The nation’s home builders today called on Congress to reauthorize the National Flood Insurance Program (NFIP) for five years and for the Federal Emergency Management Agency (FEMA) to address repetitive loss properties in order to ensure the long-term viability of the program.
Testifying on behalf of the National Association of Home Builders before the Senate Banking Committee’s Subcommittee on Economic Policy, Steve Feldmann, director of community affairs for the Fischer Group, one of the largest home builders in Kentucky, said, “The home-building industry depends on a strong national flood insurance program that is annually predictable, universally available and fiscally viable.”
By guaranteeing affordable flood insurance, the NFIP aims to help communities address their housing needs by making it safe, affordable and practical for consumers to purchase homes in flood-prone areas.
Unfortunately, the solvency and stability of the program is threatened by a small percentage of properties that have suffered multiple, costly flood damages. Approximately 48,000 currently insured properties have incurred two or more floods within a 10-year period. These properties, which make up only 1 percent of the current 4.4 million policyholders, cost the NFIP approximately $200 million annually and account for roughly 25 percent to 30 percent of the claims paid by the program, according to a press statement.
Although Congress recently extended FEMA’s statutory authority to issue flood insurance policies until June 30, 2004, a lapse in authority after that date may have severe repercussions for a vast number of landowners.
However, Feldmann told lawmakers that the measure should be amended to narrowly define severe “repetitive loss” properties to include only those that pose the most severe flood risks.
“By narrowing the scope of targeted properties, FEMA would be directed to address the most problematic properties first, which would quickly lead to significant savings to the NFIP and ensure its long-term viability,” said Feldmann.
He added that Congress should encourage FEMA, with the participation of state and local governments, to facilitate the redevelopment of properties so that they meet local floodplain codes and regulations, as do newly constructed homes. Additionally, in cases where FEMA makes an offer to buy a property, the owner must be paid fair market value for both the land and the structure.
Finally, Feldmann told lawmakers that any reauthorization legislation should require FEMA to notify all current policyholders of any changes to the program.
The National Association of Home Builders is a Washington-based trade association representing more than 215,000 members.
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