PIA Urges Reforms in Flood Insurance Hearing Testimony

The House Financial Services Committee Subcommittee on Housing and Insurance today held a hearing entitled Encouraging Greater Flood Insurance Coverage in America. This hearing focused not just on the National Flood Insurance Program (NFIP) but also on the overall accessibility and availability of flood insurance, as well as ways to increase flood insurance coverage across the country.

This is the first hearing in the House of Representatives focused on flood insurance of the 118th Congress and the first since a May 2022 hearing on NFIP reauthorization and reform, at which PIA of Puerto Rico National Director and current PIA National Vice President, Ariel Rivera-Miranda, testified on PIA’s behalf.

PIA submitted testimony for the record for this hearing, noting our support for the NFIP because it provides critical flood insurance coverage and post-disaster relief to residential and commercial property owners. We also highlighted our support for H.R. 1392, which would extend the NFIP beyond its current expiration date of September 30, 2023, to December 31, 2024. H.R. 1392 was recently introduced by Rep. Warren Davidson (R-OH), the chairman of this subcommittee. Passage of this bill would provide Congress with additional time in which to consider various ways to reform the program and reauthorize it long term. In our testimony, we note that we would also support a longer-term “clean” extension of the program (without reforms) to give Congress additional to agree on reforms.

Encouraging greater flood insurance coverage in America will require effort from all segments of the insurance market, along with the cooperation of policymakers. The goal is to achieve greater participation in the NFIP and strengthen the private market for flood insurance. In addition to passing a long-term reauthorization of the program, Congress could increase the number of flood insurance policies in force by deploying several public policy tools that could both facilitate greater NFIP participation and strengthen the private flood insurance market.

To that end, one of PIA’s top priorities for any long-term NFIP reauthorization is the inclusion of a continuous coverage provision like the one contained in H.R. 900, the Continuous Coverage for Flood Insurance Act, a bipartisan bill recently introduced by Reps. Kathy Castor (D-FL) and Blaine Luetkemeyer (R-MO). Continuous coverage would allow policyholders to move between the private market and the NFIP without penalty.

PIA’s testimony noted that we support FEMA’s new pricing methodology because it provides property owners with a more accurate estimate of their flood risk than was previously available to them. However, numerous times, we have demanded that FEMA provide greater transparency in the prices produced by Risk Rating 2.0, particularly when, as is too often the case, those prices are at odds with the expectations of expert flood insurance agents. We are also committed to the creation of an affordability framework to ensure that NFIP policyholders are not priced out of their homes as their rates increase along the glide path toward full risk.

These reforms will attract and retain policyholders and provide everyone associated with the program the certainty needed to remain in the business of flood insurance. PIA will continue to urge Congress to work towards a long-term NFIP reauthorization that includes 1) a continuous coverage provision, 2) a requirement that FEMA increase its transparency around its new pricing methodology, 3) an affordability framework, and 4) continued support of the independent agent community, without which increasing the number of policies in force will remain an elusive goal.

Beyond the hearing today, as the effort to reauthorize the NFIP continues this Congress, PIA will also caution against provisions that would harm independent insurance agents’ involvement in the NFIP. Specifically, PIA will oppose any legislation that includes proposals like cutting the Write Your Own Reimbursement Rate or creating an online NFIP sales model.

We look forward to working with Congress on flood insurance issues going forward.