Provisions of the bill
This summary is based largely on the summary provided by the Congressional Research Service, a public domain source. [9]
The Homeowner Flood Insurance Affordability Act of 2013 would prohibit the Administrator of the Federal Emergency Management Agency (FEMA) from: (1) increasing flood insurance risk premium rates to reflect the current risk of flood for certain property located in specified areas subject to a certain mandatory premium adjustment, or (2) reducing such subsidies for any property not insured by the flood insurance program as of July 6, 2012, or any policy that has lapsed in coverage as a result of the policyholder's deliberate choice (Pre-Flood Insurance Rate Map or pre-FIRM properties). The bill would set forth expiration dates for such prohibitions. [9]
The bill would amend the National Flood Insurance Act of 1968 (NFIA) to prohibit the Administrator from providing flood insurance to prospective insureds at rates less than those estimated for any property purchased after the expiration of such six-month period (currently, any property purchased after July 6, 2012). [9]
The bill would direct FEMA to: (1) restore during such six-month period specified estimated risk premium rate subsidies for flood insurance for pre-FIRM properties and properties purchased after such six-month period, and (2) submit to certain congressional committees a draft affordability framework addressing the affordability of flood insurance sold under the National Flood Insurance Program. [9]
The bill would prescribe procedures for expedited congressional consideration of legislation on FEMA affordability authorities. [9]
The bill would permit FEMA to enter into an agreement with another federal agency either to: (1) complete the affordability study, or (2) prepare the draft affordability framework. [9]
The bill would direct FEMA submit to certain congressional committees the affordability study and report. [9]
The bill would amend NFIA to authorize FEMA to reimburse homeowners for successful map appeals. [9]
The bill would make any community that has made adequate progress on the construction (as under current law) or reconstruction (new) of a flood protection system which will afford flood protection for the one-hundred year frequency flood eligible for flood insurance at premium rates not exceeding those which would apply if such flood protection system had been completed. [9]
The bill would revise guidelines governing availability of flood insurance in communities restoring disaccredited flood protection systems to include riverine and coastal levees. [9]
The bill would require FEMA to: (1) rate a covered structure using the elevation difference between the floodproofed elevation of the covered structure and the adjusted base flood elevation of the covered structure; and (2) designate a Flood Insurance Advocate to advocate for the fair treatment of policy holders under the National Flood Insurance Program and property owners in the mapping of flood hazards, the identification of risks from flood, and the implementation of measures to minimize the risk of flood. [9]
Congressional Budget Office report
This summary is based largely on the summary provided by the Congressional Budget Office about the substitute amendment for H.R. 3370 that was posted on February 28, 2014. This is a public domain source. [2]
H.R. 3370 would reduce federal flood insurance premium rates for some properties that are sold, were uninsured as of July 2012, or where coverage lapsed as a result of the policyholder no longer being required to maintain coverage. Excess premiums collected on these policies since the beginning of fiscal year 2014 would be refunded to the policyholder. In addition, H.R. 3370 would limit the amount that the National Flood Insurance Program (NFIP) could increase premium rates for individual policyholders (with some exceptions) and for all policyholders within the same risk classification. The legislation also would place an annual surcharge of $250 for all NFIP policies covering non-residential properties or non-primary residences and $25 for all other policies. [2]
The Congressional Budget Office (CBO) estimates that the surcharges collected under the bill would exceed the costs of reduced premiums over the 2015–2019 period, resulting in a decrease in direct spending of $165 million over that time. Over the subsequent five-year period, additional borrowing (made possible by lower borrowing during the first five years), as well as reduced net income to the program, would increase direct spending by $165 million, resulting in no net effect over the 2015–2024 period. [2]
The change in net income to the NFIP measures the effect of the legislation without regard to borrowing. CBO estimates that the changes proposed by H.R. 3370 would have no significant effect on net income to the NFIP over the 2015–2024 period. Additional receipts generated by annual surcharges collected on all policies would roughly offset the lesser premium collected from some properties. [2]
Debate and discussion
One Republican supporter of the bill, Rep. Shelley Moore Capito (R-WV), said that due to the sharply increasing insurance premiums, some people were now faced with the choice "to either spend their life savings on their flood insurance bills or walk away from their house, ruining their credit." [1]
Republicans opposed to the bill were concerned that it would make it more difficult to pay back the billions of dollars of debt owed by the National Flood Insurance Program. [1] Rep. Jeb Hensarling (R-TX) criticized the bill, saying the bill would "postpone actuarially sound rates for perhaps a generation... (and) kill off a key element of risk-based pricing permanently, which is necessary if we are to ever transition to market competition." [1] Hensarling criticized the National Flood Insurance Programs for regularly underestimating flood risk. [1]
Conservative activist group Heritage Action urged its supporters to contact their representatives and tell them to vote no on the bill. The organization criticized the bill because it "forces taxpayers to continue subsidizing high-risk development of flood-prone areas and sets a terrible precedent of never letting positive reform take effect." [11]
One Republican Michigan Congresswoman Candice Miller argued that the state of Michigan should opt out of the National Flood Insurance Program entirely and urged the governor to do so. According to Miller, Michigan residents subsidize other, more flood prone parts of the country, by paying higher premiums than they should. [12] Miller accused insurance premiums of being decided by politics rather than actuarial costs. She said that "too many Americans across this nation are paying rates far below what actual risk would dictate in the marketplace while others, including many who I represent, are being forced to pay into a program that they do not need or want to help subsidize lower rates for other favored groups whose risk is far greater." [12]
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