Menendez Formally Introduces Bipartisan, Comprehensive Flood Insurance Reform Bill with Additional Support

Menendez Formally Introduces Bipartisan, Comprehensive Flood Insurance Reform Bill with Additional Support


WASHINGTON, D.C. – U.S. Senator Bob Menendez today formally introduced the comprehensive National Flood Insurance Program Reauthorization and Reform Act of 2019 (NFIP Re). The bipartisan bill extends the NFIP for five years and tackles systemic problems with flood insurance, puts it back on solid fiscal ground, and reframes the nation’s entire disaster paradigm to one that focuses more on prevention and mitigation in order to spare the high cost of rebuilding after flood disasters.  

Earlier in the week, the Senator led a press conference in Washington outlining his bill which is co-sponsored by Minority Leader Charles Schumer (D-N.Y.) and Senators Bill Cassidy (R-La.), Cory Booker (D-N.J.), John Kennedy (R-La.), Elizabeth Warren (D-Mass.), Marco Rubio (R-Fla.), Kirsten Gillibrand (D-N.Y.), Jack Reed (D-R.I.) Chris Van Hollen (D-Md.) and Cindy Hyde-Smith (R-Miss.).

More than five million American families, including more than 220,000 New Jerseyans, depend upon the NFIP, which Congress must reauthorize before it expires after Sept. 30, 2019.

A copy of the bill, S. 2187, can be found here.

The National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019

Long-Term Certainty.  Reauthorizes the NFIP for five years, providing certainty for communities.

No Steep Rate Hikes under Risk Rating 2.0.  Protects policyholders from exorbitant premium hikes by capping annual increases at 9%. Currently, premiums can more than double every 4 years or less and FEMA’s new methodology called Risk Rating 2.0 will fundamentally alter premiums on every policy in the country.  This untested and unknown methodology could cause a rate shock and lead to unaffordability premiums, forcing homeowners to drop coverage or lose their homes.  We saw all too clearly the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket, hurting policyholders and disrupting the real estate market.  This will put guardrails on FEMA’s new rating methodology, known as Risk Rating 2.0, and safeguard policyholders from sudden rate shocks. 

Affordability for Low- and Middle-Income Policyholders.  Provides a comprehensive means-tested voucher for millions of low- and middle-income homeowners and renters if their flood insurance premium causes their housing costs to exceed 30% of their Adjusted Gross Income, significantly increasing the affordability of the NFIP program.

Path to NFIP Solvency.  Freezes interest payments on the NFIP debt and reinvests savings towards mitigation efforts to restore the program to solvency and reduce future borrowing

Limits on Private Insurance Company Profits.  Caps Write Your Own (WYO) compensation at the rate FEMA pays to service its own policies and redirects the savings to pay for the means-tested affordability program.

Increased Cost of Compliance (ICC) Coverage.  Increases the maximum limit for ICC coverage to better reflect the costs of rebuilding and implementing mitigation projects. In addition, ICC coverage eligibility is expanded in order to encourage more proactive mitigation before natural disasters strike.

Strong Investments in Mitigation.  Provides robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk. 

More Accurate Mapping.  Authorizes funding for Light Detection and Ranging (LiDAR) technology for more accurate mapping of flood risk across the country, reducing confusion and generating better data.

Oversight of Write Your Own (WYO) Companies.  Creates new oversight measures for insurance companies and vendors, and provides FEMA with greater authority to terminate contractors that have a track record of abuse.

Claims and Appeals Process Reforms Based on Lessons from Sandy. Fundamentally reforms the claims process based on lessons learned in Superstorm Sandy and other disasters, to level the playing field for policyholders during appeal or litigation, bans aggressive legal tactics preventing homeowners from filing legitimate claims, holds FEMA to strict deadlines so that homeowners get quick and fair payments, and ends FEMA’s reliance on outside legal counsel from expensive for-profit entities.

Better Training.  Provides for increased training and certification of agents and adjusters to reduce mistakes and improve the customer experience.