WILDWOOD, N.J. – U.S. Senator Bob Menendez, chair of the Sandy Task Force and a senior member of the Senate Banking Committee that oversees the National Flood Insurance Program (NFIP), today held a roundtable discussion on the need for comprehensive flood insurance reform with local mayors, residents, business owners and the chamber of commerce in Cape May County. The southern Jersey Shore has seen its share of powerful nor’easters and tropical storms that have inundated communities, including Winterstorm Jonas in 2016 that generated significant storm surge along the coast.
Sen. Menendez recently introduced new, comprehensive bipartisan legislation to extend the NFIP for five years while instituting a series of sweeping reforms to address the waste, abuse and mismanagement plaguing the system that led to delayed recovery for Superstorm Sandy survivors. More than five million American families, including more than 220,000 New Jerseyans, depend upon the NFIP, which Congress must reauthorize before it expires on Sept. 30, 2019.
“We got a crash course in just how broken the National Flood Insurance Program is after Superstorm Sandy. We witnessed the NFIP fail our constituents in their greatest hour of need, but if we don’t pass real reform, New Jersey families and their communities are going to drown in higher flood insurance premiums,” said Sen. Menendez. “The reforms I am pushing for are comprehensive and have broad, bipartisan support. They will make the program more sustainable, more affordable, hold FEMA and private contractors accountable, and invest in the kind of forward-looking mitigation that reduces risk and prevents costly flooding in the first place.”
Among those attending today’s meeting were: Wildwood Mayor Ernie Troiano; North Wildwood Mayor Patrick Rosenello; West Cape May Mayor Carol Sabo; Cape May Mayor Clarence Lear; Cape May Deputy Mayor Patricia Gray-Hendricks; Cape May Point Deputy Mayor Anita VanHeeswyck; Avalon Councilman Sam Wierman; Cape May County Freeholder Director Gerald Thornton; Cape May County Freeholder Marie Hayes; Cape May County Cape May County Chamber of Commerce President Vicki Clark; West Wildwood CFO Elaine Crowley; Louis Blasco, the tax assessor for West Cape May, Cape May City and Cape May Point; Lower Twp. Planning Director William Galesock; Cape May County Planning Director Leslie Gimeno; Upper Twp. Municipal Engineer Paul Dietrich; Jonathan Atwood, LD1 chief of staff; George Kasimos of Stop FEMA Now; Jodie Stewart and Alison Arne of the New Jersey Organizing Project; Jim Rutala of Rutala Associates, LLC; and Michael McMahon and Bill McMahon of McMahon Insurance Agency.
Sen. Menendez’s National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019 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 to spare the high cost of rebuilding after flood disasters.
The NFIP Re Act of 2019 builds upon bipartisan, comprehensive reform legislation originally introduced in 2017 by Sen. Menendez that addresses critical problems with the program, administered by the Federal Emergency Management Agency (FEMA), following Superstorm Sandy and other disasters: unsustainability, low participation rates, inaccurate flood maps, indifference to the benefits of flood control infrastructure, agency mismanagement, unsustainable debt service costs and contractor profiteering.
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.
NFIP Re of 2019 was introduced in the Senate with broad, bipartisan support and original cosponsors: Cory Booker (D-N.J.); Bill Cassidy (R-La.); Chris Van Hollen (D-Md.); John Kennedy (R-La.); Elizabeth Warren (D-Mass.); Marco Rubio (R-Fla.); Kirsten Gillibrand (D-N.Y.); Jack Reed (D-R.I.); Cindy Hyde-Smith (R-Miss.); and Chuck Schumer (D-N.Y.). Companion legislation is being led in the House of Representatives by Congressmen Frank Pallone, Jr. (N.J.-06) and Bill Pascrell, Jr. (N.J.-09) with support of New Jersey’s entire congressional delegation.
Sen. Menendez first exposed the problem of widespread lowballing of flood insurance claims during Congressional hearings he chaired in 2014, and then successfully pushed FEMA to reopen every Sandy flood insurance claim for review, which compensated Sandy victims with more than $230 million in additional payments they were initially denied.
Sen. Menendez authored the Superstorm Sandy Relief and Disaster Loan Program Improvement Act, which extended and expanded access to federal disaster loans through the U.S. Small Business Administration (SBA). His Homeowner’s Flood Insurance Affordability Act was signed into law in 2014 to address skyrocketing rates many Sandy survivors were encountering. In 2013, he shepherded the original $60 billion federal Sandy aid package through Congress.