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CSFI Testimony Featured in The Water Report

The Water Report, a professional publication on water-related issues (legal, regulatory, quality, quantity, and equality), has featured CSFI in their February 2024 edition.  Michael Hecht’s testimony, as provided to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, can be found on pages 20-28.   Find the piece from Issue #240 here.

Hecht’s testimony speaks to the current state of NFIP and effects of recent changes to the program.  The testimony beginnings by underscoring the need for reauthorization by March 8, 2024.  Hecht writes, “NFIP’s reauthorization is consequential to the national housing market and real estate transactions. During a June 2010 lapse, about 1,400 home sale closings were canceled or delayed each day, representing over 40,000 sales per month. There are approximately six million homes located in SFHAs and subject to the MPR nationwide.”  Furthermore, Hecht identifies the original intent of NFIP – “Congress, in 1968, did not create NFIP to charge full-risk rates, if those premiums were onerous and exacerbated risk exposure. Rates were supposed to be ‘adequate, on the basis of accepted actuarial principles, to provide reserves for anticipated losses, or, if less than such amount, consistent with the objective of making flood insurance available where necessary at reasonable rates so as to encourage prospective insureds to purchase such insurance and with the purposes of this chapter.’”

Hecht continues by describing Risk Rating 2.0 transparency and accuracy concerns – “Unfortunately, policyholders do not have access to their property-level rating factor inputs, beyond the few listed on their declaration pages, which is made available only after purchasing coverage. Furthermore, there is no public-facing, interactive Risk Rating 2.0 premium calculator. So, it still isn’t clear to policyholders how modifying each of these factors (like elevation / first floor height) may affect their premium at the property-level.  There are other known issues with data granularity across rating factors, from distance to coast to levee quality. Yet, there is no appeals process – for policyholders or communities – to ensure that FEMA’s data is accurate and that rating factors are refined at the property-, community-, or state-level. Furthermore, there is no disputes process for policyholders to challenge the accuracy, or fairness, of chargeable premiums.”

He then speaks to experienced impacts of Risk Rating 2.0 – “NFIP has lost over 215,000 policyholders, or 4.39% of all policyholders, since Risk Rating 2.0’s implementation. 121,739 policies have been lost in Texas alone. Participation has already fallen by over 5% in 26 states and by over 10% in 14 states.”   He explains how Risk Rating 2.0 is unduly affecting working communities, like Greater New Orleans – “Across the country, NFIP allows working communities to continue working. Our region – Greater New Orleans – is essential to the national economy, and even global food and energy security. NFIP simply does not take these factors into account. NFIP has not conducted a comprehensive assessment of the economic and social impacts of implementing Risk Rating 2.0, which would demonstration ripple effects on government revenues, property values, national security, and more…Our community is like many of the 22,500+ in NFIP – a hardworking community that serves America through water resources. Over half of America’s population lives in a coastal county, and over half of all jobs are located in coastal counties.”

Hecht closes by outlining urgent reform priorities:

  • Require a peer-review of the Risk Rating 2.0 methodology and an analysis of Risk Rating 2.0’s
  • Mandate FEMA’s transparency through the release of a public-facing rate calculator and establishment of rating factor appeals process
  • Lower annual premium increases to nine percent
  • Enact a means-tested assistance program with housing burden as a targeting factor
  • Forgive NFIP’s debt or freeze interest payments – “Congress should forgive NFIP’s debt, given that it was accumulated under a legacy pricing system. FEMA will pay the U.S. Treasury $619M this year to service $20.5B of NFIP debt, much from policyholders who have left the program or mitigated their properties. According to FEMA, approximately 11% of each current policyholder’s premium is applied towards these payments, equating to about $132 per policyholder per year. At the least, Congress should grant forbearance for interest payments over a defined period of time. The NFIP-RE Act would pause interest payments for five years, and deposit these savings into a National Flood Mitigation Fund.”

Find Hecht’s full testimony within this month’s edition of The Water Report (, or via Senate Banking Committee’s website.