Support the Toomey Flood Insurance Alternative, Which Addresses Rate Increases While Protecting the Flood Program, Taxpayers, and the Environment


New SAP Argues for Modifying, Not Delaying Reforms supports the amendment drafted by Senator Toomey to address affordability issues in the National Flood Insurance Program (NFIP). The Toomey amendment—which has no cost to taxpayers– will address the Administration’s concerns with delaying needed reforms to NFIP, while protecting policyholders from high rate increases, putting the program on sounder financial footing, and protecting the environment and those in harm’s way.

The Toomey amendment will slow down rate changes in the program so that policyholders do not see steep rate increases—rate increases are capped at 25% of current premium per year. This is a significant change from Biggert-Waters which charges full risk-based rates upon home sale and provides a five-year phase-in for those remapped into higher risk areas. The Toomey amendment will significantly lengthen the phase-in time, allowing people a much longer transition period while FEMA continues to conduct its study on affordability. This gives FEMA and Congress time to come up with a comprehensive plan to help those policyholders who cannot afford their full risk-based premium. And, the Toomey amendment is fully paid-for within the program, reducing the burden on the 99 percent of households who do not benefit from flood insurance subsidies.

S. 1926, the Homeowner Flood Insurance Affordability Act of 2014, is the wrong answer to concerns about rising flood insurance premiums. S. 1926 continues subsidies in the program regardless of need for 4 years, further undermining the program which is already deeply in debt to US taxpayers. While some people in the program cannot afford new rates, S. 1926 continues subsidies even for those who can afford to pay for the risk of where they live.

The Administration last night came out with strong concerns about the bill, saying that, “Delaying implementation of these reforms would further erode the financial position of the NFIP, which is already $24 billion in debt. This delay would also reduce FEMA’s ability to pay future claims made by all policyholders.” According to the Congressional Budget Office (CBO), S. 1926 would result in losses of $2.1 billion to NFIP and “CBO expects the program would be forced to delay payment of insurance claims until additional resources become available.”

Continuing subsidies for all policyholders will further undermine the program and further burden US taxpayers while protecting less than 1% of property owners in the US. Of 130 million housing units, only 5.6 million have NFIP policies and of those only 1.1 million are subsidized. Instead of continuing subsidies regardless of need, Sen. Toomey has put forth an alternative that provides a glide path for those who live in harm’s way, giving those policyholders time to consider mitigating their risk to protect their lives and property, well before paying full risk-based rates.