The U.S. House of Representatives voted last night to approve a bill that would overhaul many parts of the Biggert Waters Act of 2012. The Biggert Waters Act's intention was to fix the flood insurance program, but enactment of the bill was met with much criticism as many policyholders were faced with large premium increases.
Key aspects of the House bill:
- Restores the grandfathering of properties, including when they are resold by the current owner. The measure also rolls back full-risk rates increases for properties that have been resold since the law was passed in mid-2012.
- Caps the annual increase at 18% for any individual policy per year, and sets a minimum annual increase to average 5% across a property class.
- Clarifies that rates for properties newly mapped into special flood hazard areas will get the grandfathered rate for one policy year and then see the standard rate increases.
- Mandates that the FEMA administrator must try to minimize the number of insurance policies that annually cost more than one percent of the value of the property being insured.
- To help pay for the changes, the bill calls for charging every flood policy a surcharge; $25 on residential properties, and of $250 on businesses and second homes. Revenue from the assessments would be placed in the NFIP reserve fund.
- Allows for premiums to be paid in monthly installments.
- Eliminates the mandatory requirement that policyholders buy coverage for detached buildings such as sheds and garages.
- Adds requirements to mapping procedures, including that FEMA must notify each affected community of a new model that will impact their rate and provide a 30 day period for such communities to consult with FEMA regarding the appropriateness of the model.
- FEMA will have 18 months rather than two years to complete the long-awaited affordability study.
- The bill does not repeal the Biggert-Waters provision mandating that those with a second home in a flood zone and those with properties that have repeatedly been flooded will continue to have their premiums increase until they reach actuarial rates.
The Biggert Waters premium increases for secondary homes and severe repetitive loss homes are not affected by the House bill. The bill now goes back to the Senate for approval.