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Flood Insurance, Finances, and Climate Change: The Homeowners Flood Insurance Affordability Act


June 24, 2014

An ELI Professional Practice Seminar

The National Flood Insurance Program (NFIP) was created in 1968 to help homeowners, renters, and business-owners financially protect themselves from floods. Communities that participate in the NFIP program agree to adopt and enforce ordinances that reduce the risk of flooding. This insurance, however, encouraged the settlement of areas that have become increasingly risky with the advent of rising waters and increase of severe storms due to climate change. The subsequent increased price tag of the program (which already carries a debt of $24 billion) resulted in landmark reforms two years ago. The Biggert-Waters Flood Insurance Reform Act of 2012 reauthorized the flood insurance program and phased in rate increases for policy holders.

Under pressure from homeowners worried that increased insurance rates will make their homes unsalable, the Homeowners Flood Insurance Affordability Act was signed into law by President Obama in March 2014. Among other provisions, it eliminates phased-in rate hikes for some policy holders and suggests that the Federal Emergency Management Administration should keep rates below one percent of a policy holder’s coverage, which would effectively issue further subsidies to homeowners in the riskiest areas. It also attempts to increase natural, non-structural flood measures.

Participants learned more about the NFIP program and how subsequent amendments have changed it. The expert panel addressed the manner in which recent amendments treat the risks associated with climate change and focused on the implications of the Homeowners Flood Insurance Affordability Act for taxpayers in a changing climate.

Dr. Rebecca L. Kihslinger, Science and Policy Analyst, Environmental Law Institute (moderator)
Barbara Montoya, Primary Legal Counsel, National Flood Insurance Program
Eric Nordman, Director, Center for Insurance Policy & Research
Josh Saks, Legislative Director, National Wildlife Federation
Robert R. M. Verchick, Gauthier-St. Martin Eminent Scholar and Chair in Environmental Law, College of Law, Loyola University New Orleans

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