Last week, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing examining the value of disaster mitigation as a means of strengthening the American insurance markets. Witnesses included representatives of the American Property Casualty Insurance Association (APCIA); the Center for Industrial Progress, and the Insurance Institute for Building and Home Safety (IBHS).
Witnesses cautioned that proposed cuts to the Federal Emergency Management Agency (FEMA) and its insurance programs could increase consumers’ insurance costs. Some Banking Committee members emphasized the risk posed by climate change and its potential impact on insurance markets. They expressed interest in evaluating mitigation strategies as a means of stabilizing the markets. Among Banking Committee members, there appeared to be a broad consensus that current insurance costs are unsustainable.
On the eve of the hearing, Senate Banking Committee chair Tim Scott (R-SC) joined Sen. Brian Schatz (D-HI) in reintroducing the Repeatedly Flooded Communities Preparation Act. (Sen. Scott previously introduced the bill in both the 117th and 18th Congresses.) The bill seeks to end the cycle of endlessly repeated flooding and rebuilding across the country by requiring communities that participate in the National Flood Insurance Program (NFIP) to assess their flood risks and develop and implement publicly available mitigation plans. The bill would also require FEMA to consider a community’s degree of compliance with mitigation strategies when issuing flood risk mitigation grants.
PIA supports the Repeatedly Flooded Communities Preparation Act because it will incentivize community adoption of vital flood mitigation strategies, which will ultimately protect consumers from the economic losses associated with floods and other natural disasters. The bill could also improve the long-term financial solvency of the NFIP by reducing the frequency and severity of future claims. PIA agents who sell NFIP policies rely on the program’s survival as part of their businesses. Likewise, policyholders, whether in high-risk areas or not, rely on agents to provide them with a wide variety of carrier options, both within and outside the NFIP. Strengthening the NFIP financially will encourage independent agents and policyholders to remain in the program.
The hearing underscored the importance of effective mitigation policies like those contained in the Repeatedly Flooded Communities Preparation Act to improve community resilience and stabilize insurance markets.