NATIONAL FLOOD INSURANCE PROGRAM (NFIP)
- As a result of changes to the National Flood Insurance Program (NFIP) by the Biggert-Waters Flood Insurance Act of 2012, certain properties will be subject to skyrocketing premium increases triggered by a new flood map or by a transfer of ownership. This is true even if the properties were built to code under then-current flood maps (“grandfathered properties”) and have never experienced a flood. Moreover, new flood maps do not take into account a community’s flood mitigation efforts, including levees and pump systems paid for by the community, and therefore mandate unnecessary elevations.
- An affordable flood insurance program is vital to many communities.
- ICBA is concerned about the impact on homeowners and community banks of dramatic rate increases as a result of remapping.
In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to protect themselves financially. The NFIP offers flood insurance to homeowners, renters, and business owners in participating communities that agree to adopt and enforce ordinances that meet or exceed Federal Emergency Management Agency (FEMA) requirements to reduce the risk of flooding.
In 2005 and 2006, and again in 2012, there were insufficient reserves to cover the billions in flood claims resulting from hurricanes Katrina, Rita, Wilma, and Super Storm Sandy. The NFIP currently has a deficit of $24 billion. In 2012, Congress reauthorized the NFIP, the Biggert-Waters Flood Insurance Reform Act of 2102 and made significant changes to the premium structure.
ICBA has serious concerns about the impact of drastic and unsustainable flood insurance premium increases on homeowners, local housing markets, mortgage lenders, and the broader economy. Pending premium increases are already depressing home values and freezing the housing market in certain communities, and the impact will only get worse as the law continues to be phased in.
ICBA supports legislation to amend the Biggert-Waters Flood Insurance Act in order to provide immediate relief for policy holders. These include: delaying implementation of new premiums; requiring FEMA to complete an affordability study initially mandated by the Biggert-Waters Act and propose an affordability framework for consideration by Congress that will help homeowners cope with higher premiums; requiring FEMA to recognize community-funded flood protection systems; and improving the accuracy of flood maps.
Staff Contacts: Renee Rappaport