Homeowners across the country shouldn’t be forced to pay for the sudden and dramatic flood insurance premium increases that are the unintended consequence of the Biggert-Waters Flood Insurance Reform Act of 2012, insisted the NATIONAL ASSOCIATION OF REALTORS® in testimony before the U.S. House Financial Services Subcommittee on Housing and Insurance.
Some homeowners throughout the U.S. have seen their flood insurance rates increase dramatically over the past year.
In Haleiwa, Hawaii, Tim and Caterine Clearwater purchased a modest 1950s home in November 2012. At the time they purchased their home, the flood insurance premium for the property was $2,700 a year. They’re now facing an increase to $28,000 a year or more.
In Folly Beach, S.C., Brent and Maggie Campbell purchased an 850 sq. ft. second home in October 2012. Their premiums are set to increase from $825 a year to $13,000 a year (nearly a 1,500% premium increase).
“We need a ‘timeout’ from the implementation of the law,” said former NAR President Moe Veissi. “No one could have imagined rate increases of this magnitude. During the debate over Biggert-Waters, the prevailing wisdom was that actuarial rates would range from hundreds to thousands of dollars, not tens of thousands of dollars or the 1,000% rate increase shocks that we are learning about now.”
He suggested the panel address the issue by supporting the “Homeowner Flood Insurance Affordability Act,” bicameral, bipartisan legislation introduced by Reps. Michael Grimm, R-N.Y., and Maxine Waters, D-Calif., and by Sens. Bob Menendez, D-N.J., and Johnny Isakson, R-Ga.
The bill would delay major rate changes until the Federal Emergency Management Agency (FEMA):
- Completes an affordability study.
- Creates an office of the Advocate to investigate flood insurance rate increases.
- Reports to Congress with proposed solutions to any identified problems.
NAR also called on FEMA to convene a national summit with key stakeholders to develop a longer term affordability solution.