U.S. Senators Roger Wicker (R-Miss.) and Cindy Hyde-Smith (R-Miss.) today strongly encouraged the Federal Emergency Management Agency (FEMA) to delay a new flood insurance rating system that will raise premiums on a majority of policyholders.
Wicker and Hyde-Smith signed a bipartisan letter to FEMA Administrator Deanne Criswell that argues for delaying implementation of Risk Rating 2.0, the new National Flood Insurance Program (NFIP) risk rating system. Scheduled to go into effect Oct. 1, the new system is expected to result in premium increases for 80 percent of NFIP policyholders nationwide.
The letter expresses support for more accurate rating methodologies to improve NFIP solvency, but warns that moving forward with Risk Rating 2.0 will not only increase premiums on nearly 8-in-10 NFIP policyholders, but also prompt an estimated 900,000 policyholders to drop their coverage.
“We are extremely concerned about the administration’s decision to proceed forward with the implementation of this program without first determining an alternative that avoids the prospect that hundreds of thousands of families will be inclined to forfeit flood insurance on their homes,” the Senators wrote.
“This unwillingness to alter the current proposal and the potential for having a significant increase in uninsured homeowners leaves Congress in the unfortunate position of having to pass more expensive, less beneficial disaster aid on the back end each time a devastating storm strikes and homeowners are left unprotected,” the letter continued.
The letter criticizes FEMA handling of the risk rating process and expresses concerns that as hurricane season ramps up, Risk Rating 2.0 will also leave flood providers overburdened with this added responsibility of learning a new, unfamiliar, and untested rating system.
“We are troubled that FEMA has not publicly conveyed that 75% of primary residences will potentially see premium increases of 18%, the cap under law,” the letter said. “This is a sharp departure from the 6% to 12% percent average increases that primary residence policyholders have seen in recent years. In addition, we still have not received requested information and have little insight into the impact of the new program on grandfathered properties.”
U.S. Senators Bob Menendez (D-N.J.) and Bill Cassidy, M.D. (R-La.) led the letter, which Senators Cory Booker (D-N.J.), Kristen Gillibrand (D-N.Y.), John Kennedy (R-La.), Marco Rubio (R-Fla.), and Chuck Schumer (D-N.Y.) also signed.