Press Release

Gillibrand, Menendez, Colleagues Introduce Comprehensive Flood Insurance Reform Bill To Extend National Flood Insurance Program And End Systemic Problems Plaguing The System

Jul 16, 2019

Washington, DC – Today, U.S. Senators Kirsten Gillibrand (D-NY) and Bob Menendez (D-NJ), along with eight Senate colleagues, announced bipartisan legislation to extend and reform the National Flood Insurance Program (NFIP). More than five million American families depend on the NFIP for affordable insurance to help prepare against flooding damage and to help rebuild after flooding. Unless Congress acts, the NFIP will expire on September 30th, 2019. This new legislation would extend the NFIP for five years and reform the program to make it more sustainable, affordable,and efficient. Gillibrand and Menendez’s legislation would make flood insurance more affordable for policyholders, refocus the program to fund more prevention and mitigation efforts to protect properties from flood risk, and reform the broken claims process and protect against the types of unscrupulous practices that defrauded New Yorkers after Superstorm Sandy.

“Our National Flood Insurance Program is broken, and New Yorkers who live and work in coastal communities are demanding that Congress solve this problem now. With hurricane season already here and sea levels rising on our coasts, we must act quickly to fix the program and give Americans the relief they need,” said Senator Gillibrand. “I was proud to help write this bipartisan bill to make our National Flood Insurance Program stronger, and I urge all of my colleagues to join me in fighting to pass it.”

“We’ve witnessed the NFIP fail our constituents in their greatest hour of need and, after countless reauthorizations that simply kick a broken can down the road, we want real reform,” said Sen. Menendez, a senior member of the Senate Banking Committee that oversees the NFIP and chair of the Sandy Task Force. “With the National Flood Insurance Reauthorization and Reform Act of 2019, we can make the program more sustainable, more affordable, hold FEMA and private contractors accountable, and invest in the kind of forward-looking mitigation that reduces risk and prevents costly flooding in the first place.”

Gillibrand is an original cosponsor of the National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019. This legislation is sponsored by Senator Menendez and also cosponsored by Senators Bill Cassidy (R-LA), Cory Booker (D-NJ), John Kennedy (R-LA), Marco Rubio (R-FL), Elizabeth Warren (D-MA), Rick Scott (R-FL), Jack Reed (D-RI), and Shelley Moore Capito (R-WV). Companion legislation will be introduced in the House of Representatives by Representatives Frank Pallone, Jr. (D-NJ-06) and Clay Higgins (R-LA-03).

Along with extending the NFIP for five years, this new legislation would make the following reforms to help address systemic problems within the NFIP:

  • Cap Annual Premium Increases at 9 Percent: Currently, premiums can more than double every 4 years or less and FEMA’s new methodology (Risk Rating 2.0) will fundamentally alter premiums on every policy in the country. This untested and unknown methodology could cause a rate shock and lead to unaffordable premiums, forcing homeowners to drop coverage or lose their homes. The NFIP Re Act of 2019would place protections against sudden rate shocks for policy holders and implement regulations for FEMA’s new rating methodology.
  • Provide Vouchers for Millions of Low- and Middle-Income Homeowners and Renters:Vouchers would be provided for homeowners and renters if their flood insurance premium causes their housing costs to exceed 30 percent of the Adjusted Gross Income.
  • Refocus on Flood Mitigation Efforts: TheNFIP Re Act of 2019 would freeze interest payments on the NFIP debt while reinvesting savings towards mitigation efforts to restore the program to solvency and reduce future borrowing.  
  • Make Strong Investments in Flood Mitigation: The bill would provide robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk. 
  • Better Reflect Rebuilding and Mitigation Costs: In order to better reflect the costs of rebuilding and of implementing flood mitigation projects, this bill would increase the maximum limit for ICC (Increased Cost of Compliance) coverage and expand ICC coverage eligibility to encourage more proactive mitigation before natural disasters.
  • Authorize Funding for More Accurate Mapping of Flood Risk: The bill would authorize funding for Light Detection and Ranging (LiDAR) technology, which would help create more accurate mapping of flood risk across the country, reducing confusion and generating better data.
  • Place Limits on Profits for Private Insurance Companies: Write Your Own (WYO) compensation policies would be capped at the rate that FEMA pays to service its own policies.
  • Create Oversight of Write Your Own (WYO) Companies: The bill would create new oversight measures for insurance companies and vendors and provide FEMA with greater authority to terminate contractors that have a track record of abuse.
  • Implement New Claims and Appeals Process Based on Lessons from Superstorm Sandy: The bill would fundamentally reform the claims process based on lessons learned in Superstorm Sandy and other disasters to level the playing field for policyholders during appeal or litigation, ban aggressive legal tactics preventing homeowners from filing legitimate claims, hold FEMA to strict deadlines so that homeowners get quick and fair payments, and end FEMA’s reliance on outside legal counsel from expensive for-profit entities.
  • Provide Increased Training: The bill would provide for increased training and certification of agents and adjusters to reduce mistakes and improve the customer experience.