Rep. Lynch Seeks Delay In Flood Insurance Hikes

By Shujie Leng
BU Washington News Service

WASHINGTON — Rep. Stephen Lynch, D-South Boston, Tuesday afternoon asked the director of Federal Emergency Management Agency to delay a rate increase arising from recently enacted flood insurance legislation until FEMA has completed an affordability study required by the new law.

At issue is the so-called Biggert-Waters Flood Insurance Reform Act, which took effect this year. During a hearing of the House Financial Services Subcommittee on Housing and Insurance, Lynch said that a number of residents of his South Shore district have seen their flood insurance premiums increase by 500 percent – with some increases surpassing 1,000 percent — under new flood maps required by the law.

“I would say, just based on looking at my district, the threat of forcing people from their homes by these increases of premiums [is] probably equal to the removal of people from homes during some of those storms that we are trying to address,” declared Lynch, a member of the Financial Services Committee. While not a member of the Housing and Insurance Subcommittee, he was permitted to sit in at Tuesday’s hearing.

FEMA Director Craig Fugate said it might take four years to finish the affordability study, which is being conducted by National Academy of Sciences.

Fugate cited the difficulty of conducting such study, “How do we determine what’s affordable, at what income, at what level?” he asked. “That’s not something that FEMA does…
At what point is affordability, and how much of that should be shared with taxpayers?”

For his part, Lynch declared: “It makes no sense to implement the premium increase first–in some cases, up to a 3,000 percent increase—[then], after you force them out of their homes, they figure out whether it’s affordable or not.”.

The Biggert-Waters law, passed in the summer of 2012, is aimed at improving the finances of FEMA’s National Flood Insurance Program which owed the U.S. Treasury $24 billion as of the end of the 2013 fiscal year on Sept. 30. The law requires the program to charge rates that more accurately reflect the actual risk of flooding.

Once fully implemented, houses that are used as second homes or are not occupied by the owner would lose premium subsidies provided under the act. Meanwhile, owner-occupied homes will see, on average, a 25 percent annual increase in their premiums over each of the five years of the law’s authorization period – if these properties are included in a new flood map.

Lynch recently co-sponsored a flood insurance relief bill that delays the changes on insurance premiums under the new flood maps until the affordability study is finished. A similar Senate bill is backed by Sens. Elizabeth Warren and Edward Markey, both D-Mass.

At the hearing, Lynch also asked FEMA to establish an independent committee to review homeowner appeals of the insurance increases stemming from the new law.

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