After Irene, Lee And Sandy, Schumer Championed Major Reforms To National Flood Insurance Program For NY; Now, Many of Those Reforms Are Included in Bipartisan Legislation He Wants To Pass This Hurricane Season

Senator’s Push Comes While Hurricane Dorian Wreaks Havoc On Atlantic Coast, As Threat Of More Storms 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 homeowners in Schenectady’s Stockade, while Dorian wreaks havoc on the U.S. Atlantic coast, 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 Capital Region homeowners in the event of major flooding, like from hurricanes and spring runoff. Schumer said Capital Region homeowners are worried that Congress could allow the program to lapse in the middle of hurricane season. Second, Schumer detailed the National Flood Insurance Program Reauthorization Act of 2019 (S. 2187). Amongst other reforms, Schumer said the plan would extend the NFIP for (5) years so Capital Region homeowners can breathe a sigh of relief. He also explained how the plan would better protect policyholders from eye-popping rate hikes now on the horizon based on FEMA’s proposed plans, which he has rallied against.  

“It was eight years ago that Irene and Lee tore through Upstate New York, and flooded the Stockade in Schenectady, Amsterdam, Rotterdam Junction, and downtown Troy. Two years later, Sandy rocked Long Island and New York City. Those experiences cemented in our minds that the NFIP is a far too complex set-up that too often benefits insurance companies over homeowners,” said Senator 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.”

“Our residents who live along the Mohawk River, especially those in the historic Stockade are no strangers to flooding. I can remember touring the neighborhood and the community college with Senator Schumer in the days following Irene. I applaud the Senator for his efforts to extend and reform the National Flood Insurance Program,” said Mayor of Schenectady Gary McCarthy 

“Troy residents know firsthand the devastating impact that flooding and extreme weather can have on inland waterfront communities. In the aftermath of Hurricane Irene, Senator Schumer fought to secure federal funding to stabilize areas impacted by flooding, including the repair the City of Troy's downtown seawall, critical to protect vital infrastructure, businesses and residents along the Hudson River against future flood events. As Troy continues to attract new residents, businesses, and looks to future planning initiatives to address our environmental climate challenges, we need to ensure the continued availability of affordable flood insurance coverage through programs like the National Flood Insurance Program (NFIP) to improve the everyday lives of our residents. We applaud Senator Schumer’s continued commitment to local communities and his effort to renew and reshape the NFIP to provide longer-term protection and assistance for families and business owners in waterfront cities like Troy,” said Mayor of Troy Patrick Madden.

Amongst other reforms, Schumer said the legislative plan would extend the NFIP for (5) years so Capital Region 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 Capital Region residents who live along the Mohawk and Hudson 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.”

The NFIP currently covers approximately 5 million policyholders nationwide. As of this June, there were 2,292 NFIP policies in force between Schenectady, Montgomery, Albany and Rensselaer Counties and 2,250 contracts in force.

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 the Capital Region. 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.


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