Tuesday, December 4, 2012

Is There Water at the Bottom of the Fiscal Cliff? News from FEMA

    A report on the website Propertycasualty360.com says that the Federal Emergency Management Agency (FEMA) is bracing for a backlash against rate increases in the National Flood Insurance program passed as part of the Biggert-Waters Act of 2012 (yes, that's really the name.)  However, coming on the heels of Hurricane Sandy (I refuse to call it "Superstorm Sandy",) the perception is likely to be that the rate increases are a reaction to the massive storm damage that affected the Northeast:
Federal Emergency Management Agency officials are girding for sticker-shock outrage from consumers as they prepare to implement across-the-board rate increases in the flood-insurance program.
The law imposing the increases in January is the Biggert-Waters Act, and was enacted by Congress in July.
It would phase in actuarial rates over four years; and institute a five-year phase-in of higher rates imposed through mapping changes. The changes go into effect starting Jan. 1.
“We are expecting acute consternation,” said an unidentified aide to David Miller, FEMA associate administrator for federal insurance and mitigation.
Miller made his comments at the Government Relations Task Force meeting held in conjunction with the NAIC’s fall national meeting Saturday at National Harbor, Md.
    Also included in the report is a possible tie-in to the ongoing fiscal cliff negotiations as it appears the agency is poised to request a 50% increase in its borrowing authority:
Miller was cagey in discussing when and if the administration will seek an increase in the borrowing authority for the program, the National Flood Insurance Program.
It is expected that officials will seek an increase from the current $20.775 billion to $30 billion. That increase in borrowing authority is expected to be tucked into legislation that resolves the “fiscal cliff” crisis that is now the subject of intense negotiation between the Obama and administration and Congress.
It is expected that some sort of deal will be completed by mid-December.
Miller would only say that Congress, the White House and the Office of Management and Budget are being updated daily on the “burn rate” of the estimated $2.95 billion FEMA had on hand to pay claims when Superstorm Sandy hit. 

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