Efforts to Delay the Gradual Elimination of Flood Insurance Premium Subsidies [March 3, 2014] [open pdf - 451KB]
"On July 6, 2012, President Barack Obama signed into law the Biggert-Waters Flood Insurance Reform Act of 2012 (Division F, Title II, P.L. 112-141; 126 Stat. 918) to reauthorize the National Flood Insurance Program (NFIP) through September 30, 2017, and make significant program changes designed to make the program more financially stable. To achieve long-term financial sustainability and ensure that flood insurance rates more accurately reflect the actuarial risk of flooding, the new law gradually phases out subsidized premiums and grandfathered policies for approximately 19% (or about 1.1 million policyholders) of the program's total number of policyholders. Under the Biggert-Waters Act, the Federal Emergency Management Agency (FEMA) began imposing premium rates based on the property's 'elevation rate,' which, in turn, is based on the property's lowest floor elevation relative to the Base Flood Elevation (BFE) for existing homes and businesses built prior to the community's initial Flood Insurance Rate Map (FIRM). Since 1973, these so-called pre-FIRM structures had been shielded from higher premium rates. The National Flood Insurance Act of 1968 (P.L. 90-448; 82 Stat. 572) included a provision for subsidizing pre-FIRM structures by charging less than full risk-based premiums for flood insurance because their construction took place before the application of the NFIP construction standards. These structures are also exempt from the NFIP's mitigation requirements unless they become substantially damaged or substantially improved."
CRS Report for Congress, R43395