Bipartisan achievements are rare, but one of them was the 2012 reform of federal flood insurance.
- The goal of the Biggert-Waters reform of 2012 was to require that property owners gradually adjust to paying actuarial sound rates for taxpayer-backed flood insurance.
- Millions of Americans have long paid below-market rates to cover their shoreline homes, leaving the National Flood Insurance Program under water by some $24 billion after Hurricanes Katrina and Sandy.
- The federal program has $1.3 trillion in outstanding insurance, though private insurers provide flood coverage for losses above the federal $350,000 limit and are eager to do more.
Under the reform, already-subsidized vacation homes, businesses and “severe repetitive loss” properties would see premiums rise 25% per year until they paid actuarial rates.
- Owners of primary residences with federal flood insurance would see no change unless they sold their home, in which case the new homeowner would pay the actuarial rate.
- Biggert-Waters also instructed the Federal Emergency Management Agency to collect more refined data when it conducts its periodic remapping surveys.
- This new information, such as current elevation levels, would help the federal flood insurance program more accurately price premiums.
- Property owners would pay new rates when the maps were done, a process which could take three to five years.
This should slow down the fast rising flood insurance rates in coastal areas.