The Future of the National Flood Insurance Program – A Legislative Update

Congress has reauthorized the National Flood Insurance Program (NFIP) via February 18, 2022.  Previous to this most up-to-date non permanent reauthorization, the NFIP had been set to run out on December 3, 2021. Since 2017, there have been 18 non permanent reauthorizations as extra complete and everlasting legislative options to the program have failed to achieve traction in Congress.

In the fall of 2021, Florida Sen. Rick Scott launched three payments to reform the NFIP.  Scott’s payments goal, partially, the price will increase related to FEMA’s Danger Ranking 2.0 which might be anticipated to impression extra considerably property homeowners in coastal states equivalent to Florida. Scott’s payments search to encourage progress of the non-public flood insurance coverage market via, amongst different proposals, an modification to the NFIP’s “continuous coverage” requirement that property should hold an lively NFIP coverage to stay eligible for sure premium reductions. Below Scott’s proposal, shoppers would stay eligible for these premium reductions even when they buy a personal flood insurance coverage coverage. As well as, Scott beforehand joined Sen. Mike Lee to sponsor a quantity of different payments looking for to revise the NFIP.

In November 2021, the National Flood Insurance Program Reauthorization and Reform Act of 2021 (NFIP Reauthorization and Reform Act) was launched to the Home and Senate – and H.R. 5802 and S. 3128 respectively. The practically similar payments had been launched by Rep. Frank Pallone Jr. and Sen. Robert Menendez, each of New Jersey. The payments have bipartisan help from senators and representatives in Florida, Louisiana, Maryland, Mississippi, Pennsylvania, and New York. The NFIP Reauthorization and Reform Act particularly addresses considerations regarding Danger Ranking 2.0 and the price will increase policyholders anticipate to see annually.

As we beforehand noted, FEMA designed Danger Ranking 2.0 in order that flood insurance coverage charges can be primarily based on the precise flood threat and worth of particular person properties in efforts to supply extra correct pricing. Though FEMA anticipates many policyholders will see price decreases, the new threat ranking system locations people in coastal areas in danger of dealing with vital year-over-year premium price will increase till the property reaches it full threat price. At the moment the NFIP incorporates an annual premium price improve of 18% per yr. The NFIP Reauthorization and Reform Act proposes to scale back the annual premium price improve cap to 9% per yr, sustaining the present exceptions for misrated and lapsed insurance policies.

For the previous a number of years, when the NFIP was set to run out, Congress has briefly approved renewal of the NFIP with out a lot overview or consideration. The most up-to-date reauthorization was included in a stopgap invoice to maintain the authorities funded via February 18, 2022.  Although a quantity of payments that would overhaul the NFIP have been launched, there seems to be little urge for food in Congress for such payments. The rollout of Danger Ranking 2.0 and the continued introduction of program-altering payments may require Congress to present the NFIP extra consideration than we’ve seen in prior years. Keep tuned as we proceed to supply updates.

Source link