TheWeekInCongress.com
Week Ending June 25 2004
S 2238 Amending the National Flood Insurance Act of 1968
BRIEF
The National Flood Insurance Program is a function of FEMA, the Federal Emergency Management Administration.
Buildings in areas where flood damage is possible are often covered by the Federal flood insurance program and without regulation some properties continue to be flooded and continue to receive payment for their claims. The bill would address that problem by giving grants to states to be used to relocate, raise or take means necessary to end the cycle of repetitive claims.
One common anecdote is the $125,000 home in Texas that has received over $800,000 in flood damage payments over several years.
Sponsor: Senator Jim Bunning (R-KY)
Vote: Passed Senate by Unanimous Consent. Passed House by voice vote.
Cost to the taxpayers: The National Flood Insurance program spends around $300 million yearly with an estimated 25 to 30 percent of the payout to repeat claims.
MORE INFORMATION
The Congress finds that the national flood insurance program insures approximately 4.4 million policyholders and that approximately 48,000 properties currently insured under the program have experienced, within a 10-year period, 2 or more flood losses where each such loss exceeds the amount of $1,000. Approximately 10,000 of these repetitive-loss properties have experienced either 2 or 3 losses that total more than the cost of the building or 4 or more losses, each exceeding $1,000.
According to congress repetitive-loss properties constitute a significant drain on the resources of the national flood insurance program, costing about $200 million annually. Those properties comprise only 1 percent of currently insured properties but may account for 25 to 30 percent of claims.
The vast majority of repetitive-loss properties were built before local communities managed their floodplains under the program. They are eligible for subsidized flood insurance.
Mitigation of repetitive-loss properties through buyouts, elevations, relocations, or flood-proofing will produce savings for policyholders under the program and for Federal taxpayers through reduced flood insurance losses and reduced Federal disaster assistance.
While some property owners take advantage of the program that allows subsidized flood insurance without requiring mitigation action, others are trapped in a vicious cycle of suffering flooding, then repairing flood damage, then suffering flooding, without the means to mitigate losses or move out of harm's way, Congress concludes..
The government will first try to mitigate high-priority repetitive-loss properties. By shifting more of the recovery costs to property owners who choose to remain vulnerable to repetitive flood damage they figure the property owner would take actions that reduce loss of life and damages and benefit the program financially.
A pilot program would be established ‘under which the Director of the Federal Emergency Management Agency (FEMA) may provide financial assistance to States and communities for taking actions to mitigate flood damage to severe repetitive-loss properties and losses to the National Flood Insurance Fund (the Fund) from such properties.'
‘Severe repetitive loss property" would mean, in the case of property consisting of one to four residences, property that has incurred flood-related damage for which four or more separate claims payments exceeding $5,000 each or totaling more than $20,000 have been made. Also included in the definition would be property for which at least two separate claims payments have been made that cumulatively exceed the value of the property.
In the case of property consisting of five or more residences, mitigation plans would be determined by the Director (of FEMA) as provided by regulation.##