House Passes ‘Homeowner Flood Insurance Affordability Act’

Bill would reform National Flood Insurance Program, aims to protect homeowners from steep insurance hikes

Congressman Chris Smith and Monmouth County Shaun Golden prepare to survey Hurricane Sandy damage

WASHINGTON, D.C. – The House of Representatives voted last night to provide relief to hundreds of thousands of homeowners facing huge flood insurance premium rate increases, including many still recovering from the devastation caused by Superstorm Sandy. Congressman Chris Smith (NJ-04), who represents severely damaged areas in southern Monmouth and northern Ocean Counties, praised the vote.

“The bill makes targeted and necessary reforms and will prevent massive premium increases from hitting homeowners who simply cannot afford them—and cannot find a buyer to take them on, leaving them stranded and without a solution,” Smith said. “Many cannot afford the recommended mitigation measures that may or may not reduce their premiums, creating a further environment of uncertainty. Accordingly, the Homeowner Flood Insurance Affordability Act slows the rate of increase that was included in the 2012 Biggert-Waters reform bill, allowing homeowners to remain in their homes and plan accordingly to continue flood insurance policies.”

The bill passed in a 309-91 vote. If enacted the bill will provide relief and stability to these homeowners and their communities while bringing reform to the National Flood Insurance Program (NFIP). It also provides a mechanism for enhanced community participation in the flood mapping process and increases transparency by making information publicly available to impacted parties.

The Homeowner Flood Insurance Affordability Act (HR 3370), co-sponsored by Smith, remedies many of the unintended consequences of the so-called Biggert-Waters Act of 2012. It repeals certain rate increases on Pre-Flood Insurance Rate Map (Pre-FIRM) properties and restores Grandfathered Rates for Post-FIRM properties that were built to code at the time of construction. It prevents a property sale from triggering rate increases and refunds those who have already faced one.

The legislation also prevents the Federal Emergency Management Agency (FEMA) from raising insurance premiums within a single property class by more than 15 percent per year. A preferred risk rate policy will be given to homes that are newly mapped into a special flood hazard area, and rate increases for these homes is capped at 15 percent per year.

Funding is provided for an affordability study to be conducted by FEMA and reported back to Congress in two years. FEMA must also issue guidelines providing alternate mitigation methods to homeowners whose homes cannot be elevated due to their structural characteristics.

At the start of this year, over 80,000 flood insurance policies were in force in Monmouth, Ocean and Mercer Counties in Smith’s Congressional District. The exploding cost of flood insurance—a program that many have paid into for years—threatens to roll back much of the progress made, and once again leave homeowners looking for answers.

“Without these reforms, the coming rate hikes would have a chilling and dramatic impact on these communities, and mitigating the consequences for homeowners along the shore is a necessary step in the recovery effort,” Smith said.

Throughout the 113th Congress, Smith has supported measures offering relief to those facing premium hikes. Smith cosponsored H.R.1485, Congressman Frank LoBiondo’s (NJ-02) bill that would phase in rate increases over an eight year period, and supported Congressman Bill Cassidy’s (LA-06) amendment delaying rate premium hikes by at least a year.

Smith, who took a lead role in obtaining $60 billion in federal disaster relief funding for Superstorm Sandy victims, wrote a bill, H.R. 592, called the “Federal Disaster Assistance Nonprofit Fairness Act of 2013.”