The subsidy phase out was enacted into law last year as part of major flood insurance reform legislation called the “Biggert-Waters Flood Insurance Reform Act,” which helped bring much-needed stability to the program by reauthorizing flood insurance for five years. But the law also instituted reforms to make the program more financially sound, and it’s part of that financial restructuring that Congress included the phase-out of insurance premium subsidies for a small portion of homes and businesses. As a result of the phase-out, some owners will see their share of flood insurance premiums go up starting next month, which is the start of the next federal fiscal year.
Although the number of impacted property owners is not large, for some of these owners, the increase could be significant, especially for those whose property is an a flood-prone area or an area that previously has not been designated a flood area but is now under new or newly updated flood-plain maps.
To slow down the pace of the subsidy phase-out, in part so FEMA can make sure it has the most accurate picture of flood risk in various areas, lawmakers, with NAR’s support, have introduced legislation in both the House and the Senate. The legislation has passed the House but not the Senate, and with the new fiscal year just around the corner, time is short for Congress to act.
Sen. Mary Landrieu (D-La.), who led the effort earlier this year in the Senate to get the phase-out delayed, testified at yesterday’s hearing that, separate from the burden on owners, the higher costs of flood insurance will make some homes hard if not impossible to sell. “Many of our folks are saying they can’t put their homes for sale,” she said. “They have no value.”