President Biden is proposing an unprecedented $ 358 million program next year to help low-income people buy flood insurance and strengthen their properties against flood damage.
The program is included in the $ 6 trillion fiscal year 2022 budget released by Biden on Friday. This will be one of the first times the federal government has targeted low-income property owners with flood relief.
Biden’s plan could solve a major problem facing the United States as climate change amplifies flood damage: millions of people lack flood insurance and suffer huge financial losses when their homes are flooded. Flood insurance is not part of standard homeowner’s insurance policies and must be purchased separately, usually through a program run by the Federal Emergency Management Agency.
“This proposal is expected to increase the number of policyholders and help make obtaining and maintaining flood insurance more affordable for those who are eligible” to receive federal assistance, says Biden’s budget proposal.
Biden’s budget also supports FEMA’s controversial plan to restructure its National Flood Insurance Program so premiums better reflect the risk of flooding for each property.
Some members of Congress oppose the plan, dubbed “Risk Rating 2.0,” because it will dramatically increase premiums next year for about 200,000 policyholders and a modest increase for 3.7 million policyholders. Insurance premiums will drop for 1 million policyholders, many of whom own inexpensive assets and have been paying prohibitively high rates for years, according to FEMA.
Biden’s flood budget proposals received praise from one political expert who called for a major overhaul of flood insurance to contain development in flood-prone areas.
“I have long believed this was a sound policy approach to the program: risk-based pricing and means-tested assistance for low-income households,” said Caroline Kuski, executive director of the Center for Risk Management and Decision Processes at Wharton University of Pennsylvania.
The Risk Rating 2.0 pricing framework “sends more accurate signals to the markets about risk,” while Biden’s policyholder assistance program “will help make sure everyone can benefit from the financial protection of disaster insurance,” Chunks wrote in an email to E&E News …
Senator Bob Menendez (DN.J.), a leading critic of the 2.0 risk rating, welcomed Biden’s plan to help low-income households purchase flood insurance.
“It is gratifying to see the Biden administration believe in a robust relief program,” Menendez spokesman Steve Sandberg wrote in an email to E&E News.
On Friday, when Biden released his budget proposal, Menendez criticized the 2.0 risk rating in a statement, saying it would “cause a colossal shock” that will force some homeowners to sell their homes and “destroy entire neighborhoods.”
Biden’s budget calls for two new streams of funding for low-income families: $ 208 million to help them buy flood insurance, and $ 150 million to help them protect their homes from flood damage.
The insurance assistance program was first proposed by FEMA in a 2018 Congressional report that found 51% of uninsured homeowners in high-risk flood areas had low income and that insurance costs could deter them from purchasing coverage.
House Finance Chair Maxine Waters, California, in 2019 proposed a program to help low-income households purchase flood insurance. Her proposal was included in the total flood insurance bill for the deceased in the home. Waters recently revived the proposal in a new flood insurance bill.
FEMA said in a statement to E&E News that it supports “providing relief for primary housing” when family income makes federal flood insurance “unattainable or difficult to maintain.”
The $ 150 million flood mitigation program will complement FEMA’s longstanding flood mitigation program, which provides $ 150 to $ 200 million annually for activities such as demolishing or raising flood-prone homes. Biden is offering $ 175 million for a flood relief program.
The new $ 150 million program will target flood insurance policyholders who are eligible for the insurance assistance program.
Reprinted from E&E News with the permission of POLITIKO LLC. Copyright 2021. E&E News provides important news for energy and environment professionals.