Flood Insurance Rate: U.S. Congress Approves Bill to Protect Consumers and Enterprises from Flood Premium Hikes

0
34

Flood Insurance Rate: U.S. Congress Approves Bill to Protect Consumers and Enterprises from Flood Premium HikesIt was a refreshing scene in Washington, D.C. on Tuesday, as the U.S. House of Representatives were mostly in agreement to pass a bill that would protect U.S. homeowners and businesses from stratospheric flood insurance premium increases.

Bipartisanship was in the air pn Tuesday, as the Republican-dominated Congress had voted 306-91 to send the Homeowners Flood Insurance Affordability Act of 2014 to Senate for what could be official approval. The bill’s goal is to cap any yearly increases of insurance policies to no more than 18 percent, in the light of consumers and businesses expected to suffer through premium increases by double digits going forward.

In addition, the bill requires the Federal Emergency Management Agency to institute an “affordability target” that would constrain the cost of flood insurance policies to one percent of the total coverage amount of a given home or establishment.

This new reform was drafted to counter the Biggert-Waters Flood Insurance Reform Act of 2012, which would have allowed insurance premiums to be commensurate to the actual risk of living in areas that are prone to flooding. It was also passed with a $24 billion deficit in the National Flood Insurance Program in mind; this program has suffered through numerous losses in recent years, including losses that stemmed from Hurricane Katrina in 2005.

The stakes were quite high given more recent incidents, as Democrats and Republicans had put their differences aside to have the bill passed in Congress. In 2012, Superstorm Sandy had resulted in thousands of individuals filing and businesses for insurance claims, and at the time of those filings, most were not cognizant of the possibility of premiums rising more than tenfold, something that resulted in mass dissatisfaction and incertitude among those affected by the storm.