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Reauthorization of Flood Insurance Program Urged

Testifying on behalf of NAHB before the Senate Banking Committee's Subcommittee on Economic Policy, Steve Feldmann director of community affairs for Fischer Homes, one of the largest home builders in Kentucky, said, “The home building industry depends on a strong national flood insurance program that is annually predictable, universally available and fiscally viable.”

By guaranteeing affordable flood insurance, the NFIP helps communities to address their housing needs by making it safe, affordable and practical for consumers to purchase homes in flood-prone areas.

Unfortunately, the solvency and stability of the program is threatened by a small percentage of properties that have suffered multiple, costly flood damages. Approximately 48,000 currently insured properties have incurred two or more floods within a 10-year period. These properties, which make up only 1% of the current 4.4 million policyholders, cost the NFIP approximately $200 million annually and account for roughly 25%-30% of the claims paid by the program, he said.

Although the Congress recently extended FEMA’s statutory authority to issue flood insurance policies until June 30, a lapse in authority after that date will have severe repercussions for a vast number of landowners.

“Allowing FEMA’s authority to limp from one short-term authorization to the next does not instill confidence or consistency for policyholders, future home buyers or industries that depend on a viable national flood insurance program,” said Feldmann. “Congress should reauthorize the NFIP for a full five years in order to allow the home building industry to continue to deliver safe, decent, affordable housing to consumers in a location of their choice.”

NAHB has been a proponent of House-passed reauthorization legislation H.R. 253, the “Flood Insurance Reform Act of 2003,” and supports the provision in the bill ensuring that all properties remain eligible for flood insurance. However, Feldmann told lawmakers that the measure should be amended to narrowly define severe “repetitive loss” properties to include only those that pose the most severe flood risks.

“By narrowing the scope of targeted properties, FEMA would be directed to address the most problematic properties first, which would quickly lead to significant savings to the NFIP and ensure its long-term viability,” said Feldmann.

He added that Congress should encourage FEMA, with the participation of state and local governments, to facilitate the redevelopment of properties so that they meet local floodplain codes and regulations, as do newly constructed homes. Additionally, in cases where FEMA makes an offer to buy a property, the owner must be paid the fair market value for both the land and the structure.

Finally, Feldmann told lawmakers that any reauthorization legislation should require FEMA to notify all current policyholders of any changes to the program.

To read the full legislation, click here, and enter H.R. 253 in the box at the upper left.

Photo by Herman Farrer

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