Flood Insurance

Updated July 2014

After several active hurricane seasons and devastating floods over the past few years, flood insurance had garnered much attention from lawmakers in Congress. While there had been a lack of consensus on how to reform the National Flood Insurance Program (NFIP), leading to a series of short-term extensions, Congress acted in June 2012 to reauthorize the program for an additional 5 years. NAFCU supported this effort, as a long-term reauthorization will provide certainty and consistency for lenders and the millions of Americans who rely on this important program as a cornerstone of homeownership.

The language authorizing the extension through fiscal year 2017 was included in an unrelated conference report for the highway reauthorization bill (H.R. 4348). Both the House and Senate approved the package deal with votes of 373-52 and 74-19, respectively, and the President promptly signed it into law.

In addition to reauthorizing the NFIP for 5 years, the final deal included a provision from Senator Tom Coburn to phase out federal subsidies for flood insurance on second homes. It also included a NAFCU sought provision, which clarifies the law that allows lenders to collect premiums for force-placed flood insurance during a 45-day notification period if borrowers let policies lapse. NAFCU believes that it was an issue of fairness given that credit unions participating in the NFIP continued to assume the risk of property damage during this delinquency notification window.

It has been well over a year since the bill reauthorizing the NFIP for 5 years was enacted. Outlined in the bill are a series of premium increases designed to make the program more actuarially sound over time. The bill also requires the Federal Emergency Management Agency (FEMA) to complete an affordability impact study and share its findings with Congress. To ensure new premiums are not unaffordable and that they don’t have a drastic negative impact on the housing recovery, NAFCU has joined other industry groups in supporting a delay of premium increases until the FEMA study can be reviewed.  

In January 2014 the Senate passed legislation (S. 1926) that would delay the implementation of these premium increases until such time as further study can be done to address homeowner affordability. In March 2014 the House passed corresponding legislation that would amend the 2012 Biggert-Waters Flood Insurance Reform Act by reinstating the grandfathering of premiums to:

  • prevent catastrophic rate increases due to FEMA remapping, 
  • remove the home sale rate increase trigger, 
  • provide a refund of excess premium charges already paid under Biggert-Waters,
  • lower the cap on rate increases to 15 percent, and 
  • establish a per property rate increase limit.

The Senate took up and passed the House version of the bill and it was signed into law by President Obama on March 21, 2014.

NAFCU is pleased that thousands of American’s will no longer face the uncertainty created by the unintended consequences of the Biggert-Waters Act.  We thank both the House and Senate for their work to protect the many affected homeowners.


Flood Insurance Policy Letters

03-04-2014 NAFCU support for the amended Homeowner Flood Insurance Affordability Act of 2014 (H.R. 3370)

11-18-2013 NAFCU letter on Biggert-Waters Flood Insurance Act of 2012

11-15-2013 NAFCU joint letter on FEMA

09-18-2013 Merkley-Heller NFIP letter

5-15-12 Boehner-Pelosi NFIP Extension

5-8-12 Tester-Vitter NFIP Reauthorization Support Letter  

9-7-11 Johnson-Shelby Flood Insurance Reform Markup Letter  

7-7-11 Boehner-Pelosi H.R. 1309 Support Letter

6-8-11 Johnson-Shelby National Flood Insurance Program Comment Letter  

5-11-11 Bachus-Frank Flood Insurance and CFPB Mark-Up Comment Letter  

4-5-11 Biggert-Gutierrez Flood Insurance Comment Letter  

9-13-10 Pelosi-Boehner Flood Insurance Extension Comment Letter   

9-13-10 Reid-McConnell Flood Insurance Extension Comment Letter  

6-23-10 Pelosi-Reid Flood Insurance Comment Letter