U.S. House OKs measure that includes review of why Mich. rates overstate risks
NATHAN HURST
The Detroit News Washington Bureau
Washington -- Michiganians paying a high price for flood insurance even though their risk for water damage is low won't see an immediate reprieve on their rates under a House bill passed Thursday.
The bill would overhaul the government-run program, and an amendment pushed by Rep. Candice Miller, R-Harrison Township, will launch an investigation into why rates in the Great Lakes State aren't commensurate with property owners' risk.
The approval provides for a five-year reauthorization of the National Flood Insurance Program, allowing the program run by the Federal Emergency Management Agency to boost premiums and deductibles. The program needs more revenue to pay down its nearly $19 billion debt to the U.S. Treasury that resulted from big payouts connected with the 2005 damage caused by Hurricanes Katrina and Rita.
The bill passed the House 329-90 Thursday and now heads to the Senate, where its chances of passage are uncertain.
Miller has been a staunch critic of the program and voted no on the bill, saying its cost to Michigan homeowners was too high.
Earlier this week, The Detroit News reported that thousands of Michiganians are paying thousands per year for flood insurance, even though their risk is determined, in many cases, by outdated flood maps that don't take into account drastic falls in the water levels of the Great Lakes in recent years.
According to the program's own records, Michiganians have received just $44 million in flood insurance claims since 1978, though they've paid more than $200 million in premiums.
This year, homeowners in the state will pay more than $19 million in the programs, many of them at the behest of mortgage lenders who require the insurance when FEMA-generated maps show homes are in high-risk areas, even if those maps are outdated. The latest figures from FEMA show Michigan homeowners that participate in the program pay an average premium of $764; counterparts in flood-prone Louisiana pay an annual average of $647.
The program hasn't been updated since 1994, and has been opposed by some lawmakers, who have had to pass three temporary measures extending the program this year. The latest short-term extension is set to expire at the end of September.
The bill would phase out subsidies available to some vacation homes and second homes and nonresidential properties, and also eventually end subsidies for severe repetitive loss properties.
Rep. Shelley Moore Capito, R-W.Va., noted properties in areas repeatedly hit by floods account for about 1 percent of all policies but about 30 percent of claims.
The bill raises the annual limitation on premium increases from 10 percent to 20 percent, raises annual deductibles and raises maximum coverage limits to $335,000 for residences and $670,000 for businesses. Currently the average annual premium is about $570.
Though the bill passed over objections from lawmakers like Miller, she was able to get an amendment passed that will force the Government Accountability Office to research the program and look for ways to lower premiums for homeowners in low-risk states.
"With my amendment, the GAO will look at regionalization of the NFIP as a means to correct this imbalance," she said in a statement, noting there's a "disconnect between price of the policy premiums and the actual risk."
The Associated Press contributed.