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What Is the Biggert-Waters Flood Insurance Reform and Modernization Act… and Why Should You Care?

Folks, who live in coastal areas, whether in single-family homes or condominiums, should maintain flood insurance for their property. Flood insurance is actually a national program administered by FEMA and a selected group of private insurers. The Biggert-Waters Flood Insurance Reform and Modernization Act of 2012 (Biggert-Waters) renewed The National Flood Insurance Program (NFIP) for five years until September 30, 2017.

Biggert-Waters, a bipartisan bill sought to make changes to the way the NFIP operates, particularly in the area of setting flood insurance premiums. Following the devastation of Superstorm Sandy, the NFIP was overburdened by claims, and Congress determined that the premiums charged for flood insurance had not kept up with the actual risk, leaving a shortfall in the program.

Unfortunately, like much legislation, there are unintended consequences embedded in Biggert-Waters. Now the sponsor of the original bill, Maxine Waters, is trying to reign in the monster she unwittingly created. While the original bill passed to make NFIP financially sound, Biggert-Waters eliminated and phased out subsidies for homeowners in floodprone areas. However, the “rate shock” ended up far worse than anyone intended or realized, particularly in Florida (where consumers hold one-third of all flood insurance policies in the entire country) and Louisiana.

Due to this “rate shock,” key House and Senate members reached another bipartisan deal to delay changes to the NFIP that raise flood insurance premiums. The “fix” bill also requires FEMA to address affordability of insurance coverage before any new rate hikes are implemented.

Under the proposed bipartisan deal, rate increases will be delayed four years. Congresswoman Waters, in a statement said, “Over the past several months, I have felt the harm and heartache that many Americans have already experienced as a result of changes to the National Flood Insurance Program. From the start, I have made clear that I would lead the effort to fix the unintended consequences of the Biggert-Waters Flood Insurance Reform Act.”

New legislation requires FEMA to complete an affordability study mandated in the original bill but never actually launched. Under the proposed fix, FEMA must propose affordability regulations within 18 months after completion of the affordability study. The proposed legislation also establishes a six month moratorium before any regulations can go into effect. This will provide Congress an opportunity to review the proposed regulations, specifically contemplating affordability. The delays proposed in the new bill apply to primary residences without repetitive flood loss claims and will be grandfathered. The new legislation will also apply to all properties sold after July 6, 2012, and all properties that purchased a new flood insurance policy after July 6, 2012.

FEMA recently suggested that it will take two years to complete the affordability study before any proposed regulations can be issued and reviewed by Congress. In other words, all rate increases will likely be delayed at least four years. In addition to the rate increase delay and affordability study, the proposed legislation:

1. Allows FEMA to utilize National Flood Insurance Funds to reimburse policyholders who successfully appeal a map determination;
2. Eliminates the 50 percent cap on state and local contributions to levee construction and repair;
3. Protects the “basement exception,” which allows for the lowest proofed opening in a home to be used for determining the flood insurance rates;
4. Establishes a “Flood Insurance Rate Map Advocate” under the auspices of FEMA to answer current and prospective policyholder questions about the flood mapping process; and
5. Requires FEMA to certify that FEMA has fully adopted a modernized risk-based approach to analyze flood risk.

The proposed bill experienced delays from the government shutdown but should proceed quickly since it enjoys wide, bipartisan support. It is important, however, that this proposed legislation actually be passed. According to FEMA Director Craig Fugate, this legislation is necessary to delay the premium rate increase because the agency does not have the authority under the original Biggert-Waters Act to stop the rate increases administratively. Fugate also says there was not enough time or money to complete the affordability study before the rate increases go into effect without new legislation.

The proposed “fix” legislation is supported by numerous consumer and business groups, including the Community Advocacy Network (CAN). For condominium associations located in flood zones, the Biggert-Waters legislation, and its proposed fixes, is critical. Premium rate increases may be catastrophic for any properties near water, regardless of inland or oceanfront locations. The proposed legislation clarifies that condominium owners with flood insurance policies should receive insurance payments regardless of the adequacy of the associations’ flood insurance coverage.

This provision is important since it provides condominium unit owners peace of mind that their flood insurance claims must be covered regardless of whether or not their fellow unit owners or association has adequate flood insurance coverage. All homeowners, and particularly those living in common interest community associations, should have adequate flood insurance coverage. Hurricane Katrina and Superstorm Sandy made it obvious that flood waters often cause the most damage during and after a storm. The proposed changes to Biggert-Waters should eliminate the outrageous premium rate increases that associations otherwise will suffer. Associations are well advised to plan their budgets accordingly since it is a near certainty that flood insurance premiums will increase in the years ahead.

Alan Garfinkel is one of the Founding Partners of the statewide law firm, Katzman Garfinkel, a firm that devotes its practice to the representation of community associations. Garfinkel can be reached at (407) 539-3900 or via e-mail at

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