WASHINGTON (AP) - Hundreds of thousands of homeowners facing big flood insurance premium increases would see those rate hikes delayed for years under legislation that's set to pass the Senate.
WASHINGTON (AP) — Hundreds of thousands of homeowners facing big flood insurance premium increases would see those rate hikes delayed for years under legislation that's set to pass the Senate.
The bipartisan legislation comes amid protests that it would undo hard-fought reforms passed less than two years ago to stabilize the government's flood insurance program.
The legislation scheduled for a vote Thursday would delay for up to four years huge premium increases that are supposed to phase in next year and beyond under new and updated government flood maps. It also would allow homeowners to pass below-cost policies on to people who buy their homes. People who have recently bought homes and face sharp, immediate jumps in their premiums would see those increases rolled back.
The measure faces a rockier climb in the GOP-controlled House, where Speaker John Boehner, R-Ohio, and Financial Services Committee Chairman Jeb Hensarling, R-Texas, prefer a more modest approach.
At issue is the government-run flood insurance program, in which taxpayers and other homeowners subsidize below-risk rates paid on older homes in both coastal areas threatened by hurricanes and big storms and inland areas near flood-prone rivers. A sweeping overhaul that passed virtually unanimously in 2012 was designed to make the federal flood insurance program more financially stable and bring insurance rates more in line with the real risk of flooding.
Opponents of the new legislation says it essentially unravels reforms to the much-criticized flood insurance program that put taxpayers on the hook for $24 billion in losses by subsidizing ownership in risky areas. The changes were aimed at making the program more financially sound and to quit requiring homeowners in less risky areas to essentially subsidize below-market insurance rates for homeowners in locales more at risk of flooding.
However, projections of what the new rates will be have caused anxiety among hundreds of thousands of homeowners. The loss of subsidies when homes are sold has put a damper on the real estate market and threatened home values. Some homeowners are caught in a Catch-22. They face rates that, once phased in, they won't be able to afford. But because of the higher insurance rates, they also face having to sell their properties at distressed prices.
For instance, a North Dakota couple, Allison and Kyle Skari, bought a home in Grafton a year ago and initially paid $901 a year for $100,000 of coverage. They were hit with a $4,200 bill now and tell Sen. Heidi Heitkamp, D-N.D., that they never would have bought the home. They're ineligible for a phase-in of the higher premium because they bought after the 2012 law was passed, but would get relief under the Senate bill.
The Senate measure would delay many of the changes and is likely to pass after votes on a host of amendments. One, by Sen. Pat Toomey, R-Pa., would proceed with the premium increases but cap them on most properties — including homes being sold — at 25 percent per year until the premium reflects the true flood risk. If faces almost certain rejection, though Toomey said it lines up with what the Obama administration wants. The administration said in a statement it "strongly supports a phased transition to actuarially sound flood insurance rates."
There's no relief in the offing for 1.7 million owners of second homes, who are not covered by the Senate bill and who face annual 25 percent increases — provided they owned their home before Congress overhauled the program in 2012. They say the premium hikes threaten the viability of older beachfront towns.
The program helps 5.6 million policyholders, 20 percent of whom receive subsidized policies for older homes built before communities joined the flood insurance program.