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After Sandy, Schumer Championed Major Reforms To National Flood Insurance Program For LI; Now, Many Of Those Reforms Are Included In Bipartisan Legislation He Wants To Pass This Hurricane Season

Senator’s Push Comes While Tropical Storm Dorian Spins In Atlantic, As Threat Of More Storms Aiming For LI Could Loom & With The NFIP Clock Set To Run Out September 30th

Schumer: This Bipartisan Plan Puts High Pressure On Congress To Do Something Meaningful This Hurricane Season 

Standing with several Long Island homeowners while Dorian strengthens in the Atlantic, U.S. Senator Charles Schumer both waged a fight and debuted a new bipartisan federal legislative reform plan to reshape the National Flood Insurance Program (NFIP) and make it work better for New Yorkers. Schumer first explained that the NFIP’s authorization will expire September 30th unless Congress extends the program that protects Long Island homeowners in the event of major flooding, like from hurricanes. He said Long Island homeowners are worried that Congress could allow the program to lapse in the middle of hurricane season. And he also debuted the National Flood Insurance Program Reauthorization Act of 2019 (S. 2187).

“Since the aftermath of Sandy, we here on Long Island have called it like it is when it comes to the NFIP: a far too complex set-up that too often benefits insurance companies over homeowners,” said U.S. Senator Charles Schumer. “I’ve led a vociferous effort to push for reforms we want and need. Well, today, many of those reforms are now included in this bipartisan legislation that I believe Congress should pass this hurricane season. And I’m here today to report that there’s a good chance we will be able to extend this program for years to come, certainly better than we’ve seen in the past few years."

Amongst other reforms, Schumer said the legislative plan would extend the NFIP for (5) years so Long Island homeowners can stop dealing with the threat that the program may lapse year after year. And he explained how the plan would better protect policyholders from eye-popping rate hikes now on the horizon based on FEMA’s proposed plans, called Risk Rating 2.0, which he has already rallied against.

Schumer warned that the looming threat of a September 30th expiration eliminates the NFIP’s authority to issue new insurance policies and existing contract policies would only be good until the end of the policies’ terms. Moreover, an expiration restricts the NFIP’s authority to borrow money from the U.S. Treasury in the event of an emergency, crippling its ability to fulfill policy obligations should a major storm spur many insurance claims. Therefore, Schumer says the program cannot be allowed to lapse.

“And we are also here today, making this reauthorization push because it would finally allow Long Islanders to exhale a little when it comes to the NFIP’s stability and predictability that is constantly in question given the continual threat of expiration, like it is now. We cannot keep getting to the edge of the proverbial cliff when it comes to reauthorizing the NFIP because it drives communities mad, and rightfully so,” Schumer added. “I want to get both of these things done this hurricane season: reauthorize the NFIP for the long-term and pass a bipartisan reform package."

“So many residents in Nassau County have made their homes and livelihoods on our beautiful waterfronts and near our coasts. As we enter peak hurricane season it is even more important to make sure that these communities are preserved from flooding and other weather related incidents,” said Nassau County Executive Laura Curran. “I commend Senator Schumer for his push to reauthorize the National Flood Insurance Program which would ensure proper protection for all of our families and business owners along our coasts."

“The Trustees, residents, and businesses of Freeport who rely on reliable flood insurance for safety and security during hurricane season support Senator Schumer’s proposed legislation that would reform and extend the National Flood Insurance Program,” said Mayor of Freeport and President of NYS Conference of Mayors Robert Kennedy. “This legislation would be a benefit to waterfront communities such as the Village of Freeport."

“There are over 20,000 NFIP policies in the Town of Hempstead that are held by approximately 65,000 local residents who could all face insurance premium rates doubling or even tripling in one year,” said Supervisor Laura Gillen. “That would absolutely devastate our middle class families and create a housing crisis throughout the South Shore of Long Island. I applaud Senator Schumer for reforming the National Flood Insurance Program to address current waste, abuse and mismanagement while simultaneously capping the amount of money that rates can go up every year."

"I am proud to stand with Senator Schumer as he introduces this much-needed legislation to curb future financial hardship and make available increased levels of coverage and mitigation for homeowners protected under FEMA’s National Flood Insurance Program,” said New York State Senator John Brooks. “It is imperative that all homeowners in high flood risk areas have an affordable coverage option and that this insurance is comprehensive and effective. This legislation not only takes the necessary step of extending coverage for all these homeowners, but it caps the annual rate hikes expected in the coming years. Just as importantly, it also covers a range of other important aspects of NFIP coverage, such as mitigation projects, additional ICC funding to enable homes to be compliant with codes and regulations, and closure of the “earth movement” loophole. I commend Senator Schumer on sponsoring legislation to address these groundbreaking expansions to NFIP coverage and look forward to continuing to work with him and other elected officials to make Long Island a safer and more affordable place to call home."

The NFIP currently covers approximately 5 million policyholders nationwide. Specifically, there are 82,489 NFIP policies in force on Long Island, including 47,248 policies in Nassau County and 35,241 in Suffolk County. Following Superstorm Sandy, approximately 144,000 policyholders filed NFIP flood claims.

Schumer explained that an active, near-normal Atlantic hurricane season is likely upon us and that there is also a 30% chance of an above-normal season, according to NOAA’s predictions. This year’s hurricane season, which officially extends from June 1 to November 30, is expected to bring about 9 to 15 named storms, with winds of 39 mph or higher; 4 to 8 of these named storms could become hurricanes with winds of 74 mph or higher, including 2 to 4 major hurricanes. Major hurricanes include categories 3, 4, or 5; with winds of 111 mph or higher.

And some of those storms could target New York State and Long Island. That’s why Schumer is working with U.S. Senator Bob Menendez of New Jersey, whose state was also devastated by Superstorm Sandy, to usher this flood insurance legislation through the Senate and the full Congress as hurricane season intensifies. As touted by Menendez, the bill’s lead, the National Flood Insurance Program Reauthorization and Reform (NFIP Re) Act of 2019 includes the following highlights:

Long-Term Certainty. Reauthorizes the NFIP for five years, providing certainty for communities.

No Steep Rate Hikes under Risk Rating 2.0. Protects policyholders from exorbitant premium hikes by capping annual increases at 9%. Currently, premiums can more than double every 4 years or less and FEMA’s new methodology called Risk Rating 2.0 will fundamentally alter premiums on policies throughout the country. This untested and unknown methodology could cause a rate shock and lead to unaffordable premiums, forcing homeowners to drop coverage or lose their homes. We saw all too clearly the negative consequences of hiking premiums after the Biggert-Waters Act of 2012 caused costs to skyrocket, hurting policyholders and disrupting the real estate market. This will put guardrails on FEMA’s new rating methodology, known as Risk Rating 2.0, and safeguard policyholders from sudden drastic rate shocks. 

Affordability for Low- and Middle-Income Policyholders. Provides a comprehensive means-tested voucher for millions of low- and middle-income homeowners and renters if their flood insurance premium causes their housing costs to exceed 30% of their Adjusted Gross Income, significantly increasing the affordability of the NFIP program.

Path to NFIP Solvency. Freezes interest payments on the NFIP debt and reinvests savings towards mitigation efforts to restore the program to solvency and reduce future borrowing.

Limits on Private Insurance Company Profits. Caps Write Your Own (WYO) compensation at the rate FEMA pays to service its own policies and redirects the savings to pay for the means-tested affordability program.

Increased Cost of Compliance (ICC) Coverage. Increases the maximum limit for ICC coverage to better reflect the costs of rebuilding and implementing mitigation projects. In addition, ICC coverage eligibility is expanded in order to encourage more proactive mitigation before natural disasters strike.

Strong Investments in Mitigation. Provides robust funding levels for cost-effective investments in mitigation, which have a large return on investment and are the most effective way to reduce flood risk. 

More Accurate Mapping. Authorizes funding for Light Detection and Ranging (LiDAR) technology for more accurate mapping of flood risk across the country, reducing confusion and generating better data.

Oversight of Write Your Own (WYO) Companies. Creates new oversight measures for insurance companies and vendors, and provides FEMA with greater authority to terminate contractors that have a track record of abuse.

Claims and Appeals Process Reforms Based on Lessons from Sandy. Fundamentally reforms the claims process based on lessons learned in Superstorm Sandy and other disasters, to level the playing field for policyholders during appeal or litigation, bans aggressive legal tactics preventing homeowners from filing legitimate claims, holds FEMA to strict deadlines so that homeowners get quick and fair payments, and ends FEMA’s reliance on outside legal counsel from expensive for-profit entities.

Better Training. Provides for increased training and certification of agents and adjusters to reduce mistakes and improve the customer experience.

The bipartisan bill is also cosponsored by Senators Bill Cassidy (R-La.), Cory Booker (D-N.J.), John Kennedy (R-La.), Elizabeth Warren (D-Mass.), Marco Rubio (R-Fla.), Kirsten Gillibrand (D-N.Y.), Jack Reed (D-R.I.) Chris Van Hollen (D-Md.) and Cindy Hyde-Smith (R-Miss.).

Schumer has long pushed for reforms as part of a long-term reauthorization of the flood program, which included: an NFIP that provides homeowners with flood protection for a stable and fair cost, more accurate flood maps that utilize the best technology and sound data, stricter controls placed on lawyers who seek to defend insurance companies against homeowners, and better oversight of insurance companies participating in the NFIP.

Additionally, Schumer has criticized the administration’s proposed Risk Rating 2.0 plan, and has demanded that they halt the plan, which would begin to assess properties individually according to what they call ‘logical rating variables.” Schumer has said that plan could potentially impact millions of single-family policyholders of public flood insurance, and yet, Congress has not been adequately consulted.  

Schumer has long fought to protect NFIP policyholders throughout New York. In 2015, Schumer even urged FEMA to scrap the decades-old Write-Your-Own (WYO) insurance model from the NFIP and move forward to overhaul the process entirely so that flood insurance policyholders in New York and across the country benefited from consistent coverage and providers that were not incentivized to fight their claims. The WYO model has been in place since 1983 and allows participating insurance companies to write and service policies in their own names. While the WYOs are subject to NFIP’s rules and regulations, Schumer explained that often times the companies are servicing flood insurance claims with the same profit-driven mentality as they would have for their other lines of business, and as a result unfairly reducing payments to homeowners.