Vote Notes: 21st Century Flood Reform Act
This window between Christmas and New Years represents my last chance to catch up on a number of legislative matters we voted on, but I couldn’t get out there given other posts that were stacked up.
In that vein, I wanted to circle back to a bill the House passed last month...the 21st Century Flood Reform Act. The bill extends the authorization of the National Flood Insurance Program for five years. Although I had some concerns with the bill, I voted yes on it because I believe that the legislation was an overall step in the right direction in bringing reforms that in some cases are long overdue.
It adjusts the way in which people’s annual premiums are set. It does this by taking into account risk levels, or the likelihood that their home will flood. This is similar to the way that your car insurance works. If you’re more likely to get in an accident, your premium goes up. The aim here is to begin some level of pricing consequence to people whose homes are flooded five or ten times.
It works to improve the program’s outdated risk zone maps. During Hurricane Harvey, it was estimated that roughly 80% of people whose homes flooded did not have flood insurance. In many cases, this was simply because they were not mapped into a risk zone. This bill would allow FEMA to approve risk maps that come from local communities and third-party sources...allowing FEMA to update maps far more quickly and accurately.
The bill also incentivizes people to better prepare against the next flood that would cause damage to their home. All too often, a person’s home will get flooded and then rebuilt in the same way - only to get flooded again. This bill sets aside funds for people to use to help better flood-proof their homes. FEMA has shown that every $1 spent on mitigation saves $4 down the line.
Finally, the legislation expands the private flood insurance market by allowing people to purchase non-government set private market policies. Historically, if a person wanted to buy flood insurance through a private company, that policy had to adhere to the government’s standards on a number of - in some cases - superfluous fronts. This bill would let private companies set their own policies and offer consumers choices. In these instances, the government’s policies could still act as a minimum for people, but the consumer would be free to shop around for other policies.
All this having been said, I still had some concerns with the legislation….
Earlier this fall, I voted against the expansion of the private flood insurance market because, at the time, there weren't any other reforms to the program overall. The expansion of the private market could allow for companies to come in and cherry pick lower risk insurance policies. This would leave each of us as federal taxpayers not only with the existing $24 billion debt on the program...but a real cash flow squeeze to boot.
Lastly, the program’s debt is still an issue. The National Flood Insurance Program is $24 billion in debt, and, on average, the National Flood Insurance Program runs at about a $1.4 billion annual shortfall. In 2017 alone, Congress voted to eliminate $16 billion of debt in the most recent disaster supplemental bill. The program also bought a reinsurance policy in order to pass over $1 billion in debt to the private sector. The legislation that we voted on last month did not have any substantial answers to dealing with the debts still inherent in the existing program.