Mr. Speaker, I rise and want to make comments actually echoing a lot of the comments that were made already. The gentleman from Massachusetts talked about this needing to be a bipartisan bill, and I agree. The gentleman from New Jersey…
Mr. Speaker, I rise and want to make comments actually echoing a lot of the comments that were made already.
The gentleman from Massachusetts talked about this needing to be a bipartisan bill, and I agree. The gentleman from New Jersey talked about Hurricane Sandy tax relief, and I agree. The gentleman from Florida talked about the need to ensure that we are responding quickly and appropriately in response to the devastating disasters that have affected his State of Florida and the State of Texas. I also support the gentleman from Pennsylvania's comments regarding a short-term reauthorization to the FAA so we can continue to move forward on reform.
But you may be wondering why, Mr. Speaker, groups like the Association of State Floodplain Managers and the Consumer Federation of America have expressed opposition to this legislation.
Mr. Speaker, I include these letters in the Record.
Association of State
Floodplain Managers, Inc.,
September 24, 2017.
Re Private flood insurance in H.R. 3823, Disaster Tax Relief
and Airport and Airway Extension Act of 2017.
Dear Leadership of the U.S. House of Representatives: Early
this week, the House will consider legislation promoting
development of private flood insurance as part of a bill to
reauthorize the FAA for 6 months and provide hurricane tax
relief. The bill is scheduled to be taken up under suspension
this week. ASFPM strongly objects to consideration of private
flood outside the reauthorization of the NFIP. The proposed
bill does not insert HR 2901 from the 114th Congress as
mentioned in press reports, but inserts HR 1422, the Ross-
Castor bill from the 115th Congress as Title 4, with
provisions that as written could substantially weaken and
undermine the critical functioning of the National Flood
Insurance Program,. The NFIP not only provides flood
insurance, but is a comprehensive flood risk management
program.
Although we understand the potential benefits of more flood
insurance options, we point out that the private market has
been readily expanding since Biggert-Waters 2012 was passed
authorizing private flood insurance. ASFPM cannot support
authorization for private flood insurance as written in HR
1422. The temporary extension and reauthorization of the NFIP
expires on 8 Dec 2017, giving Congress ample time to consider
the full scope of the NFIP, into which private flood must
integrate, without causing irreparable damage to the other 3
fundamental elements of this comprehensive flood risk
management program. Those are floodplain mapping,
implementation of local floodplain ordinances to protect new
development, and hazard mitigation grants to reduce damage
and loss of life from flooding.
ASFPM has stated that three modifications of that HR 1422
language must be made to ensure continuity of the
comprehensive flood risk reduction aspects of the NFIP that
exist today. A federal policy fee on all NFIP policies pays
for almost half the cost of floodplain mapping and all of the
costs of floodplain management including technical assistance
to over 22,000 communities that have joined the NFIP. Hazard
mitigation grants are funded by premium income to the
program. None of these functions are provided by private
flood insurance policies.
Yet private insurance companies acknowledge that mapping
(i.e. identification of flood risk areas and areas of
mandatory purchase of flood insurance) and floodplain
management (i.e. reduced risk due to local requirements for
hazard-resistant construction) help them to target their
marketing and to price premiums lower where floodplain
ordinances exist.
First, private policies must also carry the federal policy
user fee to support the mapping and floodplain management
functions. Private flood policy holders, private insurance
companies, as well as the NFIP and its policy holders,
benefit from these functions by identifying at-risk areas,
ensuring building construction standards which facilitate
lower flood insurance premiums, and targeting areas and
structures which could benefit from mitigation actions
leading to lower premiums. As policies migrate to the private
sector, millions of dollars in revenue to support those
floodplain management and mapping functions will be lost
unless there is an equivalent policy user fee on private
policies.
Second, private policies to satisfy the mandatory purchase
requirement for properties in floodplains must only be sold
in communities that participate in the NFIP (meaning
they have adopted floodplain management ordinances to guide
safer development). In smaller communities with only a
handful of properties required to purchase flood insurance,
if that requirement can be met with private policies, those
communities may drop out of the NFIP and no longer maintain
floodplain management ordinances to reduce future losses.
This could result in lack of abililty to reduce future flood
losses and in taxpayers picking up disaster costs.
Third, several provisions of the existing definition of
private flood insurance must be retained. The Biggert-Waters
2012 legislation (42 USC 4012a(b)(7)) defines private flood
insurance, among other things, as providing coverage ``at
least as broad as'' that provided by the NFIP. The language
provides consumer protections to ensure policies would not
have excessive deductibles, exclusions, or eliminate some
essential coverages like Increased Cost of Compliance, which
provides assistance to policyholders to rebuild in a manner
that reduces flood damage in the future. Without these
important provisions in place, policyholders could face
unaffordable deductibles when they have a claim; communities
would find it much harder to help homeowners become eligible
for mitigation funding; and there would be a greater chance
that claim payments would not be applied to building repairs
resulting in increased community blight. ASFPM further notes
that with this language in place, the private market has
already been growing. The private flood insurance bill
strikes this language.
The nation's floodplain managers strongly urge adoption of
these elements if private flood language is added to the
House NFIP reauthorization bill. This would preserve the
flood risk mapping and floodplain management functions that
the NFIP provides and would protect consumers from purchasing
low-cost policies that provide less than adequate coverage
and/or higher deductibles they could not pay. This would not
happen if insureds had an NFIP policy.
The Association of State Floodplain Managers (ASFPM) and
its 36 chapters represent more than 17,000 state and local
officials, as well as other professionals engaged in all
aspects of floodplain management and flood hazard mitigation
including management of local floodplain ordinances, flood
risk mapping, engineering, planning, community development,
hydrology, forecasting, emergency response, water resources
development and flood insurance. All ASFPM members are
concerned with reducing our nation's flood-related losses.
Again we urge you to oppose inclusion of these ill-advised
private flood provisions outside of the context of
comprehensive NFIP reauthorization legislation. The
suspension package makes it impossible to properly address
these issues. Thank you for seriously considering these
recommendations from the Association of State Floodplain
Managers.
Very sincerely,
Chad Berginnis,
ASFPM Executive Director.
Mr. Speaker, extraneous provisions on flood insurance that should not be pasted into this legislation were included. These provisions actually undermine the very solvency of the program. They are establishing a private market at a time when the National Flood Insurance Program--the Federal program--is going to need the resources to pay claims. Establishing a private market within 60 days is going to divert resources from the Federal program to private insurers. It is going to divert these dollars to where they don't have the resources to make the payments.
Private insurance companies are already involved in flood insurance, and once we authorize them to step into these markets, they are going to be able to cherry-pick low- and moderate-risk policies, leaving the National Flood Insurance Program with only high-risk policies, leaving them with the burden of flood mapping and leaving them with the burden of a $24.6 billion debt. I don't understand how the program is going to have the resources to pay the claims it underwrites.
Next, Mr. Speaker, one of the other big problems we have is that this shows floods in Texas, floods in Louisiana, and gutting homes in Louisiana here and in Texas there.
These were both 1,000-year flood events. I don't understand the difference on why we choose these folks get tax relief and these don't. We introduced nearly identical legislation to address this.
We shouldn't be discriminating against folks in New Jersey and New York and Louisiana in exchange for the others.