Jan 31 2014

Shelby Opposes Dismantling of Flood Insurance Reform

If my colleagues are hoping to decimate the federal flood insurance program, then they should support this legislation because that is exactly what it will do.

 WASHINGTON, D.C., Wednesday, January 29, 2014 – U.S. Senator Richard Shelby (R-Ala.), Vice Chairman of the Appropriations Committee, today delivered a speech on the Senate floor in firm opposition to S. 1926, a bill that would dismantle critical reforms to the National Flood Insurance Program (NFIP) that were passed into law just two years ago.

 “One of the goals of the reforms was to ensure that the 5.6 million flood insurance policyholders could collect on their policies if they were ever to suffer a flood loss – something that cannot be guaranteed by a flood insurance program that is currently $25 billion in debt,” Shelby said in his speech.  “The program is bankrupt and only operating by the grace of the American taxpayer.”

 Shelby, a former Chairman and Ranking Member of the Banking, Housing, and Urban Affairs Committee; spent several years working in a bipartisan manner toward necessary reform of the NFIP.  In today’s speech, he urged measured and specific fixes to any issues in implementing the reforms:

 “I concede that there are some issues with the implementation of Biggert-Waters that were not anticipated.  But, those can be addressed in discrete ways that do not require the ‘stop everything’ approach that the proponents of this legislation are advocating. 

"Congress is often criticized for being unable to fix anything.  Well, in 2012 we took a very significant step towards fixing the National Flood Insurance Program.  And now, we have a bill before us that will undo virtually every reform we enacted less than two years ago.


The full text of Shelby’s speech is as follows:

M. President, I rise today in opposition to S. 1926.

In July of 2012, after over seven years of negotiation, the Congress finally passed Biggert-Waters, the first significant flood insurance reauthorization bill since the creation of the program in 1968.

One of the goals of the reforms was to ensure that the 5.6 million flood insurance policyholders could collect on their policies if they were ever to suffer a flood loss – something that cannot be guaranteed by a flood insurance program that is currently $25 billion in debt.

The program is bankrupt and only operating by the grace of the American taxpayer.

Historically, flood insurance premiums have not covered costs because the program was not designed to be actuarially sound.  Essentially, it was flawed from the beginning.

The National Flood Insurance Act of 1968 authorized subsidized rates to encourage participation in the flood insurance program, especially for properties in high-risk locations.

Biggert-Waters changed all of this by requiring that the program be actuarially sound, that flood insurance rates reflect actual risk, and that the program eliminate its debt.

The sponsors of the legislation before us have said that from the moment Biggert-Waters was signed into law by the President, they began working to roll-back the reforms. 

Before they had any clear knowledge of how the changes would be implemented; how the mapping would affect homeowners; how flood insurance rates would change; or, who might be pulled into the program and who might be pushed out.

If my colleagues are hoping to decimate the federal flood insurance program, then they should support this legislation because that is exactly what it will do.

However, if they are looking to address the unintended consequences of Biggert-Waters then we should take a more measured approach.

If there are affordability concerns that they are seeking to address, then we should find a way to address them.

If they are attempting to address economic impacts that were not contemplated in Biggert-Waters, then we should find alternative approaches that minimize those impacts.

If they believe that the rate at which Biggert-Waters phases in risk-based premiums needs to be reconsidered, then we should discuss alternative increases.

Unfortunately M. President, this legislation does not specifically address these issues.

S. 1926, coupled with the provision that the sponsors included in the recently passed Omnibus Appropriations Act, will stop ALL changes to the federal flood insurance program.

These efforts will ensure that mapping revisions do not move forward, that premium increases are halted and, even more disturbing, that homeowners never truly learn their flood risk.

People deserve to know the cost and risks of where they live.

And, M. President, taxpayers deserve to have those who choose to live in harm's way assume their own risk.

The proponents of this legislation want to continue to burden an already over-burdened and bankrupt federal flood insurance program.

They are not seeking to address a few, discrete problems with the flood insurance reforms passed in 2012.  Make no mistake; they want to stop it all.

I concede that there are some issues with the implementation of Biggert-Waters that were not anticipated. 

But, those can be addressed in discrete ways that do not require the “stop everything” approach that the proponents of this legislation are advocating.

Congress is often criticized for being unable to “fix” anything.  Well, in 2012 we took a very significant step towards fixing the National Flood Insurance Program.

And now, we have a bill before us that will undo virtually every reform we enacted less than two years ago.

M. President, I urge the proponents of the bill to follow regular order and take this bill through the Committee process where it can be debated and amended.

Absent that, I urge my colleagues to join with me in rejecting this legislation in favor of a more measured approach which will preserve what is needed in Biggert-Waters and change only that which needs to be changed.

Thank you, M. President.

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