New Jersey lawmakers are concerned about a reauthorization of the National Flood Insurance Program they fear could result in a dramatic spike in flood insurance premiums for Two River-area homeowners.
A June 12 House bill to reauthorize the National Flood Insurance Program calls for premiums to rise annually up to 18 percent for primary homeowners and 25 percent for owners of vacation homes, commercial property owners and owners of “compromised total loss” properties until actuary rates are met.
Named the National Flood Insurance Program Reauthorization Act of 2019, the bill by U.S. Rep. Maxine Waters (D-CA) was unanimously approved by the House Financial Services Committee.
The bill would provide a five-year reauthorization of the program, which is due to expire Sept. 30. Following a series of historic and devastating storms around the country, including Super Storm Sandy and Hurricane Irene, the program was reported to be $25 billion in debt as of July 2018.
Without increases to flood insurance premiums, that debt could continue to rise, making the program unsustainable. If the program lapses, the Federal Emergency Management Agency would continue to adjust and pay claims as premium monies enter the National Flood Insurance fund and reserve fund. If those funds are depleted, claim payments would have to wait until sufficient premium monies are received.
But how high should premiums be permitted to go?
Last week, U.S. Sen. Robert Menendez (D-NJ) joined U.S. Rep. Frank Pallone (D-6) and other lawmakers at a Capitol press conference to announce bi-partisan flood insurance reform legislation called the National Flood Insurance Program Reauthorization and Reform Act of 2019, which would also reauthorize the program through 2024, but cap allowable annual premium increases to 9 percent.
The bill also aims to trim administrative fees paid to private insurance companies, which would create a cost savings for the program without a reduction of services.
“It’s not affordable,” Menendez said of Waters’ bill in a July 16 press conference. “In fact, homeowner premiums will likely double ever y four years and possibly even sooner than that.”
The bill also allows property owners located in flood-prone areas to borrow at low interest rates as a means to proactively elevate their homes rather than reacting to flood damages. It also limits how much private insurers can profit on writing policies.
Pallone said the measure is to ensure the industry isn’t making “hand-over-fist profits at the expense of program sustainability.”
“After Super Storm Sandy, insurance companies outright refused to make good on their promises to policyholders and instead pointed to the fine print while denying families who had lost everything,” Pallone said. “New Jerseyans deserve a long-term flood insurance program reauthorization that improves the program based on the realities of major weather events like Sandy.”
Middletown Township administrator Anthony P. Mercantante said he hopes whatever legislation is adopted will begin to treat residents in the coastal North Middletown section of the municipality fairly.
Thanks to a levee that runs adjacent to Pews Creek, extending in a westerly direction from Port Monmouth Road near Monmouth Cove Marina to Route 36, “virtually no homes were flooded” during Super Storm Sandy, Mercantante said. But homeowners there still pay high flood insurance premiums.
“They’ve still had to pay and now they’ll have to pay higher rates. It’s something we’ve been fighting about with the flood insurance program since 2009. It’s not fair to the North Middletown community. They receive no credit for being protected by the flood levee and the levee obviously works,” Mercantante said.
FEMA’s new Risk Rating 2.0 mapping system will help customers better understand their flood risk and provide them with more accurate rates based on their unique risk, the agency said.
But George Kasimos, who heads the Toms River-based organization Stop FEMA Now, is dubious, calling the last mapping change after Super Storm Sandy “a mess.” “Now they’re changing the process again and it could hit property owners in the Bayshore hard. Their mapping system hasn’t gotten it right yet,” said Kasimos.
Berkeley, Brick, Lacey, Toms River and Point Pleasant recently passed resolutions denouncing aspects of the House bill for the potential premium hikes and proposed mapping updates, which they say could result in higher rates for those situated closer to bays, oceans and rivers.
“In some cases around the state you’re talking about premiums that can increase by $3,000 a year. And if you try to sell that proper ty you’ll have a hard time trying to find someone who will buy it,” said Kasimos, who is also a real estate agent and broker. “It’ll be a game of musical chairs and the last guy is going to be sitting in a home he won’t be able to sell.”
