Biggert-Waters and NFIP: Flood insurance should be strengthened.

The reform of the reform bill on flood insurance was signed by the President yesterday. The key provision is that FEMA must complete an affordability study prior to rolling out rate increases that would reflect the new flood maps and, thereby, more accurately assess the risk of flooding. Click title for link to the Slate article.

Legislators wanted significant amendments. Under the direction of New Jersey Sen. Robert Menendez and New York Rep. Michael Grimm, the Homeowner Flood Insurance Affordability Act (HR 3370) started moving through Congress early this year. This reform to the Biggert-Waters law rolls back the expiration of grandfathered policies and delays the more dramatic premium increases, at least until FEMA completes an affordability study—a process that will take a while. It also puts an annual cap on premiums that has analysts very concerned that the NFIP will never regain or sustain fiscal balance.

This reform-of-the-reform does not entirely gut the bill, but it eliminates the toughest provisions—and it calls a time-out while lawmakers argue over affordability criteria. For its part, FEMA, having seen plenty of partisan combat since Katrina, is trying to remain more or less neutral, accepting the logic of reform put forward by Biggert-Waters while also agreeing that premium increases should not unduly harm homeowners.