By Anessa V. Cohen

In 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform Act (FIRM) of 2012, which calls on the Federal Emergency Management Agency and other agencies to make a number of changes to the way the National Flood Insurance Program is run. Some of these changes have already been put in place (making the rest of us crazier than FEMA has already made us) and others have begun to reflect true flood risk when premiums are being assessed for existing and new policyholders, causing all kinds of mayhem.

Essentially what the Biggert-Waters Act created was an immediate end to the existing policy in place for years and years, whereby flood insurance was provided to homeowners at subsidized rates by the federal government in order to provide them with protections in the event of catastrophic floods creating damages that were uninsurable by other means.

Since the Biggert-Waters Act has been enacted, many homeowners have found themselves suddenly hit with massive flood-insurance premiums–sometimes three to even five times the amount of premiums that they had previously been paying–causing tremendous hardship both to the existing homeowners involved, as well as to new homebuyers, causing homes falling into these new categories of high premium charges to become suddenly unsaleable.

Realizing that the new law had resulted in unintended consequences from what the proponents of had intended, pressure was put on Congress to rescind Biggert-Waters or at the very least to revise it in some way to fix what was a disaster in the making.

Last week, the Senate finally met and passed a bill (which already been passed by the House of Representatives) to reverse the reforms and curb flood-insurance premium increases. This new bill is called the “Homeowner Flood Insurance Affordability Act of 2013.”

Sponsored by Senator Bob Menendez and Representative Michael Grimm, the bill restores “grandfathering” of policies located in communities of new flood maps. It also reinstates subsidies for pre-FIRM properties that are bought and sold.

According to the Congressional Budget Office, the bill would not add to the $25 billion debt of the National Federal Insurance Program and would pay for itself through annual reserve fund assessments of $25 a year for primary residences and $250 a year for businesses and vacation homes.

In summary, this bill provides the following:

– Creates a firewall on annual rate increases, which prevents FEMA from raising the average rates for a class of properties above 15% and from raising rates on individual policies.

– Repeals the provision in Biggert-Waters that required the homebuyers to pay the full-risk rate for pre-FIRM properties at the time of purchase. Under Menendez-Grimm, homeowners will receive the same treatment as the home seller.

– Repeals the provision in Biggert-Waters that required pre-FIRM property owners to pay the full risk rate if they voluntarily purchase a new policy.

– Repeals the provision in Biggert-Waters that would have terminated grandfathering. (Under grandfathering, property owners mapped into higher risk would have to either elevate their structure or have higher rates phased in over five years. The Menendez-Grimm bill allows grandfathering to continue and sets hard caps on how high premiums can increase annually.)

– Requires FEMA to refund policyholders for overpaid premiums which were issued under Biggert-Waters.

– Requires FEMA to minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.

What remains now for this all to be set into place is for President Obama to sign it into law. I would encourage everyone to e-mail the president to sign this as soon as possible for the good of our economy and well-being. v

Anessa Cohen lives in Cedarhurst and is a licensed real-estate broker and a licensed N.Y.S. mortgage originator with over 20 years of experience, offering full-service residential, commercial, and management real-estate services (Anessa V Cohen Realty) and mortgaging services (First Meridian Mortgage) in the Five Towns and throughout the tri-state area. She can be reached at 516-569-5007 or via her website, Readers are encouraged to send questions or comments to

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