Bipartisan letter to House leadership urges relief amid National Flood Insurance Program rate hikes

U.S. Reps. Bill Pascrell, Jr. (D-NJ-09) and Garret Graves (R-LA-06) led a letter signed by 38 bipartisan Members of Congress demanding the National Flood Insurance Program's (NFIP) Risk Rating 2.0 implementation be postponed to prevent against unreasonable rate hikes unilaterally imposed by Federal Emergency Management Agency's (FEMA) new pricing methodology. In their letter to House leadership, the Members cite concerns surrounding the new methodology for assessing risk, which will lead to double digit rate hikes for certain policyholders. The Members request that House leadership include language delaying the implementation of Risk Rating 2.0 in upcoming legislation this month.

"While we appreciate FEMA's work to create a NFIP that establishes actuarily sound rates, we are concerned about the burden of potential double digit rate hikes on our constituents by FEMA's untested pricing methodology," the Members wrote. "Therefore, we ask you to include language delaying the unfair implementation of Risk Rating 2.0 in any piece of legislation going to the floor this month until a more robust methodology that includes a lower premium cap is in place for policy holders."

The Members continued, "[t]ime is of the essence with FEMA's pending deadline to implement Risk Rating 2.0. We cannot accept another short-term extension of the NFIP without addressing these expected rate hikes for our constituents."

According to FEMA state profiles, nearly 80 percent of policy holders in the eight states (approximately 1,385,759 in Florida, 661,830 in Texas, 394,757 in Louisiana, 170,685 in New Jersey, 155,349 in South Carolina, 157,316 in California, 117,093 in New York, and 104,145 in North Carolina) that account for the largest share of NFIP policies should expect to pay a higher premium under Risk Rating 2.0.

Rep. Pascrell has railed against a rushed implementation of Risk Rating 2.0, which could have disastrous effects on policyholders in New Jersey. In March, Reps. Pascrell and Frank Pallone (D-NJ-06) sent a letter to Homeland Security Secretary Alejandro Mayorkas urging the National Flood Insurance Program's Risk Rating 2.0 implementation be postponed to ensure transparency in the process and fairness for New Jersey policyholders. Pascrell and Pallone also led legislation to extend the NFIP for five years, address the waste, abuse, and mismanagement plaguing the system, and cap annual rate increases at 9%.

Text of the Members' latest letter to House leadership is provided below.

September 16, 2021

The Honorable Nancy Pelosi The Honorable Kevin McCarthy

Speaker Minority Leader

U.S. House of Representatives U.S. House of Representatives

Washington, DC 20515 Washington, DC 20515

Dear Speaker Pelosi and Minority Leader McCarthy,

We write because our constituents are in desperate need of relief from the National Flood Insurance Program (NFIP) rate hikes expected under Federal Emergency Management Agency's (FEMA) Risk Rating 2.0. While we appreciate FEMA's work to create a NFIP that establishes actuarily sound rates, we are concerned about the burden of potential double digit rate hikes on our constituents by FEMA's untested pricing methodology. Therefore, we ask you to include language delaying the unfair implementation of Risk Rating 2.0 in any piece of legislation going to the floor this month until a more robust methodology that includes a lower premium cap is in place for policy holders.

While Congress continues to debate needed affordability, fairness, and sustainable reforms to the NFIP, FEMA plans to unilaterally implement Risk Rating 2.0 in a phased approach beginning on October 1, 2021. FEMA's Risk Rating 2.0 implementation announcement earlier this year has already impacted communities we represent that are still dealing with the far-reaching economic impacts of COVID-19 and recovering from the devastation of Hurricanes Ida and Henri.

There are serious implementation questions surrounding Risk Rating 2.0. Our constituents and those involved in implementing FEMAs rate hikes need more time to get the answers they deserve. The additional burden of up to double digit rate hikes by FEMA for our constituents, especially those in low- and moderate-income communities is too much for them to bear. Massive rate changes should be subject to additional scrutiny and review by Members of Congress in a long-term reauthorization, not arbitrary FEMA deadlines. A delay in implementing Risk Rating 2.0 is needed to allow Congress time to work on a comprehensive long-term reauthorization of the NFIP.

FEMA has already previewed that nearly 80 percent of policy holders in the eight states (approximately 1,385,759 in Florida[i], 661,830 in Texas[ii], 394,757 in Louisiana[iii], 170,685 in New Jersey[iv], 155,349 in South Carolina[v], 157,316 in California[vi], 117,093 in New York[vii], and 104,145 in North Carolina[viii]) that account for the largest share of NFIP policies should expect to pay a higher premium under Risk Rating 2.0. This increase is due to FEMA's new methodology as well as the existing statutory limits on rate increases.

We appreciate the hard work Chair Maxine Waters and Ranking Member Patrick McHenry have put into developing a long-term NFIP reauthorization, including efforts to recognize the pending rate hikes. Time is of the essence with FEMA's pending deadline to implement Risk Rating 2.0. We cannot accept another short-term extension of the NFIP without addressing these expected rate hikes for our constituents. We are eager to work together to implement reforms to the NFIP based on the realities experienced in the aftermath of major flooding and storms our constituents have just experienced. Thank you very much for your time and attention to our request.

Sincerely,

[i] https://www.fema.gov/sites/default/files/documents/fema_florida-state-profile_03-2021.pdf

[ii] https://www.fema.gov/sites/default/files/documents/fema_texas-state-profile_03-2021.pdf

[iii] https://www.fema.gov/sites/default/files/documents/fema_louisiana-state-profile_03-2021.pdf

[iv] https://www.fema.gov/sites/default/files/documents/fema_new-jersey-state-profile_03-2021.pdf

[v] https://www.fema.gov/sites/default/files/documents/fema_south-carolina-state-profile_03-2021.pdf

[vi] https://www.fema.gov/sites/default/files/documents/fema_california-state-profile_03-2021.pdf

[vii] https://www.fema.gov/sites/default/files/documents/fema_new-york-state-profile_03-2021.pdf

[viii] https://www.fema.gov/sites/default/files/documents/fema_north-carolina-state-profile_03-2021.pdf

Read this original document at: https://pascrell.house.gov/news/documentsingle.aspx?DocumentID=4878