Legislation limiting flood insurance premium increases to no more than 18 percent a year was delivered to the White House on March 18.
The bill won final congressional approval the week before and will be signed into law by the president.
The bill’s passage culminated a nearly two-year effort to combat large premium increases for some of the 5.5 million flood insurance policyholders resulting from a 2012 law intended to make the program solvent. The 2012 law created unintended consequences for families throughout the country. The Des Moines Register published an article about the plight of an Iowa homeowner who saw her yearly flood insurance premium jump this year from $729 to $4,923.
The Homeowner Flood Insurance Affordability Act (H.R. 3370) limits yearly premium increases to an average of 15 percent per year for each of the nine property categories listed by FEMA and stipulates that no individual policyholder pay an increase of more than 18 percent per year.
The bill reinstates the flood insurance program’s grandfathering provision, meaning homes that complied with previous flood maps would not be hit with large increases when new maps show greater risk of flooding. It also ends a provision that required an immediate hike to actuarial levels when a home changes ownership – slowing home sales in many communities designated high risk by FEMA flood maps.
It provides refunds of premiums for people who purchased homes after the Biggert-Waters Reform Act became law in July 2012 and found that the change in ownership marked a sudden end to subsidized flood insurance premiums, sometimes resulting in dramatic increases when policy renewals were due.
The retention of subsidized rates in the House bill is funded by a $25 surcharge for most homeowner policyholders and a $250 fee for non-residential property or non-primary residence homeowners. However, the bill retains a provision in Biggert-Waters to eventually make the program self-sufficient by moving toward actuarial rates.
