NAR and many lawmakers in Congress are pushing for a time-out in the federal government’s efforts to eliminate flood insurance subsidies over time and phase in premium rates that reflect properties’ actuarial risk of flooding. NAR’s Call for Action this week to its members is part of that effort.
But it’s not just hikes in insurance premiums that’s fueling this push by NAR and others to slow things down; it’s the sometimes wildly divergent and uncertain way insurers are assessing new premium rates. As NAR Past President Moe Veissi said in eye-opening testimony before a House subcommittee yesterday, property owners are sometimes getting half a dozen different premium quotes for their property, sometimes even from agents in the same company.
“The law has proven complicated and difficult to implement,” Veissi said in his testimony.
The former association president shared reports from NAR members across the country of some property owners seeing big increases in their flood insurance costs even though their property has never flooded and in some cases their community has never flooded or has instituted community-wide flood mitigation efforts.
The confusion in the market is having dire consequences on the ground. “We’re seeing for-sale signs today that say ‘No insurance impact on this property,’” he said. “That tells us very quickly that folks are making determinations at the point of impact on property that they would normally have bought.”
He also shared findings from a Rand study that home values are declining by $10,000 for every $500 increase in premiums.
Bottom line, there was broad acknowledgement among lawmakers and the witnesses at the hearing table that the flood insurance program must move to a premium structure that reflects the actuarial risk of flooding. But at the same time, a lot needs to be done to ensure that the needed change happens in an appropriate way. And that’s what the NAR-backed, bi-partisan legislation that’s under consideration in Congress would do.
The legislation is called the “Homeowner Flood Insurance Affordability Act,” H.R. 3370 in the House and S. 1610 in the Senate, and It would pause some program changes while the federal government gets a handle on how the new rates are to be set and it looks at the affordability impact of the new premium structure. Importantly, it would also help property owners take action if they feel their premium changes aren’t accurate.
You can get more info on the Call for Action at the REALTOR® Action Center.