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House Subcommittee holds hearing on NFIP Participation; Senators Introduce Bills to Improve Transparency

The House Financial Services Committee Subcommittee on Housing and Insurance held a hearing titled “How Do We Encourage Greater Flood Insurance Coverage in America?” on March 10.  This hearing – expected to be the first of multiple NFIP-related hearings this year – provided subcommittee members, and new Chairman Warren Davidson, with an initial opportunity to hear from expert witnesses about the flood insurance gap.  A hearing video and witnesses’ statements can be reviewed on the Committee’s webpage.  Witnesses included representatives from Guy Carpenter, Big “I,” Wholesale & Specialty Insurance Association, and Brookings Institution.  In the past year alone, NFIP participation has fallen by over 3.3% nationally and by over 8% in West Virginia, Oklahoma, Texas, and North Dakota.

On March 8, Senator Hyde-Smith introduced the “Homeowner Flood Insurance Transparency and Protection Act,” cosponsored by Senators Cassidy, Cruz, and Kennedy.  The bill would allow policyholders to retain legacy premiums, instead of Risk Rating 2.0 premiums, until FEMA satisfies certain conditions, like publishing full-risk premium rate distribution and publicly releasing all data and methods used to prescribe chargeable premium rates.   Sen. Hyde-Smith said that, “The effects of RR2.0 on the pocketbooks of flood insurance policyholders have only deepened a sense of mistrust in just how FEMA derived the new premium rates.  FEMA still needs to come clean on the methodology it is using in this major change to the National Flood Insurance Program, and my legislation would force them to answer our concerns.”

Furthermore, to address affordability challenges of Risk Rating 2.0, Senator Kennedy introduced the “Flood Insurance Affordability Act,” cosponsored by Senator Rubio.  This follows Senator Cassidy’s speech on the Senate Floor about the affordability challenges of Risk Rating 2.0, citing a sample policy that was increasing in premium by over 1000%, despite having no previous claims.   Senator Cassidy implored the Biden administration to halt Risk Rating 2.0.