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House bill calls 'timeout' on flood insurance hikes

WASHINGTON -- Across-the-board bumps to flood insurance nationwide expected to kick in over the next few years might not come as soon as planned.

Rep. Kevin Cramer, R-N.D., announced Thursday that the House passed a funding bill that essentially calls a "timeout" on a few scheduled changes to the National Flood Insurance Program, which he said will cause "extreme pain" for homeowners if Congress can't stop them.

The amendment to the 2014 Appropriations Bill for Homeland Security passed by the House delays some premium hikes scheduled to be implemented later this year by the Federal Emergency Management Agency.

It would also stop funding for future FEMA flood mapping and prevent maps already completed from being implemented, Cramer said.

"It's a very big freeze," said Cramer, who believes the slowdown was needed to get a better understanding of the impact of flood insurance rate increases.

The U.S. Senate is also working on legislation that would delay premium hikes, according to representatives of Sens. John Hoeven, R-N.D., and Heidi Heitkamp, D-N.D.

Fargo City Administrator Pat Zavoral said Thursday he wasn't familiar with the details, but it looked like a "good short-term" solution.

"It'll give us some more time, it looks like, for us to discuss with FEMA what their final rules will be," Zavoral said.

Some of the rate increases are a part of the Biggert-Waters Flood Insurance Reform Act of 2012, enacted last July. The law phases out the National Flood Insurance Program's subsidies and aims to make it self-supportive by increasing rates to actuary amounts -- low amount for low risk, high amount for high risk. FEMA estimates about 20 percent of policies nationwide are subsidized.

Other increases were expected to come by late 2014 as a result of new FEMA flood maps, which would affect all flood insurance policies, subsidized or not.

"This remapping has resulted, or has a potential to result, in huge increases," Cramer said. "Not like 100 percent increases, but like 1,500 percent increases."

The House legislation does not affect those premium hikes under Biggert-Waters that have already begun, Cramer said.

For instance, at the beginning of this year, subsidies for policies on nonprimary residences began to be phased out. They will increase by as much as 25 percent each year until they reach actuary rates.

But rate increases that have not kicked in would be delayed, Cramer said. That includes the planned hikes for business properties and properties that have flooded repeatedly, which are scheduled to begin in October, unless the Senate can pass a similar delay and it can be made into law.

Cramer said the goal is to delay the process for another year, allowing Congress and FEMA to go back to the drawing board and "try to find a better solution" to fix flood insurance.

"Clearly you can't pile extreme pain on extreme pain, which is what the unintended consequence of it was," he said of Biggert-Waters' combination of new maps and new rates.

Fargo officials have been concerned about the potential for remapping and higher actuary rates hitting the city at the same time. If that process can delay for even a little longer, it helps, Zavoral said.

"If they do go to actuarially based flood insurance rates, and we don't have certified levees or we don't have the diversion, everyone's going to be paying higher rates," he said.