Flood insurance continues to be a worrisome issue
Flood insurance has become a hot topic in the U.S. with rates on the rise and FEMA’s revising of flood maps, which could have a costly impact on homeowners throughout the country. As the cost of flood insurance continues to attract attention, finding ways to solve this problem are gaining momentum. New legislation is expected to reach the U.S. Senate next week concerning the state of the country’s flood insurance program and the Biggert-Waters Flood Insurance Reform Act of 2012.
Federal law calls for higher rates
The Reform Act of 2012 was meant to resolve many of the issues that the National Flood Insurance Program (NFIP) had been facing over the past several years. The most significant of these issues have to do with the program’s financial failings and the danger that it would be unable to pay claims generated by serious natural disasters. One of the provisions of the law increases the premiums of flood policies significantly, while also eliminating some of the discounts and subsidies that policyholders had access to.
New legislation seeks to delay rate increases
House Resolution 3218 has begun making its way through the federal legislative process and could help alleviate the issues associated with the flood insurance reform law. The legislation is called the Flood Insurance Fairness Act of 2013 and seeks to delay the increase in insurance premiums until the completion of a study regarding the affordability of coverage. The legislation is expected to allow time for the impact of higher flood insurance rates to be better understood so that more adequate reforms can be made to the federal insurance program.
Financial impact of natural disasters may derail new legislation
The legislation has managed to attract strong support from politicians, but how it will fare in the Senate is impossible to predict. The financial troubles of the National Flood Insurance Program are severe enough to cause serious concern among federal lawmakers. If a natural disaster with the power of 2005’s Hurricane Katrina or 2012’s Hurricane Sandy were to strike, the federal program is unlikely to be able to handle the claims generated by such an event, placing significant financial burden on homeowners and the federal government.
