Reps. Pascrell, Pallone, Sens. Menendez, Booker Unveil Legislation Bill to Reform National Flood Insurance Program

PATERSON, New Jersey, Oct. 30 -- Rep. Bill Pascrell Jr., D-New Jersey, issued the following news release on Oct. 29, 2021:

On the ninth anniversary of Superstorm Sandy slamming New Jersey, U.S. Rep. Bill Pascrell, Jr. (D-NJ-09) and Senators Bob Menendez (D-NJ) and Cory Booker (D-NJ) unveiled their bipartisan, bicameral legislation to extend the National Flood Insurance Program (NFIP) for five years, while implementing a series of sweeping reforms to address the waste, abuse, and mismanagement plaguing the system. Over five million Americans depend on the NFIP, including 220,000 New Jerseyans. U.S. Rep. Frank Pallone, Jr. (D-NJ-06) is the prime sponsor of the legislation in the House of Representatives.

"We know New Jerseyans got screwed with red tape that slowed our recovery after Hurricane Sandy," said Rep. Pascrell. "I remember Sandy's devastation like it was yesterday. Our neighbors saw their entire lives swept away in an instant. The new Risk Rating program FEMA is unilaterally imposing will increase premiums for over 170,000 policy holders in New Jersey. Our bipartisan bill will make the program more affordable and fairer. Additionally, our legislation has safeguards to stop premiums from being jacked up, it will help people prepare prior to a storm with accurate maps and flood prevention investments, it will strengthen the claims process so survivors get what they need to rebuild, and it will bring much-needed accountability to the Write Your Own program. We owe so much to our flooding victims and are working hard to see these reforms enacted this Congress. I want to especially thank Senator Menendez for his dedication to making our flood insurance program better."

"It is time Congress stops kicking the can down the road with reauthorizations that do not address the systemic problems plaguing this program. With this legislation, we can make NFIP more sustainable, we can make flood insurance more affordable, and we can hold FEMA and its private contractors more accountable," said Sen. Menendez. "And instead of waiting for the next disaster to strike, we can invest in mitigation that prevents costly flood damage in the first place."

"Nine years ago, Superstorm Sandy made landfall in New Jersey, leading to widespread and historic flooding, devastation to homes and businesses, and the tragic loss of life," said Sen. Booker. "We know that Sandy wasn't a one-time event; instead, due to the effects of climate change, historic and damaging storms will become the new normal. This is why this bipartisan, bicameral bill is important - from reauthorizing the flood insurance program and making it more affordable, to investing in flood mitigation, these efforts are vital to giving New Jerseyans peace of mind from future storms. I will also continue to work with colleagues and the Biden administration to address the climate crisis and fund the robust infrastructure investment we need to build stronger, more resilient communities."

"Superstorm Sandy devastated New Jersey nine years ago, and my constituents still know all too well how important a flood insurance program is after major flooding events. After the storm, insurance companies outright refused to make good on their promises to policyholders and instead pointed to the fine print while denying families who had lost everything. The National Flood Insurance Program must be both affordable and fair - otherwise it just doesn't work. This bill delivers a long-term flood insurance program reauthorization that improves the program based on the realities of major weather events like Sandy," said Rep. Pallone. "This legislation will go a long way to strengthen our flood insurance program so that homeowners in my district are protected from the devastating effects of future flooding."

The federal lawmakers were joined by Paterson Mayor Andre Sayegh, New Jersey Organizing Project (NJOP) Board President Joe Mangino, NJ Realtors Federal Political Coordinator and Past President Ilene Horowitz and American Policyholder Association Executive Director Doug Quinn.

"The City of Paterson has seen the devastation that storms like Superstorm Sandy and Hurricane Ida can do to our community," said Mayor Sayegh. "This legislation will help thousands of residents prepare and reduce flood risks to help ease their worries about the after-effects of storms. We thank Senator Menendez, Senator Booker, and Congressman Pascrell for continuing to fight for communities like Paterson who rely on these much-needed resources."

"NJ Realtors thanks Senator Menendez, Senator Booker and Congressman Pascrell for their important work on reforming the National Flood Insurance Program," said Ilene Horowitz, NJ Realtors Federal Political Coordinator. "We applaud their efforts to mitigate the impact that risk rating 2.0 could have on current homeowners and potential first time home buyers."

The National Flood Insurance Program Reauthorization and Reform Act of 2021 would take concrete steps to improve affordability, transparency, accountability, and the long-term sustainability of the NFIP by:

* Reauthorizing NFIP for five years and extending the program until September 30, 2026.

* Ending runaway premium hikes by capping annual rate increases to 9 percent. Currently, premiums can increase by up to 25 percent a year -- which has an adverse effect on property values, creates affordability challenges, and discourages participation in the program. This will put guardrails on FEMA's new rating methodology, known as Risk Rating 2.0, and prevent a rate shock that would undermine and weaken the flood insurance program and put taxpayers on the hook for even more disaster assistance grants.

* Capping Write Your Own (WYO) compensation to ensure private insurance isn't making hand-over-fist profits at the expense of program sustainability.

* Instituting a significant number of policyholder protection and fairness provisions to ensure homeowners who faithfully paid their premiums are treated fairly during the claims process.

Risk Rating 2.0, the Federal Emergency Management Agency's (FEMA) new rating system, went into effect earlier this month, which is expected to raise premiums on 80% of NFIP policyholders nationwide. Around 900,000 policyholders are expected to drop their insurance because of the hikes. 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 Pallone 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%.

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March 23, 2021

To: The Honorable Alejandro Mayorkas, Secretary, U.S. Department of Homeland Security, 3801 Nebraska Avenue NW, Washington, D.C. 20016

Dear Secretary Mayorkas,

We write to urge you to postpone the implementation of the Risk Rating 2.0 update to the National Flood Insurance Program. While we appreciated that the Federal Emergency Management Agency (FEMA) delayed implementing Risk Rating 2.0 in 2019, numerous concerns we have raised about the impact of implementation on our constituents still have not been addressed. With so many questions left unanswered, the expected implementation of Risk Rating 2.0 for new policyholders on October 1, 2021 and existing policy holders on April 1, 2022 is unacceptable. Under the prior Administration, the process was not collaborative or transparent ensuring that the current proposal does not provide affordable protections for New Jersey policyholders.

Rather than using flood maps and zones to determine a policyholder's premium rate, Risk Rating 2.0 is expected to use a series of models that will "fundamentally change" a property's individual flood risk assessment./i While we know FEMA intends for Risk Rating 2.0 to provide more accurate and transparent flood insurance pricing, this update is expected to increase premiums for the majority of policyholders in New Jersey. We remain perturbed that these burdensome costs could force some homeowners to drop coverage, or even worse, lose their homes. That fear is compounded as policyholders are dealing with the negative health and economic impacts of the COVID-19 pandemic.

Based on what little FEMA has revealed to date, many questions remain about Risk Rating 2.0. Congress and the public need more information about this proposal before FEMA determines new premiums for policyholders. Policyholders must be educated about and understand the impact Risk Rating 2.0 will have on their property and finances. Additionally, there must be a full explanation about how current affordability programs, grandfathered properties and pre-FIRM properties will be impacted. Finally, FEMA must release an economic impact analysis to inform Congress and the public about how Risk Rating 2.0 will affect insurance premiums, rates, property values, rates of dislocation, flood insurance enrollment rates and the overall housing economy.

We recall how problems surrounding the implementation of the Biggert-Waters Act of 2012 led to premium hikes and sent a chill through the real estate market. We worry FEMA could be replicating this history with Risk Rating 2.0. We have sought a lower premium cap in any potential long-term reauthorization of the National Flood Insurance Program because we expected the current protections for policyholders would be insufficient to keep our constituents' policies affordable under Risk Rating 2.0. Policyholders cannot suffer from a double-digit rate increase in addition to the fees and surcharges they will be expected to pay under Risk Rating 2.0. Also, any backdoor attempts to remove grandfathered policies would be deemed unacceptable.

Under the previous Administration, FEMA's reluctance or inability to provide information on all aspects of this new proposal to members of Congress and the public was alarming. Without a full public understanding of Risk Rating 2.0, an enormous degree of uncertainty continues to linger over the effect on the 217,200 policyholders in New Jersey. Given these uncertainties, lingering questions, and the dire financial straits so many households find themselves in due to the pandemic, we urge you to postpone plans to implement Risk Rating 2.0. We believe doing so would allow time for what we hope will be an improved dialogue between FEMA and Congress and allow policyholders further time to plan their futures with better information.

We look forward to working together to ensure the National Flood Insurance Program remains affordable.

Footnote:

i/ https://www.fema.gov/flood-insurance/work-with-nfip/risk-rating