Reforms Needed as Flood Insurance Reauthorization Moves Forward

The US House Financial Services Committee approved a bill Tuesday reauthorizing the National Flood Insurance Program (NFIP) which affects how tens of thousands of people and the natural environment are protected across the country.

While conservation groups support reauthorizing the NFIP they were critical that the committee failed to pass meaningful reforms needed to incentivize better land use planning and discourage development in the most at-risk, environmentally sensitive areas.

Conservation groups also criticized two separate and related bills passed by the committee that would have the federal government provide windstorm insurance coverage and backstop state insurance programs that provide such coverage. National Wildlife Federation and American Rivers argued strongly against such programs because they would incentivize building in high risk and environmentally-sensitive areas, and make taxpayers take the ultimate risk.

The NFIP itself needs to be substantially reformed in the face of climate change, the groups said. “Climate change increases the risk of flooding along rivers and coastal areas,” said Shana Udvardy, director of Flood Management Policy for American Rivers. “Rather than subsidizing development in the floodplain and coastal areas, the Federal government should be in the business of moving people out of harm’s way, protecting and restoring areas that provide natural flood protection, and helping Americans to acknowledge the true risk of flooding."

Udvardy said Congress needs to take a more thorough look at the National Flood Insurance Program as it moves forward to the floor.

“We don’t need a bailout for beach houses–we need a lifeline for ordinary Americans who need help making sure their homes and businesses can withstand storms and floods; that their communities receive meaningful incentives to site new developments out of harm’s way; and that natural wetlands are protected so they can help mitigate the risk of flooding,” said Adam Kolton, senior director of Congressional and Federal Affairs for National Wildlife Federation.

“Instead of listening to scientists who say more intense storms, sea level rise and flooding require urgent actions to better protect people and communities, the Financial Services Committee passed legislation backed by big real estate developers that would lead to more building and rebuilding in the most environmentally sensitive flood-prone areas,” Kolton added.

Of particular concern are the Homeowners Defense Act (H.R. 2555) and the Multiple Peril Insurance Act of 2009 (H.R. 1264) that threaten to exacerbate some of the worst problems and challenges with the NFIP: under-pricing risk, discouraging good land use planning and environmental safeguards and shifting the burden of the most risky developments to U.S. taxpayers all across the country.

“We need to put the brakes on development in the most sensitive floodplains and coastal areas,” Kolton said. “Unfortunately, these proposals step on the gas.”

The committee passed NFIP bill did include two measures supported by NWF and American Rivers’ to phase out subsidized flood insurance for vacation homes, second homes and non-residential properties and to increase from 10% to 20% the amount that FEMA can annually raise premiums to reduce subsidies and improve the NFIP’s actuarial soundness.

The groups strongly oppose provisions that would weaken requirements for buying flood insurance in newly mapped flood-prone areas and areas where flood protection systems have been declared as no longer adequate. For example, the bill imposes a 5-year delay in requiring homeowners and businesses to purchase flood insurance in areas newly mapped into special flood hazard zones. The bill also exempts homeowners and businesses from having to purchase flood insurance in areas that once had–but now no longer have–protection from a 100-year (or greater) flood.

“As we saw in hurricane Katrina, it’s a dangerous mistake to assume no flood insurance is necessary because there are nearby Corps of Engineers or other levees–especially decertified levees,” said Udvardy. “Exempting homeowners and businesses from such purchase requirements provide a false sense of security and leaves homeowners and businesses without adequate coverage in the event of a major flood or levy failure.”

The NFIP reauthorization should require FEMA’s mapping program to utilize the best available science to reflect risk to communities while prioritizing natural resources protection, and provide incentives for floodplain and natural resource protection, emphasizing natural and beneficial uses of floodplains with structural measures as a last resort.

Congress originally intended the NFIP to reduce the nation’s vulnerability to flood damage by identifying hazards, encouraging and requiring smart floodplain management, and providing flood insurance at reasonable rates. Instead, the program has run up a near $20 billion debt to the Federal Treasury, and encouraged destruction of floodplains and wildlife habitat, with taxpayer subsidies, the environmental groups said.

“More than ever, real reform of the National Flood Insurance Program is needed, to protect the environment, taxpayers and most importantly people and communities,” Kolton said.

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