The U.S. House of Representatives passed legislation that would scale down scheduled hikes in flood insurance rates that could have seen some homeowners paying 10 times the amount they do now. The bill, the Homeowners Flood Insurance Affordability Act of 2014, will now go to the Senate, where it’s expected to pass.
With homeowners and businesses facing premiums hikes of up to 10-fold or more as result of a 2-year-old law, the bill would limit annual increases of any individual policy under the National Flood Insurance Program to no more than 18 percent.
The legislation also instructs the Federal Emergency Management Agency to have “an affordability target” that would seek to limit the cost of a flood insurance policy to 1 percent of a home’s total coverage amount.
… The legislation was drafted in response to the Biggert-Waters Flood Insurance Reform Act of 2012, which was designed to allow premiums to rise to reflect the true risk of living in high-flood areas.
The law was passed to address a $24 billion deficit in the NFIP, which serves about 5 million people and had mounting losses, largely from Hurricane Katrina in New Orleans in 2005.
… That law did not stipulate that rates would soar by more than 10 times, but that is what happened to the surprise of lawmakers and consternation of homeowners and small businesses.