Source: United States Senator for New Jersey Bob Menendez
WASHINGTON, D.C. – During a Senate Banking, Housing, and Urban Affairs Committee hearing today, U.S. Senator Bob Menendez (D-N.J.) called on Congress to act immediately and pass his bipartisan National Flood Insurance Program (NFIP) bill that would extend the program an additional five years, keep premiums affordable, make smart investments in mitigation, and implement reforms to address the waste and abuse plaguing the system. Over five million Americans depend upon the NFIP, including 220,000 New Jerseyans.
“I hear too often from both FEMA and special interest groups, who are completely out of touch with disaster victims, that premiums need to be raised skyhigh on policyholders to bring down costs. But these calls to raise premiums foolishly ignore the fact that FEMA’s huge administrative costs should be reformed to provide premium savings,” said Sen. Menendez. “Insurance companies that bear none of the financial risk receive 30 cents for every premium dollar written as compensation. What’s worse is that insurance companies also get to use high-priced attorneys that drag out claims litigation and force FEMA and policyholders to pick up the tab.”
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Sen. Menendez’s National Flood Insurance Program Reauthorization and Reform Act tackles systemic problems with flood insurance, puts the program back on solid fiscal ground, and reframes the nation’s entire disaster paradigm to one that focuses more on prevention and mitigation in order to spare the high cost of rebuilding after flood disasters.
During the hearing, Sen. Menendez slammed the Federal Emergency Management Agency’s (FEMA) recent proposal that will bar new homes built in flood-prone areas and small businesses from receiving NFIP coverage. The recent proposal resembles many of the points detailed in the Trump Administration’s policy plan to overhaul NFIP.
The Senator also highlighted Risk Rating 2.0, FEMA’s new rating system, which went into effect last October and is expected to raise premiums on 80% of NFIP policyholders nationwide. Nearly 20% of policyholders are expected to drop their insurance because of the hikes, according to FEMA. Last September, Sen. Menendez called on FEMA to delay the implementation of Risk Rating 2.0.
Doug Quinn, Executive Director of American Policyholders Association and a Marine veteran who moved back into his newly-rebuilt, elevated home in Toms River’s Silverton section in 2019, testified at today’s hearing. Nearly 10 years ago, record storm surge up Barnegat Bay and the nearby Kettle Creek sent three-foot waves crashing into the family’s ranch-style house, he lived in with his teenaged daughter, inundating it with four-foot-deep floodwater.
The Quinns had already been displaced for 21 months when Sen. Menendez first visited their home in July 2014 to highlight systemic problems that delayed recovery for thousands of Sandy survivors. Despite a $254,000 damage assessment and $250,000 in flood insurance coverage, the Quinns initially received only $92,000, of which their mortgage company held half, leaving them with little money to remediate and rebuild.
“Despite having $250,000 in flood insurance, it took us seven years to rebuild our home. FEMA failed to pay us and other Sandy victims an honest claim in the aftermath of the storm,” Quinn said during his opening testimony. “We need a resilient flood insurance program with integrity and affordability. Sen. Menendez’s bipartisan NFIP-RE Act can accomplish this. This bill eliminated fraud, waste, and abuse in the program, which is a more effective strategy than raising premiums to offset costs.”
Sen. Menendez has been the leading advocate in Congress for an overhaul of the National Flood Insurance Program (NFIP), since Superstorm Sandy devastated New Jersey nearly 10 years ago.
In June, Sens. Menendez and Kennedy introduced the National Flood Insurance Program Consultant Accountability Act, which would enhance the Federal Emergency Management Agency’s (FEMA) ability to protect homeowners from parties found guilty of fraud that involved in NFIP property damage assessment.
Sen. Menendez first exposed the problem of widespread lowballing of flood insurance claims during Congressional hearings he chaired in 2014, and then successfully pushed FEMA to reopen every Sandy flood insurance claim for review, which compensated Sandy victims with more than $260 million in additional payments they were initially denied.
Sen. Menendez authored the Superstorm Sandy Relief and Disaster Loan Program Improvement Act, which extended and expanded access to federal disaster loans through the U.S. Small Business Administration (SBA). His Homeowner’s Flood Insurance Affordability Act was signed into law in 2014 to address skyrocketing rates many Sandy survivors were encountering. In 2013, he shepherded the original $60 billion federal Sandy aid package through Congress.