Manchin OK with premium delay
WHEELING – Sen. Joe Manchin said Wednesday he will support legislation to delay federal flood insurance premium increases under the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012.
A procedural vote in the Senate on the Homeowner Flood Insurance Affordability Act had been set for Wednesday, but was delayed as senators continued debate on a proposed three-month extension of jobless benefits. Similar legislation proposed in the House has yet to move out of committee.
If the proposed legislation passes, new rates wouldn’t kick in for another four years. Manchin, D-W.Va., said the delay would allow more time for an affordability study that was required by Biggert-Waters – a measure that passed with overwhelming bipartisan support, including yes votes from every local representative in Congress except Sen. Rob Portman, R-Ohio.
Earlier this week, the nonpartisan Congressional Budget Office released a report that predicts the delays would cost the FEMA-run National Flood Insurance Program – already almost $25 billion in debt – another $2.1 billion over the next 10 years.
The report further predicts Congress eventually would have to increase the program’s borrowing authority to avoid delays in paying claims.
Critics of the Biggert-Waters Act – including many legislators who voted for it in 2012 – say the law unfairly targets inland properties that are located near rivers and streams but rarely flood, forcing those property owners to pay higher rates to hold down premiums for severe repetitive loss properties in coastal areas.
According to FEMA, there were 3,838 NFIP policies in force in the 10-county area encompassing Hancock, Brooke, Ohio, Marshall, Wetzel and Tyler counties in West Virginia and Jefferson, Belmont, Monroe and Harrison counties in Ohio. Of those, more than 1,200 are within Wheeling city limits.
“It is simply unconscionable to ask thousands of West Virginia homeowners to make excessive flood insurance payments because of the unintentional consequences of the recently enacted Biggert-Waters Act,” Manchin said.
“I’ve heard many concerns from West Virginians that these rate increases could rise in some cases to be more costly than homeowners’ mortgage payments. That is simply unacceptable, especially at a time when our economy and housing market are still only slowly recovering.”
Sen. Jay Rockefeller, D-W.Va., has not commented on the proposed legislation.
Meanwhile, as debate over the issue looms in the Senate, Reps. David McKinley, R-Wheeling, and Bill Johnson, R-Marietta, sent a joint letter to House Speaker John Boehner urging him to move the House version of the legislation forward.
“Many middle class families in communities along the Ohio River could be priced out of home ownership altogether,” the letter reads.
“These changes could hurt entire neighborhoods and communities by depressing home prices and increasing vacancy.”
Several supporters of the Biggert-Waters Act, including insurance industry leaders, on Wednesday urged senators to vote down the premium increase delay.
Jimi Grande, senior vice president of federal and political affairs for the National Association of Mutual Insurance Companies, believes the Homeowner Flood Insurance Affordability Act is an example of legislators “allowing shortsighted local politics to trump sound policy decisions” in an election year.
“Who’s going to defend FEMA? It’s good politics to wag your finger, yell about FEMA and the (flood zone) maps and propose legislation to undo all the reforms,” Grande said.
R.J. Lehmann, a senior fellow at the R Street Institute, which describes itself as a “free market think tank,” believes the impact of higher premiums on the real estate market have been overstated. He said Florida, which is home to 2 million of about 5.5 million NFIP-covered properties, actually saw an increase in home sales last year with further, albeit more modest, increases predicted this year.
“We think it was long overdue, that the flood insurance program be reformed,” Lehmann said. “It encourages building in risky zones.”
Both Lehmann and Grande said they would support “need-based” subsidized premium rates to replace the pre-Biggert-Waters policy of providing subsidies even to the wealthiest property owners. They also suggest phasing in increases gradually for new policies, rather than the immediate jump to “full-risk” rates under Biggert-Waters that is making it more difficult to sell property located in a flood zone.