Shelley Moore Capito: A fix for the flood insurance fix

Thousands of homeowners in West Virginia have been hit with skyrocketing flood insurance premiums this year after a change in federal law, forcing families to choose between paying their mortgage or paying their flood insurance premiums.

One St. Albans resident purchased his house in 2012 and expected to pay flood insurance premiums of $1,400. His flood insurance bill is now more than $12,000 a year, a clearly unsustainable and unaffordable increase.

For months I have been meeting with affected homeowners, bringing their stories back to Washington as I worked with my House colleagues on a solution to help these families.

I am so pleased that the House and Senate have passed a bill that the President signed into law last Friday ensuring that homeowners will be able to afford gradual increases in their flood insurance premiums. Let’s step back and look at how this issue came to be.

The bipartisan Biggert-Waters Flood Insurance Reform Act of 2012 was intended to shore up the National Flood Insurance Program, which is $24 billion in debt.

Biggert-Waters passed the House of Representatives 406-22 and the Senate 74-19, with every member of the West Virginia delegation voting yes.

The Congressional Budget Office, which provides Congress with projections of the potential financial impacts of legislation, estimated that the average premium under Biggert-Waters would go from $1,174 to $2,641.50 once all of the subsidies were removed.

Unfortunately, when the law was put into practice, the rates published last October far exceeded the numbers that the CBO had estimated.

Many policyholders were unaware that their flood insurance premiums were heavily subsidized, so when the rate changes prescribed in the Biggert-Waters Act began to take effect, they faced premiums as much as ten times more than their existing premiums.

Residents across West Virginia and the nation began to reach out to members of Congress to share their concerns about the astronomical increases in their flood insurance premiums – concerns that were completely justified. These rate increases were unaffordable for many West Virginia homeowners and threatened property values.

I met with affected homeowners from St. Albans and was very worried about the impact these premiums were having on their ability to afford their home. Several told me they were going to have to walk away from their houses because they could not afford their premiums and no one would buy their property with the new flood insurance premiums. One woman told me a buyer backed out of purchasing her home after learning of the new premium.

I shared stories like these with my colleagues in the House as we worked to help families facing astronomical rate increases.

Working together with both Republicans and Democrats, we were able to reach a bipartisan agreement known as the Homeowner Flood Insurance Affordability Act, which would phase in the unsubsidized premiums at a more affordable rate for policyholders. It would also ensure that the purchase of a new home does not immediately trigger a substantial flood insurance rate increase.

This corrects a grandfathering provision in Biggert-Waters that intended to protect homeowners, but instead made many properties completely unsellable, thereby destroying homeowners’ investments.

Gradually removing the subsidies is critical to maintaining a strong, financial solvent flood insurance program, but the transition must be affordable for policyholders. Going from a $1,000- a-year premium to a $10,000-a-year premium is clearly not affordable for working-class families.

I’m pleased that we could reach a bipartisan, fiscally responsible agreement that protects West Virginia homeowners while protecting taxpayers from further flood insurance bailouts.

Capito is U.S. Representative for West Virginia’s 2nd Congressional District.

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