***VIDEO RELEASE*** Menendez Calls for Long-Term Flood Insurance Reforms in Face of Increasing Climate Change Threat
***VIDEO RELEASE*** Menendez Calls for Long-Term Flood Insurance Reforms in Face of Increasing Climate Change Threat
WASHINGTON, D.C. – U.S. Senator Bob Menendez (D-N.J.), chair of the Sandy Task Force and the leading policy expert in Congress on flood insurance, today joined Sen. Sheldon Whitehouse (D-R.I.) on the Senate Floor to draw attention to the increased risks of climate change and call for passage of the SAFE NFIP Act.
“I’ve never understood why we require homeowners to sit in harm’s way and wait for the next storm to come before we help them reduce their flood risk. It makes no sense,” said Sen. Menendez. “Instead of looking to simply raise prices, I want to focus on reducing costs. I believe the best way out of this hole is to make proactive investments in resiliency and mitigation to reduce the damage in the first place.”
Sen. Menendez lamented the short-term thinking and a kick-the-can-down-the-road mentality in Congress that prevents it from solving the nation’s big problems. He urged the Senate to work on a long-term vision and debate his bipartisan SAFE NFIP Act, which would make comprehensive reforms to the National Flood Insurance Program (NFIP), like investing in proactive mitigation, strengthening accountability, and addressing affordability concerns.
The NFIP expires Friday, but rather than advancing Sen. Menendez’s SAFE NFIP, which has enough bipartisan support to pass, the Senate GOP majority is pushing another short-term extension that will extend the program through Feb. 8.
Sen. Menendez’s full remarks, as delivered, are below:
“M. President, I come to the floor today to once again join the Senator from Rhode Island in calling attention to the crisis that is climate change.
“I want to thank my friend Senator Whitehouse for his passion, persistence, and refusal to let the U.S. Senate be silent in the face of one of the gravest threats to ever confront our nation and the world.
“Some say we can’t afford to invest in clean, renewable, American-made energy. Well, I say we can’t afford not to.
“The fact is, every year that goes by without a comprehensive strategy to reduce the carbon pollution responsible for warming our planet is another year in which the federal government of the United States fails to protect future generations from the immense environmental, economic and human costs inflicted by climate change.
“I yearn for the day that this body summons the courage to stand up to the special interests and boldly confront this challenge, for the longer we wait, the more expensive and the less effective we will be. And if you don’t believe me, just look at our national flood insurance program, which is already in dire need of comprehensive, forward-thinking reform.
“I’ve spent the better part of the past two years bringing Democrats and Republicans together in support of such a plan, and yet, the Majority has stubbornly refused to debate our legislation, forcing us to pass short-term reauthorizations that preserve a broken status quo. And like the totality of the climate threat, when it comes to flood insurance, every time we kick the can down the road, the can only gets heavier.
“For our coastal and inlet communities, climate change isn’t some far-out problem. It’s here. We’re already feeling the effects and bearing the costs in the form of rising sea levels and increasingly powerful storms. And even if the President of the United States suddenly reversed course and put America on a path to slow our changing climate, we would still need to address how we manage a heightened risk for flooding.
“From fishing to tourism to trade and so much more, the fact is America’s coastal communities are vital to our long-term economic competitiveness, and to give up on them in the face of rising sea levels would be to give up on our country.
“According to the Union of Concerned Scientists, sea-level rise will put an estimated 325,000 homes and businesses worth more than $135 billion at risk of chronic flooding in the next 30 years.
“With increased risk for flooding comes a whole host of challenges. Falling property values will further strain local budgets, leading to downgraded government credit ratings. And as communities lose out on approximately $1.5 billion in property taxes per year, hardworking taxpayers will feel the pain. It will cut away at middle class families’ most valuable asset, the foundation of their financial nest egg—their home.
“According to a paper published by the University of Pennsylvania Libraries, and I quote: ‘As sea level rise manifests along the coasts, reducing property value, impacts on revenue will present new challenges in servicing debt… and present a greater probability of default by local government.’
“We cannot simply keep spending money to preserve the status quo. We need a system for managing flood risk that pushes our country towards resiliency and treats our people and the communities they live in fairly. But unfortunately, we’ve remained at an impasse for over a year now, unable to fix a program that we all know is badly broken.
“We in New Jersey witnessed firsthand the pervasive problems plaguing the National Flood Insurance Program – or NFIP – after Superstorm Sandy hit in 2012. It was bad enough that so many New Jerseyans had to grapple with the heartbreak of losing their homes in the wrath of Sandy. So it made my blood boil to see their suffering compounded by a badly broken flood insurance program.
“We found ourselves lost in a system that put the policyholder last; that looked for every reason to deny legitimate claims and made some up when they didn’t exist.
“We had homeowners find the foundations of their homes had washed away into the ocean, only to have their claim denied because their insurance company claimed it wasn’t floodwaters, but moving soil, that caused the damage. The insurance adjuster didn’t stop to consider that maybe it was the five-foot storm surge that moved the soil in the first place.
“One of my constituents who I got to know very well, got snagged by this loophole. As you can see from this picture, the storm surge from Sandy inundated his home and ripped apart his foundation, leaving a large hole in his living room. But despite paying his flood insurance premiums for years, despite serving our nation honorably as a United States Marine, Doug’s claim was denied.
“We saw mitigation programs that were so cumbersome and delayed that many homeowners simply gave up.
“We had new flood maps come online that were 80 percent inaccurate in some counties.
“We had FEMA using taxpayer dollars to drag homeowners through expensive litigation until they gave up on their flood claims.
“The struggles of every day New Jerseyans revealed to me the dramatic shortcomings of our flood insurance program, and left me determined to fix them. I began working on flood insurance reform that took the lessons we learned after Sandy and turned them into action.
“In the summer of 2017, I introduced the Sustainable, Affordable, Fair and Efficient—or SAFE—NFIP Act, a comprehensive flood insurance reform bill cosponsored by four Democrats and three Republicans here in the Senate. And I know this town already has too many acronyms, but this one clearly spells out the four major goals we have in this bill.
“We want the NFIP to be sustainable, affordable, fair and efficient.
“Let’s start with sustainability. We must put the NFIP on the path to solvency. Since Katrina in 2005, the NFIP has been in the red, borrowing from the Treasury Department to pay claims.
“Some say we should jack up premiums on homeowners and keep charging more to get at this imbalance—that if we ask homeowners to pay more and more, eventually the NFIP will have enough money to pay all claims without borrowing. But higher premiums alone are not the answer.
“Of course we want everyone to pay their fair share—but the undeniable reality is that the more we raise premiums, the more homeowners leave the National Flood Insurance Program all together. And that guarantees the program’s failure. Instead of looking to simply raise prices, I want to focus on reducing costs.
“I believe the best way out of this hole is to make proactive investments in resiliency and mitigation to reduce the damage in the first place. In other words, we must build coastal communities that are resilient and strong—so that the damage inflicted by the storms of the future is less expensive to recover.
“That’s why the SAFE NFIP Act includes a billion dollars per year in mitigation funding and more than triples the maximum Increased Cost of Compliance or ICC grant from $30,000 to $100,000. We also require that this funding be spent more wisely, allowing homeowners to use ICC grants before their house is destroyed.
“I’ve never understood why we require homeowners to sit in harm’s way and wait for the next storm to come before we help them reduce their flood risk. It makes no sense.
Our bill would fix that. By giving Americans the tools to reduce their risk, we can save the NFIP and the taxpayer billions of dollars.
“Our legislation also goes after wasteful private insurance company fees, which consume about 30 percent of every premium dollar, despite taking on none of the risk. I’m all for private companies making a profit, but every dollar they make comes from the pockets of policyholders.
“The NFIP also currently pays about $400 million in interest every year. That’s ten percent of its annual premiums—money that could be going towards flood prevention and mitigation. That’s why our bill freezes interest payments on NFIP debt and redirects that funding towards mitigation. Rather than paying interest to ourselves and forcing the NFIP to borrow even more, let’s use that money to reduce future damages, save taxpayer dollars, and build safe communities.
“We cannot have a solvent and sustainable flood insurance program if it isn’t affordable to the people who depend on it.
“The NFIP’s debt and major hurricanes have put upward pressure on premiums, making it more and more expensive to get coverage. So it’s no surprise that a lot of people have been forced to drop their flood insurance. Indeed, in the face of rising premiums, the NFIP lost more than 650,000 policies, or over ten percent of its total business since just 2009.
“Has the risk of flooding decreased since 2009? Are there fewer homes in floodplains now? Of course not. When you consider the floods that have struck Louisiana and Texas and New Jersey in recent years, the answer is an unequivocal no.
“What’s happened is that premiums have just gotten too expensive for middle class families to afford. At the end of the day, this also hurts the solvency of the NFIP, because just like every other insurance model, a smaller pool means a more risky and more expensive pool.
“So our bill creates a first of its kind, means-tested affordability program that helps middle class and working families afford flood insurance.
“Pricing families out of coverage and leaving them without a way to protect their homes does nothing to address the underlying risk. On the contrary, it will be taxpayers who ultimately assume the risk when they are asked to fund uninsured disaster assistance.
“It’s our responsibility to taxpayers to make the NFIP as fair and efficient as possible.
“I have no doubt that hundreds, if not thousands, of New Jerseyans dropped their flood insurance after Sandy because of how they were treated.
“They faithfully paid their premiums for years, often decades, without filing a single claim. Then when Sandy struck and they tried to collect what they were entitled to, they had to suffer another disaster, this time manmade—the storm after the storm.
“After losing everything they worked for their whole lives, they now had to fight against an insurance company and a daunting federal bureaucracy. Some appealed, some sued. Some just gave up.
“I pledged to them we’d never let this happen again. Our legislation makes good on that promise by putting the customer, in this case the policyholder, first.
“We close notorious loopholes that allow insurers to deny claims—like the infamous earth movement exclusion when we know flood waters caused the damage.
“We fix the appeal process, enforcing FEMA’s own deadline to respond to homeowners and giving people who just went through a disaster more time to file their appeal.
“We require engineer studies to be conducted by—and imagine this—actual, licensed engineers in the state they are operating.
“We require insurance companies to provide policyholders with all of the documents used to process their claim so homeowners aren’t left in the dark.
“And we end the practice of private insurance companies spending hundreds of millions of policyholder premium dollars on private attorneys whose main goal is to bill as many hours as possible.
“Taken together, these reforms will not only give policyholders a fair shake, they will also save the NFIP resources that can be better directed to mitigation, mapping, and other cost-saving investments.
“We must recognize that the NFIP and its five million policyholders can’t solve all of our nation’s flooding problems on their own. We need to invest tens of billions of dollars elevating and buying out flood prone properties that get hit year after year.
“There simply aren’t enough resources in the NFIP to even put a dent in this problem. So instead of spending hundreds of billions of dollars on disaster grants each time a storm strikes, why not spend a fraction of that on the front end that will yield real dividends in the future?
“When a disaster strikes, our immediate priority should always be to save lives and get survivors back to a sense of normalcy as quickly as possible. But while recovery funding is absolutely vital, it shouldn’t be at the expense of rebuilding stronger, more resilient communities more capable of weathering the next storm.
“We have a problem in Congress of short-termism; living in the present and not looking ahead. We’re afraid of making tough political decisions in the present even when the future is on the line. We see it with flood insurance and we see it with climate change.
“The American people desperately need Congress to overcome this short-sighted short-termism.
“We must start thinking beyond the storm that just hit—or even the one on the horizon.
“We must begin thinking about the risk over the next several decades, because flood risk is a climate risk we cannot afford to ignore.
“We must think about what kind of future, what kind of environment, what kind of economy we want to leave for our children and grandchildren.
“It should not matter who controls the House, or who controls the Senate, or who sits in the White House. The Americans of tomorrow are depending on us—the leaders of today—to be bold, and unafraid, and willing to think big.
“That’s why I hope that Republicans and Democrats alike will continue to work with me on the issue of flood insurance and flood prevention when we return in 2019.
“Again, I want to thank my colleague from Rhode Island for the opportunity to speak, and I yield my time.”