On September 30, just six months from today, the National Flood Insurance Program will expire. The National Association of Realtors® is working closely with federal regulators and members of Congress to strengthen the program and clear the way for a private market to take hold; NAR has also issued a series of principles to improve access and affordability for consumers.
But Realtors® warn the program’s September 30 reauthorization deadline is a threat to consumers.
The expiration would deal significant damage to current policy-holding property owners, as well as threaten property sales and the broader housing market.
When the NFIP expired in 2010, over 1,300 home sales were disrupted every day as a result. That’s over 40,000 every month. Flood insurance is required for a mortgage in the 100-year floodplain, but without access to the NFIP, buyers simply couldn’t get a mortgage or vital protection from the No. 1 cause of loss of property and life: flooding.
Policyholders in over 22,000 communities across the country depend on the NFIP to protect homes and businesses from torrential rain, swollen rivers and lakes, snowmelt, failing infrastructure, as well as storm surges and hurricanes. When that lifeline is cut off, the NFIP can’t issue new policies or renew existing residential or commercial policies that expire. That means current home and business owners may find their most important asset unprotected.
The REALTORS® are pushing for reform of NFIP as well as renewal. These reforms include:
• Reauthorization of the NFIP, flood mapping and mitigation. According to NAR research, the NFIP was essential to successfully completing half a million home sales in 2015.
• Inclusion of the Flood Insurance Market Modernization and Parity Act, as unanimously passed by the House 419-0 last Congress, which includes allowing those who go to the private market place; if they return to be grandfathered back in if they have to return to the NFIP. This provision is holding up policy holders from moving to affordable private insurance.
• Providing more flexibility with mitigation assistance and adjusting the increased cost of compliance provisions to enable policyholders to mitigate risk before the property floods.
• Directing the technical mapping advisory group to develop state flood mapping programs like North Carolina’s that use Light Detection and Ranging (LiDAR) technology to improve granularity at lower cost than FEMA’s flood maps.
• Aligning the NFIP’s rate setting parameters with those of the private market. According to independent actuarial research conducted for NAR, having more than one risk rate table would enable the program to charge rates closer to the risk for many properties now overpaying into the program.