Supporters of congressional legislation that would delay most increases in flood insurance premiums face a key test Wednesday, as the Senate gears up for a vote on whether to proceed with debate on the proposition.
In order to pass, 60 votes are needed by Thursday.
The bill, which was originally expected to be considered before Thanksgiving, would freeze rate increases under the 2012 Biggert-Waters Act until FEMA completes an affordability study and Congress and FEMA can find solutions to sky-high premiums. The process is expected to take four years.
“Wednesday’s vote in the Senate represents a pivotal moment for our coalition,” Michael Hecht, president and CEO of Greater New Orleans, Inc. told the New Orleans Times-Picayune.
Hecht
previously slammed FEMA’s approach to the issue of steep premium hikes, which are up to 1000% higher for some homeowners in the South and Northeast. FEMA Administrator Craig Fugate previously told Congress he didn’t have the authority to delay rate increases, despite Biggert-Waters’ requirement that FEMA complete an affordability study.
“It’s frankly a Kafka-esque interpretation of the legislation,” Hecht told Insurance Business. “That interpretation of the law is an interpretation of the letter, not the spirit.”
Hecht expressed confidence that a solution to the unaffordable flood insurance premiums would be found, but even if the proposal is approved by the Senate, it faces some significant challenges in the House.
In November, Rep. Randy Neugebauer—chairman for the House Subcommittee on Housing and Insurance—suggested reported premium increases of 300, 500 and 1000% were “
a lot of rumors.”
Producers selling flood insurance policies, meanwhile, appear to have given up hope in a governmental solution for their clients.
Sean Johnson, a sales manager for Johnson Insurance in Gretna, La., said he is instead attempting to help clients
find ways to shield themselves from the astronomical rate increases.
“I’m tracking down clients who haven’t had an elevation survey and trying to get them to get one done that meets new FEMA guidelines,” Johnson said. “That could potentially lower the premiums.”
Johnson is also “trying to work with coverage and deductibles,” as many clients choose to take deductibles of up to $5000 and eliminate contents coverage in order to secure a more affordable premium.
The Senate bill is being sponsored by Robert Menendez of New Jersey, and both of Louisiana’s senators.
