The National Flood Insurance Program received a temporary last-minute reprieve last week, but lawmakers are warning that insurance premiums for many people are likely to increase without additional action by the Biden Administration.
In the Continuing Resolution enacted by Congress last week and signed by President Biden, the House and Senate included yet another temporary extension of the NFIP. Funding for much of the government was extended until Dec. 3, and the NFIP extension will last until then as well.
It marks the 17th time that Congress has passed short-term NFIP reauthorizations since the end of FY17. Without those renewals, the Federal Emergency Management Agency would have to stop selling and renewing flood insurance policies.
Still, senators are warning that without additional action, many homeowners could see their flood insurance premiums increase tremendously. Under the NFIP Risk 2.0, which began on Oct. 1, premiums for individual properties will be tied to their actual flood risk. The NFIP rating structure had followed general insurance practices that were in place when the program was created and has not fundamentally changed since the 1970s.
A bipartisan group of senators, including Sens. Bob Menendez, D- N.J; Bill Cassidy, R-La. and Majority Leader Chuck Schumer, D-N.Y., last month asked FEMA to delay the new system, saying that they had received reports that nearly 80% of policyholders will see premium increases.
They added that FEMA had estimated that 20% of all policyholders will eventually drop out of the program because of premium increases.
“In light of this information, we are extremely concerned about the administration’s decision to proceed forward with the implementation of this program without first determining an alternative that avoids the prospect that hundreds of thousands of families will be inclined to forfeit flood insurance on their homes,” they wrote.