SECTION 1. SHORT TITLE.
The short title is the Homeowner Flood Insurance Flood Affordability Act of 2014.
SECTION 2. DEFINITIONS.
Defines certain components of the bill, including the FEMA Administrator and the National Flood Insurance Program.
SECTION 3. REPEAL OF CERTAIN RATE INCREASES.
Repeals rate increases caused by three “triggers”:
1. All properties sold after July 6, 2012. New homeowners and business owners will continue to receive the same treatment as the previous owner.
2. All properties that purchased a new policy after July 6, 2012, before they were legally required to purchase insurance.
3. All properties that had a lapsed policy, provided that the lapse was as a result of the property covered by the policy no longer requiring coverage.
Requires refunds for those who have paid the increases as a result of the Biggert-Waters Act.
Provides for the assumption of policies. This means the person buying the home is treated the same as the person selling it.
SECTION 4. RESTORATION OF GRANDFATHERED RATES.
Restores “grandfathering” so that all homes and businesses that were built to code and later remapped into a higher risk area do not receive catastrophic rate increases as a result of remapping.
SECTION 5. REQUIREMENTS REGARDING ANNUAL RATE INCREASES.
Lowers the cap on annual rate increases to 15%, which is below the 20% threshold currently required by law, and sets a minimum increase of 5% for properties not yet at full actuarial risk.
Caps rate increases on individual policies at 18% so that no person’s rate may increase by more than 18% in a year.
SECTION 6. CLARIFICATION OF RATES FOR PROPERTIES NEWLY MAPPED INTO A SPECIAL FLOOD HAZARD AREA.
Clarifies that rates for properties newly mapped into a special flood hazard area shall be, for the first year, set at the premium risk rate, and then upon renewal rate increases fall within the 5-15% annual increase. These properties will also receive an 18% cap on the individual policy.
SECTION 7. PREMIUMS AND REPORTS.
In setting premium risk rates, in addition to striving to achieve actuarial soundness, FEMA is instructed to try and minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.
SECTION 8. ANNUAL PREMIUM SURCHARGE.
Authorizes a small assessment of $25 per year on primary residence polices in the NFIP and $250 per year on non-residential and non-primary residence policies in the NFIP. All revenue from the assessments will be placed in the NFIP reserve fund. The assessment terminates when premium rates match projected loss.
SECTION 9. DRAFT AFFORDABILITY FRAMEWORK.
Requires FEMA to propose a draft regulatory framework to address any affordability issues identified by the study within 18 months after the completion of the affordability study.
Affordability measures addressed by the draft regulatory framework may include targeted assistance to individual policyholders and may consider the negative effects of rate increases and map changes on program participation.
SECTION 10. RISK TRANSFER.
Provides that FEMA may secure reinsurance coverage from the private reinsurance and capital markets.
SECTION 11. MONTHLY INSTALLMENT PAYMENT FOR PREMIUMS.
Requires FEMA to offer monthly installment payments for premiums and provides FEMA eighteen months to implement this requirement.
SECTION 12. OPTIONAL HIGH-DEDUCTIBLE POLICIES FOR RESIDENTIAL PROPERTIES.
Allows FEMA to provide deductibles of up to $10,000 for residential properties but requires a clear and conspicuous disclosure explaining the coverage, the effect of a higher loss-deductible and that, in the event of an insured loss, the insured is responsible for out-of-pocket for losses to the extent of the deductible selected.
SECTION 13. EXCLUSION OF DETACHED STRUCTURES FROM MANDATORY PURCHASE REQUIREMENT.
No longer requires detached structures that do not serve as a residence to purchase flood insurance.
Provides consumer disclosures under the Real Estate Settlement Procedures Act (RESPA).
SECTION 14. ACCOUNTING FOR FLOOD MITIGATION ACTIVITIES IN ESTIMATES OF PREMIUM RATES.
Requires FEMA to consider flood mitigation activities in estimating premium rates.
SECTION 15. HOME IMPROVEMENT FAIRNESS.
Increases the threshold that triggers a loss of Pre-FIRM status for homes substantially damaged/rebuilt from exceeding 30% of the market value to 50%.
SECTION 16. AFFORDABILITY STUDY AND REPORT.
Requires FEMA to complete the affordability study required by Biggert‐Waters within eighteen months of the date of enactment of this bill.
Raises the cap on affordability study from $750,000 to $2,500,000 to ensure FEMA has the funding required to complete it within eighteen months of the date of enactment.
SECTION 17. FOOD INSURANCE RATE MAP CERTIFICATION.
Requires the FEMA Administrator to certify that the agency has implemented a flood mapping approach that utilizes sound scientific and engineering methodologies to determine varying levels of flood risk in all areas participating in the National Flood Insurance Program. The certification must be reviewed by the Technical Mapping Advisory Council and the findings must be submitted to Congress.
SECTION 18. FUNDS TO REIMBURSE HOMOWNERS FOR SUCCESSFUL MAP APPEALS.
Allows FEMA to utilize the National Flood Insurance Fund to reimburse policyholders who successfully appeal a map determination. FEMA currently has the authority to reimburse homeowners for successful appeals of map findings, but Congress has never appropriated funding for this purpose. Making appeal reimbursement an eligible expense of the NFIF would give FEMA the incentive to “get it right the first time” and repay homeowners for contributing to the body of flood risk knowledge.
SECTION 19. FLOOD PROTECTION SYSTEMS.
FEMA’s AR and A99 flood zone categories provide more affordable flood insurance to qualifying communities that are in the process of levee construction, reconstruction, and improvements. Current regulations require a certain level of federal participation to qualify for either an A99 or an AR designation, and therefore prevent FEMA from giving communities fair credit for improvements made to existing flood control systems. Proactive communities that invest in mitigation should not be penalized for self‐financing flood protection projects.
SECTION 20. QUARTERLY REPORTS REGARDING RESERVE FUND RATIO.
Reduces FEMA’s requirement to report on the reserve fund ratio to quarterly.
SECTION 21. TREATMENT OF FLOODPROOFED RESIDENTIAL BASEMENTS.
Codifies the pre‐Biggert‐Waters basement exception to ensure that homeowners who have floodproofed basements receive credit for that flood proofing when their flood insurance rates are calculated. This affects 54 communities nation‐wide where basements are necessary to protect homeowners from extreme weather.
SECTION 22. EXEMPTION FROM FEES FOR CERTAIN MAP CHANGE REQUESTS.
Exempts natural resource agencies from fees for flood insurance rate map change requests including dam removal, culvert redesign or installation, or the installation of a fish passage.
SECTION 23. STUDY OF VOLUNTARY COMMUNITY-BASED FLOOD INSURANCE OPTIONS.
Requires FEMA to conduct a study to assess voluntary community-based flood insurance options. This study will explore ways to incorporate community-based flood insurance coverage, which might allow communities to buy bulk coverage for their residents. It would also provide communities with incentives to mitigate future flood losses.
SECTION 24. DESIGNATION OF FLOOD INSURANCE ADVOCATE.
Establishes a Flood Insurance Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process and flood insurance rates. The Flood Insurance Advocate will be responsible for educating policyholders about their individual flood risks, their options in choosing a policy, assisting property owners through the map appeals process, and improve outreach and coordination with local officials, community leaders, and Congress.
SECTION 25. EXCEPTIONS TO ESCROW REQUIREMENT FOR FLOOD INSURANCE PAYMENTS.
Provides certain escrow exceptions to ensure borrowers with certain types of residential loans, including second mortgages or loans to purchase a property with an already existing master policy such as a condo, are not forced to escrow flood insurance premiums twice or go through the process of proving to a lender that they already have coverage.
SECTION 26. FLOOD MITIGATION METHODS FOR BUILDINGS.
Requires the Administrator to establish guidelines for building owners on alternative mitigation methods. Buildings cannot take advantage of more traditional flood mitigation such as elevating the property. This section makes clear that such alternative forms of mitigation shall be taken into account in the calculation of risk premium rates.
SECTION 27. MAPPING OF NON-STRUCTURAL FLOOD MITIGATION FEATURES.
Requires FEMA to take into account non-structural flood mitigation features in their mapping process for the calculation of risk premium rates. These non-structural features, including marshland and trees, provide protection from flood risk but are not currently recognized as such in flood maps.
SECTION 28. CLEAR COMMUNICATIONS.
Requires FEMA to clearly communicate full flood risk determinations to policyholders even if their premium rates are less than full risk. This helps to inform policyholders as to their true flood risk.
SECTION 29. PROTECTION OF SMALL BUSINESSES, HOUSES OF WORSHIP, AND RESIDENCES.
Requires FEMA to report to Congress on the impacts of rate increases on small businesses, non-profit entities, houses of worship, and residences with a value equal to less than 25% of the area median home value. If FEMA determines there is an effect on affordability for these properties, it must provide recommendations to Congress within 3 months after making the determination.
SECTION 30. MAPPING.
Requires FEMA to notify and justify to communities that the mapping model it plans to use to create the community’s new flood map are appropriate. Communities are given a 30-day consultation period wherein the community may work with FEMA to help determine whether the model is appropriate for the community.
Requires FEMA to send communities being remapped the data being used in the mapping process. Communities are given a 30-day consultation period wherein the community may provide its own data to FEMA that can be used to supplement or modify FEMA’s existing data. FEMA is required to use data that is most consistent with prevailing engineering principles. This will ensure that flood maps contain the best available floodplain data, often held by the local community.
Requires FEMA to notify, in writing, Senators and Members representing an area being remapped at least 30 days prior to the issuance of a preliminary flood map. The notification must include an estimated timeline of the mapping process including community meetings, publication of notices, the appeals process, and the number of homes and businesses that will be affected by changes in the map.
SECTION 31. DISCLSOURE.
Requires FEMA, at least 6 months prior to implementation of rate increases as a result of this Act to make publicly available the rate tables and underwriting guidelines that provide the basis for the change, providing consumers with greater transparency.
It likely means the bill, correcting what Rep. Maxine Waters, D-Calif., one of the authors of the 2012 Biggert-Waters, said were the law's "unintended consequences," could be sent to President Barack Obama for his signature very soon.
House-passed flood insurance bill on Senate floor calendar for next week
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Flood insurance becomes key issue in Louisiana Senate race
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The request for action this week, perhaps by voice vote, required unanimous consent -- meaning a single senator could block action. The objecting senator or senators were not disclosed -- only that the objection came from the Republican side of the aisle.
That's no surprise given that 31 Republicans joined one Democrat, Sen. Tom Carper, D-Del., in voting no on a Senate bill January 30 to delay most of the premium increases for four years. It passed 67-32.
Pressure grows on Senate to take up House-passed flood insurance bill
WASHINGTON -- A request for the Senate to give quick approval this week of the flood insurance legislation approved Tuesday by the House failed when an unknown Republican senator or senators objected to the expedited process.The request for action this...
We need to get our stories out.Please respond to these reporters directly.
I’m looking for people who have NOT been previously interviewed by the press who might be willing to share some of their stories about insurance bills that skyrocketed overnight. I’d hoped to speak to someone who bought a home after July 6, 2012, only to get a surprise increase in their rates later on, or someone who tried to sell a house, only to find buyers scared away by the high new rates.
If you know anyone in these categories who might be willing to share their story, I’d love to speak with them.
The Associated Press
If you live in the Greater Philadelphia area and either own a primary or 2nd home in a flood zone with high flood insurance premiums please contact:
Staff Writer,The Philadelphia Inquirer