Last Friday evening (Feb. 22), the House made available a modified (basically a substitute) version of HR 3370. There will almost certainly be a vote in the House this week, perhaps as early as Feb. 26, and we think it will occur under the "suspension of rules." That means a 2/3 majority would need to approve, and it means that no changes or amendments will be considered.
ASFPM has been analyzing this legislation over the past couple days and the legislation is decidedly a mixed bag. There are good provisions, bad provisions, and much that is left undone. ASFPM's priorities for any NFIP reform legislation continues to be addressing affordability, long-term financial stability of the program, promoting mitigation, and reducing flood losses. There are 26 sections to the bill and we have done a more extensive analysis, here. Highlights include:
- Eliminates trigger to full actuarial rates on point of sale; allows assumption of existing flood insurance policies by new property owners.
- Creates longer glide path for eventually eliminating the Pre-FIRM subsidy on all properties. Provides for increases of at least 5 percent annually of the current premium (but also subject to the total premium increase cap of either 15 or 25 percent).
- Provides for an optional higher deductible ($10,000) for residential properties.
- Eliminates Section 207 related to grandfathered rates when maps change.
- Requires a surcharge on all flood insurance policies to pay for the longer glide path. $250 per policy for second homes and businesses, and $25 per policy for all other structures.
This legislation addresses flood insurance affordability through what appears to be a better and more practical glide path than the recently passed Senate bill, or even the original HR 3370, which simply delay implementation of most increases for at least four years. However, there are other aspects that are troubling. The elimination of Section 207 in its entirety means that administrative grandfathering will continue, and the surcharge on all flood insurance policies to essentially subsidize policies already getting a discount is very disturbing. Also disappointing is what is not in the legislation. ASFPM recommendations for legislative fixes include an emphasis on mitigation - not only to address long-term affordability, but reduce risk. Ideas ASFPM has offered include expanding mitigation programs like PDM and FMA, reforming and making ICC more accessible, and provision of mitigation loans. HR 3370 does nothing to provide assistance to homeowners to undertake mitigation, which is the only measure that reduces premiums and makes people and property safer. Nor does it include any provision for widely supported targeted assistance for mitigating premiums such as means tested vouchers.