flood insurance policies more affordable for New Yorkers. Gillibrand helped write the bipartisan National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019, which would extend the NFIP for five years and fix the problems plaguing the program. The NFIP Re Act of 2019 was introduced in the Senate earlier this summer, but there has yet to be any meaningful action to pass this bill.
“Helping our communities prepare for and recover from the devastation caused by flooding should be one of our highest priorities here in the Senate, especially as so many states continue to be hit with extreme weather. The National Flood Insurance Program is meant to protect households in New York and across the country from the losses that follow major flooding, but for too many New Yorkers, flood insurance is becoming unaffordable. Additionally, following Superstorm Sandy, we learned that our National Flood Insurance Program is broken and riddled with fraud,” said Senator Gillibrand. “Congress has the chance now to fix this broken system. The NFIP Re Act of 2019 contains my reforms to make the flood insurance program more affordable, transparent, and accountable, and that’s why I am calling on Senate leaders to put this bill on the floor for a vote without delay.”
Many of Gillibrand’s provisions in the NFIP Re Act of 2019 were based on a bill Senator Gillibrand previously introduced. Her reforms include lessons learned following Superstorm Sandy, when New Yorkers suffered from a flood insurance program that did not provide many homeowners and renters with critical support at a time when they needed it most. With less than two weeks to go until the NFIP expires and with more than five million American households depending on the NFIP for affordable insurance protection to cover losses from major flooding, Gillibrand called on Senate leaders to act now. In a letter to Senate Majority Leader Mitch McConnell and to the Chairman of the Banking Committee Mike Crapo, Gillibrand also called on them to ensure that any legislation to reauthorize the NFIP makes the program more affordable for low- and moderate-income homeowners and renters and that it also includes her provisions to fix the NFIP’s broken claims process and protect against the practices that defrauded New Yorkers after Superstorm Sandy.
Below are the provisions that Gillibrand helped write into the NFIP Re Act of 2019:
- Cap Annual Premium Increases at 9 Percent to Help Make Flood Insurance More Affordable: Currently, premiums can more than double every 4 years or less and the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) new methodology (Risk Rating 2.0) will fundamentally alter premiums on every policy in the country. This untested and unknown methodology could cause a rate shock and lead to unaffordable premiums, forcing homeowners to drop coverage or lose their homes. The NFIP Re Act of 2019 would place protections against sudden rate shocks for policy holders and implement regulations for FEMA’s new rating methodology.
- Implement New Claims and Appeals Process Based on Lessons from Superstorm Sandy: The bill would fundamentally reform the claims process based on lessons learned in Superstorm Sandy and other disasters to level the playing field for policyholders during appeal or litigation, ban aggressive legal tactics preventing homeowners from filing legitimate claims, hold the FEMA to strict deadlines so that homeowners get quick and fair payments, require FEMA to give homeowners access to all claims-related documents, and end FEMA’s reliance on outside legal counsel from expensive for-profit entities.
- Provide Vouchers for Millions of Low- and Middle-Income Homeowners and Renters: Vouchers would be provided for homeowners and renters if their flood insurance premium causes their housing costs to exceed 30 percent of the Adjusted Gross Income.
- Refocus on Flood Mitigation Efforts: The NFIP Re Act of 2019 would freeze interest payments on the NFIP debt while reinvesting savings towards mitigation efforts to restore the program to solvency and reduce future borrowing.
- Make Strong Investments in Flood Mitigation: The bill would provide robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk.
- Better Reflect Rebuilding and Mitigation Costs: In order to better reflect the costs of rebuilding and of implementing flood mitigation projects, this bill would increase the maximum limit for ICC (Increased Cost of Compliance) coverage and expand ICC coverage eligibility to encourage more proactive mitigation before natural disasters.
- Create Oversight of Write Your Own (WYO) Companies: The bill would create new oversight measures for insurance companies and vendors and provide FEMA with greater authority to terminate contractors that have a track record of abuse. This would mitigate the fraudulent alteration of engineering reports uncovered after Sandy, and other corrupt practices to deny homeowners their legitimate claims.
- Fix the “Earth Movement” Exclusion: Currently, the burden is on the homeowner to prove that flood waters or “earth movement” caused physical damage to structures and foundations after a flood. This provision would shift the burden of proof on to FEMA.
The full text of Senator Gillibrand’s letter may be found here and below.
September 17, 2019
The Honorable Mitch McConnell
United States Senate
Washington, DC 20510
The Honorable Mike Crapo
Committee on Banking, Housing & Urban Affairs
United States Senate
Washington, DC 20510
Dear Leader McConnell and Chairman Crapo,
The current authorization for the National Flood Insurance Program (NFIP), currently on its 12th extension since Fiscal Year 2017, is set to once again expire at the end of this month. I am writing to urge you to prioritize legislation to reauthorize and reform the NFIP for the millions of policyholders who rely on this program in New York and across the country.
Repeated extensions of the NFIP have deprived Senators of the opportunity to make real and meaningful reforms to make flood insurance more affordable, improve mitigation of flood risk, and implement changes to the Federal Emergency Management Agency (FEMA)’s vexing claims and appeals process, and protect policyholders from the type of fraud experienced by a number of my constituents after Superstorm Sandy.
I have worked with a number of my colleagues, both Republicans and Democrats, on S. 2187, the National Flood Insurance Program Reauthorization and Reform Act of 2019. This comprehensive bipartisan legislation would provide policyholders with certainty by reauthorizing the NFIP for 5 years. It can and should serve a starting point for reauthorizing this program in the Senate. Specifically, this bill would:
- Address the affordability crisis for NFIP policyholders subject to dramatic rate increases by capping annual premium increases at 9 percent. It also creates a new means-tested voucher program for low and middle-income policyholders if their housing costs exceed 30 percent of their Adjusted Gross Income.
- Make overdue reforms to FEMA’s claims and appeals process by applying lessons learned after Superstorm Sandy and other recent major disasters. The legislation would provide more transparency for policyholders to have access to the documents used to assess their claim, ensure that claims decisions are made in a timely way. It would prohibit costly and aggressive practices against policyholders. It would also increase oversight over the “Write Your Own” program to ensure that the fraudulent alteration of engineering reports uncovered after Sandy, and other unscrupulous practices to deny policyholders their legitimate claims, never happens again.
- Put the NFIP on the path to greater solvency by freezing interest payments on the program’s debt and making significant investments in mitigation to prevent future flood loss. It allows homeowners to access more funding through the Increased Cost of Compliance (ICC) program to mitigate their homes to avoid the risk of future flood damage.
My constituents across the State of New York desperately need this bipartisan, common-sense bill, from families still struggling to rebuild from Superstorm Sandy on Long Island to low-income homeowners in Syracuse who are struggling to keep up with rising premiums they cannot afford. I urge you to make reauthorizing and reforming the NFIP a priority for this Congress and seize the opportunity to achieve a real bipartisan legislative accomplishment that will profoundly help millions of Americans.