Sen. Menendez Fights to Keep Flood Insurance Affordable

WASHINGTON, June 18 -- Sen. Robert Menendez, D-New Jersey, issued the following news release:

U.S. Senator Bob Menendez, chair of the Sandy Task Force and the leading voice in Congress for sweeping reform to the National Flood Insurance Program (NFIP), today pressed the Federal Emergency Management Agency (FEMA) during a hearing before the Senate Banking Committee to be honest about the real impact of Risk Rating 2.0 on flood insurance policyholders, the vast majority of which will face annual premium hikes. Despite their spin that Risk Rating 2.0 will deliver significant savings for policyholders, FEMA confirmed during questioning from Sen. Menendez that eight-in-ten NFIP policyholders will actually see their premiums rise.

"The Senator's right," said David Maurstad, FEMA's Deputy Associate Administrator for Federal Insurance and Mitigation Administration. "Eighty percent of policyholders will see their policies go up."

"I think what I find even more frustrating is that we call Risk Rating 2.0 'Equity in Action' when I think this new rating system is anything but equitable," said Sen. Menendez. "The more and more expensive this insurance becomes, the less the pool that will exist and the premiums will continue to go up as there are less people in the pool, not to mention the ratable losses for communities across the nation, when you can't sell the property at the end of the day because you can't afford flood insurance... There's a real impact for a very large number of people and it's not only the impact, it's the size of the impact."

The senator cited Keansburg, N.J., a largely blue collar, working-class community on Raritan Bay in Monmouth County with a median income of 52,000 that was devastated by Superstorm Sandy, in which 90% of its nearly 2,000 NFIP policyholders will see rate hikes under Risk Rating 2.0.

"Under Risk Rating 2.0, 90 percent of policyholders in Keansburg would be seeing premium increases in the first year and the increases continue to compound in years to come," Sen. Menendez pointed out, making the case that hardworking families will bear the cost of steep premium hikes.

During his testimony, Maurstad misstated that all 217,000 NFIP policyholders in New Jersey will see premiums cut by an average $85 a month. In reality, FEMA's own data shows 80 percent of New Jersey policyholders will see premium increases, with hundreds facing annual hikes over $1,000 and with no end in sight.

Sen. Menendez also pressed Maurstad on other areas to find cost-savings with the NFIP instead of putting an outsized burden on policyholders, namely the slashing the high compensation for WYO (Write-Your-Own) private insurance companies and freezing interest payments on the program's debt to be reinvested in mitigation efforts.

Maurstad confirmed that every $1 spent in mitigation saves the NFIP $6 in claim payouts after a flood.

"I like anything the federal government can do 6-to-1 at the end of the day," Sen. Menendez responded.

Sen. Menendez renewed his call for sweeping reforms to the NFIP as the program is due to expire in September without reauthorization from Congress. He is currently working towards introducing new, bipartisan NFIP reform legislation built upon legislation he led in the last Congress with Sen. Bill Cassidy (R-La.).

The National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019 tackles systemic problems with flood insurance, lowers the cap on annual premium increases to ensure policies are affordable for homeowners, puts the NFIP back on solid fiscal ground, and reframes the nation's entire disaster paradigm to one that focuses more on prevention and mitigation to spare the high cost of rebuilding after flood disasters.

Last month, Sen. Menendez questioned expert witnesses during a Banking Committee hearing on the need to make the NFIP more affordable, to revamp its broken claims process that left many Superstorm Sandy survivors holding the bag, and to invest more in mitigation efforts to reduce risk and the ultimate cost to rebuild after a flood.

Sen. Menendez first exposed the problem of widespread lowballing of flood insurance claims during Congressional hearings he chaired in 2014, and then successfully pushed FEMA to reopen every Sandy flood insurance claim for review, which compensated Sandy victims with more than $260 million in additional payments they were initially denied.

Sen. Menendez authored the Superstorm Sandy Relief and Disaster Loan Program Improvement Act, which extended and expanded access to federal disaster loans through the U.S. Small Business Administration (SBA). His Homeowner's Flood Insurance Affordability Act was signed into law in 2014 to address skyrocketing rates many Sandy survivors were encountering. In 2013, he shepherded the original $60 billion federal Sandy aid package through Congress.

Click here to watch: https://www.youtube.com/watch?v=B6HVEnn4HSE