LITTLE FERRY, N.J. – U.S. Senator Bob Menendez (D-N.J.), chair of the Sandy Task Force and a senior member of the Senate Committee on Banking, Housing and Urban Affairs, today laid out a series of robust reforms to the much-maligned National Flood Insurance Program (NFIP) administered by the Federal Emergency Management Agency (FEMA) that experienced widespread failures and fraud, cheating storm victims and hampering recovery in the aftermath of Superstorm Sandy. Sen. Menendez aims to make the NFIP: simple, affordable, fair, efficient and accountable to consumers and taxpayers.

“Americans deserve a program that is sustainable for taxpayers, affordable for homeowners, and accountable to everyone,” Sen. Menendez said. “If we want a more sustainable system, the answer isn’t to slam homeowners with even higher rates. The answer is to go after the waste and abuse that’s rampant throughout FEMA. The National Flood Insurance Program is full of perverse incentives that drive up costs for taxpayers and that hurt homeowners. The principles I’ve outlined would require insurance companies to start spending more of the premium dollars they receive on the customers they are paid to serve.”

The senator also decried the Trump Administration for floating a plan to fund construction of the president’s Mexican border through a surcharge on flood insurance policies, and cuts to the Coast Guard, airport security and disaster recovery assistance for local communities.

“The idea that Mexico was ever going to pay for a giant wall along our southern border was laughable, but the notion that New Jersey homeowners should pay for it is unconscionable,” said Sen. Menendez. “Tacking another surcharge onto flood insurance premiums would likely put policies out of reach many homeowners across New Jersey and throughout our country.”

Congress is beginning to debate reauthorization of the NFIP, which is set to expire on Sept. 30, 2017. The first hearing before the Senate Banking Committee is scheduled for tomorrow.

Sen. Menendez’s prescription for NFIP reform will address the following:


  • Build on the success of the Homeowner Flood Insurance Affordability Act (HFIAA) by going further to make rates more affordable, particularly for low and middle income families
  • Repeal arbitrary surcharges on homeowners, both primary and non-primary, and businesses


  • Bring common sense to the “earth movement” exception in order to simplify things for homeowners and ensure they get the resources they need to rebuild
  • Redefine basement exemption so homeowners can better understand what is and what is not covered in event of a flood
  • Return NFIP to solvency by eliminating or transferring its debt to the general fund, and by halting $400 million in annual interest payments to Treasury


  • Extend the 60-day deadline to appeal a claim to FEMA
  • Enforce the 90-day deadline for FEMA to adjudicate an appeal, and award the appellate the full amount of their appeal if FEMA does not comply with the deadline
  • Require all appeals to be heard by an independent, objective, neutral arbitrator outside of FEMA


  • Eliminate wasteful spending on outside attorneys fees fighting legal challenges filed by homeowners
  • Require the Write-Your-Own (WYO) insurer to pay attorney fees and other penalties to the policyholder when it’s determined they engaged in bad faith in underpaying claims
  • Extend the current one-year statute of limitations for homeowners to legally challenge their flood insurance claim, acknowledging both the difficulties in finding pertinent documents following a disaster and delays in responses by FEMA


  • Limit profits for WYOs and align their compensation more with performance, saving money and delivering better service for policyholders
  • Level the playing field and eliminate the incentive to lowball claims by imposing penalties for both under- and overpayment
  • Increase transparency by developing a “Policyholder Right to Know” and require specific signoff from the homeowner on any uncovered items that they might reasonably have expected would be part of flood insurance
  • Establish the right of policyholders to see all documentation and evidence that was used to process their claim
  • Mandate strong standards for training and continuing education to ensure all agents and adjusters perform satisfactorily


  • Create a national Storm Protection Fund (SPF), a robust, centralized, resiliency infrastructure fund to make critical mitigation investments to substantially reduce the cost of rebuilding after a disaster
  • Increase and expand the Increase Cost of Compliance (ICC) program, which provides up to $30,000 for a homeowner to mitigate their home from future flood damage only after it suffers substantial loss (more than 50% of the value), by extending its eligible purposes and providing pre-disaster options to mitigate damage

Sen. Menendez outlined his principles for NFIP reform at a news conference in Little Ferry, one of several communities severely impacted by Superstorm Sandy in 2012. He was joined by Congressman Bill Pascrell, Jr. (N.J.-09); Mayor Mauro Raguseo; George Kasimos of Stop FEMA Now; Susan Marticek of the Ocean County Long-term Recovery Group; Amanda Devecka-Rinear of the New Jersey Organizing Project; and New Jersey homeowners and storm victims.

“Reauthorizing the National Flood Insurance Program is an opportunity to fix major problems we saw in wake of Superstorm Sandy,” said Rep. Pascrell. “We also need to ensure every dollar paid by struggling homeowners is used to drive down costs and improve mitigation efforts. New Jerseyans paid into this program with the expectation that the government will provide reliable flood insurance coverage, not use it as a slush fund for unrelated government projects like President Trump's Mexican border wall.”

Sen. Menendez, who chaired the Sandy Task Force with Sens. Cory Booker (D-N.J.), and Charles E. Schumer and Kirsten Gillibrand (both D-N.Y.), first exposed the problem of widespread lowballing of flood insurance claims during Congressional hearings he chaired in 2014, and last year successfully pushed FEMA to reopen every Sandy flood insurance claim for review. The claims review has since compensated Sandy victims more than $230 million in additional payments they deserved, but were initially denied.

Sen. Menendez authored the Superstorm Sandy Relief and Disaster Loan Program Improvement Act, signed into law last November, 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.