Monday, October 29, 2007

Garrett Seeks to Increase Premiums on Flood Insurance

More often than not, when you see Representative Barney Frank next to our Representative Scott Garrett, the exchange goes something like this:
Mr. FRANK of Massachusetts. Mr. Chairman, will the gentleman yield?

Mr. GARRETT of New Jersey. I yield.

Mr. FRANK of Massachusetts. Mr. Chairman, that, I must say, totally disappoints me. For the third time the gentleman has tried to put words in my mouth. The words ``trust in me,'' the gentleman read that, and the gentleman's distortion, systematic distortion, has gone beyond what I can deal with in a brief intervention. But I will say this: I continually said we should address that in separate legislation. If the gentleman doesn't know the difference between passing legislation which sets guidelines and saying ``trust me,'' then the gentleman understands less in this place than I had hoped he did.
Well, the two of them have teamed up to introduce the HR 3959, to reform the National Flood Insurance Program (NFIP). The Record did a good job of explaining problems with the NFIP program a while back. Here's how Garrett's office described the bill:
The Garrett-Frank bill, H.R. 3959, would require any new purchaser of a pre-FIRM primary residential home that costs over $600,000 to pay phased-in actuarial flood insurance prices using the same phased-in structure that non-residential and non-primary homes are subject to under legislation passed by the House earlier this month.
The bill calls for up to a 15% premium increase every year until the premiums reach actuary equality. The Independent Insurance Agents & Brokers of America (the Big “I”) has come out strongly in support of the bill:
“The Big ‘I’ strongly supports the NFIP gradually moving towards actuarially sound rates,” says John Prible, Big “I” assistant vice president for federal government affairs. “We recognize that the NFIP’s need for financial stability must be measured against fairness to the customers we serve, which is why we believe it is important that this legislation is aimed at homes valued at over $600,000 and includes a phase-in mechanism.”
The one question I do have is how residents in the Fifth will be impacted by this change? This may be the first time we've seen Garrett flat-out advocate increased fees for anything, usually he refers to rate increases as a new tax.

It also may be the first time he's aiming such an increase largely at the Bergen County part of the District, where inland home buyers here may end up subsidizing flood insurance for beachfront homes elsewhere. Flood insurance is mandatory in certain areas, and a look over the flood maps lets you realize how this proposal may further increase the costs of home ownership in our District.

This is a continuation of an amendment Garrett had hoped to introduce last month when Congress expanded NFIP to include wind damage. Here's how the Express-Times described Garrett's efforts:
However, it's likely an increase in premiums for homeowners with houses worth more than $600,000 would have constituted a poison pill, making the bill unpalatable for officials from states with high property values and lots of shoreline, e.g., New Jersey.
Admittedly, flood insurance is something I have a very cursory knowledge of, and so this will be one of those issues requiring follow-up on my part. In the meantime, we can't over look the fact he's working with Rep. Frank.

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