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Wicker’s COASTAL Act Part of Flood Insurance Reform

Long-Term Renewal of NFIP Is Better for Property Owners and Taxpayers

Monday, July 9, 2012

Enactment of a five-year reauthorization of the National Flood Insurance Program (NFIP) is a long-awaited step with important reforms for Mississippians.  The measure passed the Senate and House of Representatives with overwhelming majorities late last month.

Having flood insurance is often a necessity in our state, which ranks fifth in the nation for floodplain acreage and eighth for the number of structures with a history of flooding.  The storm surge associated with Hurricane Katrina and last year’s rising tides of the Mississippi River were graphic reminders of the devastation that extreme flooding can cause.

A Measure of Certainty

After years of delays, a multiyear renewal of NFIP brings much-needed certainty to property owners in participating communities – including hundreds in Mississippi – where home sales can be delayed if the program lapses.  Lenders will not fund mortgage loans in flood-prone areas without flood insurance, making property owners in these areas dependent on a sustainable NFIP.  There are nearly 88,000 NFIP policies in Mississippi, protecting more than $18 billion in property.

The passage of a meaningful flood insurance agreement is also an encouraging display of bipartisan cooperation in Congress.  Covering 5.6 million Americans, NFIP has undergone a dozen temporary fixes since September 2008.  It was set to expire again at the end of this month.

Improving the Recovery Process

A number of significant reforms are part of the NFIP reauthorization, which should help move the financially strained program toward fiscal solvency and better protect property owners and taxpayers.  One of the reforms is a provision I authored to provide for the use of scientific data in the claims process after natural disasters like hurricanes.  The Consumer Option for an Alternative System to Allocate Losses (COASTAL) Act will help remedy the difficulties that homeowners can face when both wind and water are factors in the damage.

The severity of Hurricane Katrina exposed flaws in the process of determining wind-versus-water claims for total-loss properties.  After Katrina, disputes arose over whether NFIP or private insurers were responsible for making the policyholder whole.

Under the COASTAL Act, data from the National Oceanic and Atmospheric Administration (NOAA) and the Federal Emergency Management Agency (FEMA) will help ensure that NFIP has the information it needs to make accurate assessments following a major hurricane.  The COASTAL Act seeks to empower homeowners and prevent wind claims from being shifted inappropriately to the flood program.  

Keeping Communities Strong

Hurricane season officially began June 1, and early storm activity has already broken records.  Last month’s Tropical Storm Debby in the Gulf of Mexico marked the first time that four named storms have formed before the end of June.  

Being aware of weather risks and taking the necessary precautions are crucial to keeping Mississippi’s communities safe during hurricane season.  It is imperative to take an active role in ensuring that our state is ready and equipped should disaster strike.  

FEMA recommends coastal residents stay informed and vigilant by having a disaster plan, making an emergency kit, and learning evacuation procedures.  More information and safety tips can be found at www.ready.gov/hurricanes.  

July 2012 Weekly Columns