In congressional testimony today, the National Association of Realtors urged Congress to pass legislation that would delay the implementation of unexpectedly high rate increases precipitated by a flood insurance law passed last year.
NAR was a vocal supporter of the Biggert-Waters Flood Insurance Reform Act of 2012, which extended the National Flood Insurance Program for five years and ended uncertainty the trade group said was stalling 40,000 home sales every month.
But the law had unintended consequences, NAR said: “sudden and dramatic” flood insurance premium increases.
“No one could have imagined rate increases of this magnitude. During the debate over Biggert-Waters, the prevailing wisdom was that actuarial rates would range from hundreds to thousands of dollars, not tens of thousands of dollars or the 1,000 percent rate increase shocks that we are learning about now,” said Moe Veissi, NAR’s 2012 president, in a statement. He testified before the U.S. House Financial Services Subcommittee on Housing and Insurance today.
Therefore, NAR now recommends Congress pass the bipartisan “Homeowner Flood Insurance Affordability Act,” which would delay further implementation of major rate changes until the Federal Emergency Management Agency (FEMA) completes an affordability study required by Biggert-Waters; creates an office of the advocate to investigate flood insurance rate increases; and reports to Congress with proposed solutions to any identified problems, NAR said.
In the meantime, NAR called on FEMA not to wait for congressional action and to put on a national summit with key stakeholders to develop a longer-term affordability solution.