On June 30, 2016, Vice Chair David McKey of NAR’s Insurance Committee testified on the small business impacts of inaccurate flood insurance rate increases. The National Flood Insurance Program (NFIP) is up for renewal next year, and must be reauthorized before September 30, 2017 in order to continue providing flood insurance in 22,000 communities nationwide where required for a federally related mortgage.
McKey stressed that the 2014 Flood Insurance Affordability Act did successfully slow the business property increases to no more than 25 percent per year. However, the 25 percent increases won’t end until property owners provide an elevation certificate, and many are not doing so because they are not informed or not able to spend the hundreds to thousands of dollars on a licensed surveyor to obtain one. As an alternative, NAR is recommending: Improving flood mapping accuracy by using Light Detection and Ranging (LiDAR) instead of elevation certificates; encouraging the development of private market flood insurance options as a complement to a stronger, more vibrant NFIP; and streamlining federal assistance programs so property owners may elevate or relocate before floods and bring down risk-based rates.
McKey urged the Senate to immediately take up and pass the Flood Insurance Market Modernization Act (H.R. 2901) and also to reauthorize and strengthen the NFIP on time and for a minimum of five years in order to provide real estate market certainty.