News Mississippi
Mississippi delegation favors flood insurance reform
By Alex Paton
Several pieces of legislation were introduced in the U.S. Senate last week which would benefit Mississippians. Three separate bills were introduced by Senator Roger Wicker to address various parts of the current National Flood Insurance Program and another bill was introduced [by Senator Cindy Hyde-Smith], which would reauthorize the NFIP for five years and would also bring about more than 40 reforms to ensure affordable premiums, promote flood mitigation projects like levees, and give the public a greater say in NFIP policies.
“I’ve heard from Mississippians from the Gulf Coast to the Delta and the Tenn-Tom to Rankin County, who are justifiably worried by the prospect of unaffordable flood insurance and continued NFIP uncertainty,” said Hyde-Smith, lead co-sponsor of the reauthorization bill. “It is time for Congress to embrace commonsense reforms that emphasize solvency and affordability for policyholders while allowing for robust input from local communities.”
Current NFIP authorization expires on September 30, 2019. In the past two years, the program has operated under 10 short-term extensions.
“The ongoing flooding in the Delta and the deluge of water brought by Hurricane Barry are reminders that Mississippians need access to affordable, quality flood insurance protections,” Wicker said. “Congress should pass a long-term reauthorization of the NFIP. I will advocate for these proposals during that discussion to improve the program through more accurate maps, small business relief, better information for consumers, and other priorities important to Mississippi.”
As part of Hyde-smith’s co-sponsored legislation, a new community mapping appeals process dealing with flood maps was created by the Federal Emergency Management Agency (FEMA). Using the process, FEMA would be incentivized to “get it right the first time” and repay policyholders for contributing to the body of flood risk knowledge. It also directs FEMA to factor nonfederal flood control structures, like levees, when determining flood risk zone designations.
“We’re trying to flip the script on mitigation projects, from being reactionary to being proactive,” said Hyde-Smith. “This is the first bill that provides a significant amount of real money for pre-disaster mitigation, which would give taxpayers a better return on investment. It is far more expensive to rebuild after a disaster than it is to do everything you can to protect yourself beforehand.”
According to FEMA and the Congressional Budget Office, mitigation programs save the American public an estimated $5.2 billion dollars annually. There is a $6 future savings gain for every dollar spent on mitigation—and a 54:1 or higher return on community-wide projects.
Mississippi Insurance Commissioner Mike Chaney says the bill would also increase NFIP participation among homeowners and small businesses by capping the premium rate increases to nine percent. Hyde-Smith adds that under the current system, rates can rise up to 25 percent annually in perpetuity.
“The rate cap of 9% is extremely important to the policyholder in the state of Mississippi because it prevents runaway costs, the other thing that we are very concerned about was the availability of the claims data, which we now have in our possession in Mississippi, and we wanted to be able to have private flood insurance in lieu of NFIP so that banks would accept private flood,” said Chaney. “This is extremely important to the real estate market within the state and we’ve been able to press that which will keep real estate transactions available for the consumers of the state. If you don’t have flood insurance, even if you’re on high ground, you can’t sell or buy a piece of property that has been financed or has a mortgage on it.”
Chaney said the proposed reauthorization bill is expected to pass both the Senate and the House and says all of Mississippi’s delegation in the House is on board with the NFIP reform legislation as well. He added that the Insurance Department is comfortable with the bill that has been submitted.
“We don’t see anything in the bill that would give rise to concerns or anything in it that would be detrimental to the state of Mississippi itself,” Chaney said.
“Runaway premium hikes under the current system undermine and weaken the flood insurance program, which increases the burden on taxpayers to pay for federal disaster assistance to cover uninsured losses,” Hyde-Smith said. “There’s no point in having flood insurance if nobody can afford it. This bill would help meet the equally important goals of solvency and affordability.”
The reauthorization bill also includes reforms to tackle agency mismanagement, unsustainable debt service costs, and contractor profiteering.