[Senate Hearing 113-]
[From the U.S. Government Publishing Office]



 
  INSURING OUR FUTURE: BUILDING A FLOOD INSURANCE PROGRAM WE CAN LIVE 
                   WITH, GROW WITH, AND PROSPER WITH

                              ----------                              


                        WEDNESDAY, JULY 23, 2014

                               U.S. Senate,
                 Subcommittee on Homeland Security,
                               Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 2:30 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Mary L. Landrieu (chairman) 
presiding.
    Present: Senators Landrieu, Tester, Coats, Cochran, and 
Murkowski.


             opening statement of senator mary l. landrieu


    Senator Landrieu. Good afternoon, everyone. Welcome to the 
oversight subcommittee focused on what insurance program 
America can live with, grow with, and prosper with.
    I thank Senator Cochran and Senator Tester for joining 
today, and Senator Coats is on his way.
    It is a very important issue for our country, and we are so 
pleased to have Senator Bob Menendez with us this afternoon. 
Senator Menendez was a lead sponsor of the Biggert-Waters 
Reform Act that passed the Congress, the insurance 
affordability act that stopped the increases of the Biggert-
Waters flood insurance bill that passed the Congress several 
years ago and was wreaking havoc in many of our communities.
    So, Senator Menendez, thanks to you and to our colleagues 
really on both sides of the aisle, but under your leadership 
here in the Senate, we were able to reject the reforms of 
Biggert-Waters and institute the new flood insurance program 
that we are talking about today.
    But, as you know, we have to continue to be diligent and 
focused on building a new flood insurance program, and that is 
why we are here, to examine the maps and tools necessary to do 
that.
    But because of your time constraints, I am going to turn 
the floor over to you for opening statements, and then I will 
do my opening statement following that.
    And again, welcome, and thank you for your leadership.
STATEMENT OF HON. ROBERT MENENDEZ, U.S. SENATOR FROM 
            NEW JERSEY
    Senator Menendez. Madam Chair, thank you very much for your 
courtesy in allowing me to go first. I have a hearing that we 
are going to be starting.
    And to all of the distinguished members of the 
subcommittee, let me first start off by thanking you, not only 
for holding the hearing, but for being such a tireless leader 
on an issue that is so important to so many.
    Certainly, since Hurricane Katrina struck in your home 
State of Louisiana, you have been focused like a laser on 
disaster assistance issues and the ins and outs of flood 
insurance. You have demonstrated time and time again your 
willingness to work with both sides of the aisle to reach out 
and find a way forward when others could not, not because it is 
easy, but because it is the only way we get things done around 
here. And I am grateful for your leadership and to have worked 
with you in the past and working with you prospectively as 
well.
    Like the people of Louisiana, New Jersey has suffered a 
devastating storm, Superstorm Sandy, which the Chair was 
gracious enough to come with some other colleagues to see the 
consequences of. It destroyed homes. It destroyed businesses. 
It destroyed whole communities.
    And just as we were beginning to rebuild, New Jerseyans 
were hit by another disaster, this time manmade in the form of 
extraordinary increases in flood insurance premiums that 
threatened to finish the job that Sandy started.
    In the weeks and months after Sandy struck, people came to 
me in tears, saying they were afraid they would lose their 
homes, not from the winds or storm surge, but from skyrocketing 
insurance premiums they just could not afford.
    I received dozens of letters at first, then hundreds, then 
thousands, from people pleading for some relief, for some 
fairness, and for someone to do something to help.
    People in New Jersey spoke from the heart. Something had to 
be done. That is why, working with you and members of the 
committee and other Members of the Senate, we introduced, in a 
very broad, bipartisan way, the Homeowners Flood Insurance 
Affordability Act (HFIA) to stop the storm surge of flood 
insurance rate hikes that would force people from their homes.
    And with the help of strong advocates like you, Madam 
Chair, and Senator Isakson and others, our bill passed both 
Houses of Congress with overwhelming bipartisan support and was 
signed by the President into law.
    Given the unprecedented gridlock in Washington, passing 
this relief bill with 72 votes in the Senate was nothing short 
of a miracle and a tremendous victory for homeowners who had 
been spared from making a difficult choice between paying for 
flood insurance or paying their mortgage, buying medicine, and 
putting food on the table.
    Unfortunately, I am still hearing stories of egregious and 
unreasonable rate hikes in New Jersey. Take the case of one of 
my constituents, Claudette from Highlands, New Jersey. Before 
Sandy destroyed her house, she had been paying around $2,500 a 
year in premiums. When she began rebuilding, she followed all 
of the rules, built not just up to the code, but above and 
beyond the required standards.
    But despite doing the right thing and following all the 
rules, her premiums skyrocketed from $2,500 to $34,000.
    Think about that for a minute: $34,000 a year for flood 
insurance. Think about that over the course of 10 years. That 
is $350,000. That just simply doesn't pass the smell test.
    Fortunately, my office worked with the Federal Emergency 
Management Agency (FEMA) to reduce Claudette's premium to 
$7,700, but that is still far too high. We will continue to 
work with her to get the relief she deserves.
    One other, I heard from Rick from Union Beach, New Jersey, 
who saw his rates increase 50-fold from $550 to $30,000. Rick's 
case is similar to Claudette's. He, too, rebuilt his house 
above the required standards--3 feet above, in fact. But he is 
still being charged prohibitively expensive premiums based on 
the old, inaccurate maps.
    My office is also working with FEMA to fix Rick's egregious 
rate increase, and I hope FEMA will use its administrative 
discretion to help make this right.
    But the point is, what I find puzzling after working so 
hard with so many of you to pass a law that specifically caps 
rate increases and encourages FEMA to strive to keep flood 
insurance affordable, we are still hearing about outrageous 
increases that threaten to do more economic damage to families 
than the storm itself.
    So it is my goal to make sure that we don't have any more 
Claudettes or Ricks slipping through the cracks either in New 
Jersey or in any other place in the country. It is my goal that 
the manmade disaster of extraordinary increases in flood 
insurance premiums won't inflict any more harm on New Jersey 
homeowners or others across the Nation, and, of course, in our 
economy.
    So thank you, Senator Landrieu, for your leadership. And we 
look forward to continuing to have your strong voice and 
partnership in making sure that people will be able to stay in 
their homes, help build their communities, and can do so in a 
way that we can also have a flood insurance program that is 
sustainable.
    [The statement follows:]
             Prepared Statement of Senator Robert Menendez
    First of all, let me start by thanking Senator Landrieu for holding 
this hearing and for being such a tireless leader on an issue so 
important to so many.
    Since Hurricane Katrina struck her home state of Louisiana, Senator 
Landrieu has been focused like a laser on disaster assistance issues, 
and on the ins-and-outs of flood insurance.
    As a leader, she has demonstrated time-and-time-again her 
willingness to work with both sides of the aisle, to reach out and find 
a way forward when others could not . . . not because it's easy, but 
because it's the only way to get things done for the people of her 
state.
    I'm grateful for her leadership, grateful to have worked with her 
in the past, and I'm grateful to be working with her again today.
                         the aftermath of sandy
    Like the people of Louisiana, New Jerseyans suffered a devastating 
storm. Superstorm Sandy destroyed homes, destroyed businesses and 
destroyed whole communities.
    And just as we were beginning to rebuild, New Jerseyans were hit by 
another disaster--this time manmade in the form of extraordinary 
increases in flood insurance premium that threatened to finish the job 
that Sandy started.
    In the weeks and months after Sandy struck, people came to me in 
tears, saying they were afraid they'd lose their homes. Not from the 
winds or storm surge--but from skyrocketing insurance premiums they 
couldn't afford.
    I started receiving dozens of letters at first then hundreds, then 
thousands from people pleading for some relief, for fairness, and for 
someone to do something to help.
                      avoiding a manmade disaster
    The people of New Jersey spoke from the heart and something had to 
be done. That's why I wrote and introduced the Homeowner Flood 
Insurance Affordability Act to stop the storm-surge of flood insurance 
rate hikes that would force people from their homes.
    With the help of strong advocates like you, Senator Landrieu--and 
Senator Isakson--our bill passed both Houses of Congress with 
overwhelming bipartisan support, and was signed by the President into 
law.
                          benefits we can see
    Given the unprecedented gridlock in Washington, passing this relief 
bill with 72 votes in the Senate was nothing short of a miracle and a 
tremendous victory for homeowners who have been spared from making the 
difficult choice between paying for flood insurance or paying their 
mortgage, buying medicine and putting food on the table.
                     conclusion--a work in progress
    While homeowners across the country are already seeing relief, for 
some, that relief has not yet come.
    Unfortunately, I'm still hearing stories of egregious and 
unreasonable rate hikes in New Jersey.
    Take the case of one of my constituents, Claudette, from Highlands, 
New Jersey. Before Sandy destroyed her house, she had been paying 
around $2,500 a year in premiums.
    When she began rebuilding, she followed all the rules--built not 
just up to code, but above and beyond the required standards. But, 
despite doing the right thing--following all the rules--her premium 
skyrocketed from $2,500 to $34,000. Think about that for a minute 
$34,000 a year for flood insurance. Almost $350,000 over 10 years. This 
simply does not pass the smell test.
    Fortunately, my office worked with FEMA to reduce Claudette's 
premium to $7,700, but it is still far too high. And I will continue to 
work to see that Claudette gets the relief she deserves.
    I also heard from Rick from Union Beach, New Jersey--who saw his 
rates increase 50-fold from $550 to $30,000. Rick's case is similar to 
Claudette's. He too rebuilt his house above the required standards--3 
feet above, in fact, but is still being charged prohibitively expensive 
premiums based on the old, inaccurate maps.
    My office is also working with FEMA to fix Rick's egregious rate 
increase--and I hope FEMA will use its administrative discretion to 
help make this right.
    I find it puzzling, after working so hard to pass a law that 
specifically caps rate increases and encourages FEMA to strive to keep 
flood insurance affordable, that we are still hearing about outrageous 
increases that threaten to do more economic damage to families than the 
storm itself.
    It is my goal to make sure we do not have any more Claudettes or 
Ricks slipping through the cracks. It's my goal that the manmade 
disaster of extraordinary increases in flood insurance premiums will 
not inflict any more harm on New Jersey homeowners--or on our economy.
    Thank you, again, Senator Landrieu, for your leadership and I look 
forward to continue working with you and the Committee to solve this 
problem once and for all.

    Senator Landrieu. Thank you, Senator. Before you leave, I 
want to just show you a map, and the members, and then I will 
give my brief opening statement.
    I think this picture speaks volumes. This is a map of the 
population of the United States that is in a Special Flood 
Hazard Area, by population. So what this map shows is that the 
darker reds and oranges are the more treacherous areas. As you 
can see, it is many of the coastal areas. But it also reflects 
coastal areas with large populations.
    Now if you put up the other slide, which is very 
interesting--Senator Tester, this would be very interesting to 
you, I think--this is a slide of flood-prone areas that are not 
by population, just by the danger itself. So you can see in 
North Dakota and Nevada, some of the interior parts of the 
country have very similar challenges.
    The only difference is that there are less people living 
there, so they don't show up on a population scale. But 
nonetheless, it is devastating to people who are in the 
interior of the country without getting this flood insurance 
program right.
    So if we go back to the original one, I will just conclude 
with, in preparation for this hearing, what I have learned is 
that only 7 percent of homeowners are in these very difficult 
flood hazard areas. But of the 450 counties of the 3,000--so it 
is a small percentage of the 3,000 counties--55 percent of the 
GDP of the United States is produced. So when we tell our 
colleagues, this isn't just a problem for the 7 percent or the 
450 counties, it is not just coastal issue, it is an interior 
issue, and it is a national issue, I think we are standing on 
pretty solid ground.
    So thank you for your leadership, and thank you for your 
leadership on the Committee on Banking, which has jurisdiction 
over this issue. My jurisdiction comes really only with the 
funding of FEMA and flood maps, so the jurisdiction of our 
subcommittee is somewhat limited. But I think you and Senator 
Tester sit on the Committee on Banking and can be very helpful 
in shaping a better program for us.
    What we have now is a stopgap, thanks to you. But what we 
really need is a program we can grow with, prosper with, plan 
with, and live with, which is a far cry from where we are right 
now.
    Thank you.
    Senator Menendez. Thank you.
    Senator Landrieu. So let me begin by, again, good afternoon 
to everyone. I thank the Senators for coming.
    After 2 years of arduous work and steadfast determination 
by a broad coalition of individuals, business groups, and 
community leaders, the President signed into law championed by 
many of us, but led by Senator Menendez, the Homeowners Flood 
Insurance Affordability Act, which repealed draconian rate 
increases in Biggert-Waters, which were threatening to 
undermine the economic vitality of so many of our communities, 
both coastal and interior, around the country.
    This bill included a critical affordability provision, 
which the Senate insisted on an 18 percent individual annual 
cap. The bill is actually a target. I like to use the word 
``cap,'' because that is what the intention of that target is. 
It is 1 percent of the total coverage, which I think the 
maximum is $250,000. We are going to explore that.
    We included the 18-percent annual cap up to 1 percent of 
the target in that bill.
    We also removed the property sales trigger, which had 
frozen real estate markets and threatened to rob many middle-
class families that had the insurance policy, as well as their 
neighbors that did not, because when one home falls in value to 
zero, it affects neighbors all the way around them.
    So while this was a danger, yes, to the people who had 
policies, it was also a danger to their neighbors who did not, 
even those who had paid off their mortgage long ago, which is 
why this was, in my view, a national crisis and Congress came 
to the aid of many, many people.
    While I am encouraged by the testimony that was submitted 
by realtors, the Write Your Own companies, and the Association 
of State Floodplain Managers (ASFPM) that indicate that FEMA 
has adopted a much more proactive and collaborative approach to 
the implementation this time around, I believe it is imperative 
that Congress remain active and engaged to ensure this agency 
and its partners have the resources they need to do a good job 
under our law; to quickly issue refunds; adjust rate tables for 
Claudette, Rick, and others; and produce accurate and well-
vetted flood maps that reflect the intention of this 
subcommittee to make these affordable to middle-class families.
    It is also important, let me say to my colleagues, that 
Congress, that our Members, remain vigilant in educating 
ourselves about the work ahead between now and 2017.
    So today's hearing is much more than a review of the 
Homeowners Flood Insurance Affordability Act. Our work is not 
over until we build a better plan, and hopefully, we will lay 
some Congressional record to do that today.
    FEMA's flood maps are the foundation of any such plan. That 
is why I called this hearing, to really focus on the flood maps 
and the floodplains. Are they accurate? Are they transparent? 
Do they really reflect the risk of these communities? Are we 
considering everything? Are local people able to engage? Are 
mayors and city council members able to participate?
    The need, the stakes for accurate and reliable flood maps 
could not be greater. As I said, just 540 counties of the 
Nation's 3,144 are located directly on an open ocean, bayou, 
Great Lake, or estuary. But they drive more than 50 percent of 
the entire gross domestic product of this country. So if they 
are not vibrant, if they are not able to operate, the country 
is not able to operate. This is a national issue of the highest 
priority.
    FEMA rolled out its Levee Analysis and Mapping Procedures 
(LAMP) last summer to address the shortcomings with the levee 
approach they used in 2011 that wholly discounted levees. Many 
of them were financed and built locally and, might I say, did 
not collapse in Hurricane Katrina like some of the Federal 
levees that were certified and built by the Federal Government.
    Five Louisiana communities--Lafourche, Terrebonne, Plaque 
mines, St. Tammany, and St. Charles--in my State were included 
in the 25-site pilot program. I would like to review what the 
other pilot programs are, but just to get the subcommittee's 
head around this, why don't we show the map without the water 
first, so we can get clear.
    This is in Lafourche Parish, which is the toe of Louisiana. 
This is the Golden Meadow levee system. This is what it looks 
like. This is a levee and lock that is very, very typical of 
Louisiana's coastline, which is hundreds and hundreds, 
thousands and thousands of miles, counting the bays.
    So that is what it looks like when it is not flooded. This 
is what it looks like when it is flooded. The water on the top 
is the Gulf of Mexico that has just raged into the bottom of 
our State. But that levee has stopped it, and that lock was 
built and it stopped it.
    So the people on the inside of the levee should have much 
lower rates with that levee built than without that levee. I 
mean, it is just common sense.
    But the original FEMA maps pretended like that levee did 
not exist until our law mandates you to acknowledge that this 
levee exists, and rate homeowners appropriately, because they 
paid for both. They paid for the levee. They paid the taxes to 
build the levee. This is a local levee build. They paid for the 
lock, which had some Federal funding. They paid for that 
highway. And they are paying their insurance. So they shouldn't 
have to pay three times and pay the wrong rate.
    So, LAMP is a step in the right direction that attempts to 
accommodate coastal systems that have their own local barriers 
that we put up that have been in many instances, not in every, 
but in many instances, effective.
    At my request, David Miller, who is here--we thank you, 
David--FEMA Associate Director, came down to Lafourche Parish 
to see firsthand these levees now. And they exist not just in 
my State, but I am sure they exist in many other States that 
are now required. I am sure Mississippi and other coastal 
States have these as well.
    So the Technical Mapping Advisory Council was also a 
requirement under our law, that that council be established. I 
am happy to see that it has been established. Earlier this 
month, you announced it.
    While I am disappointed that no one from Louisiana was 
included in the council, I look forward to working with the 
council nationally to make sure that they have the information 
they need to give good advice to you all so that we can build a 
better program.
    I want to thank the realtors, bankers, and the National 
Association of Counties (NACO). They all played a critical role 
in educating people about the flood risk, their exposure to 
flooding. They must have a seat at the table, our local folks 
from around the country. I am going to hold FEMA accountable 
for that.
    In closing, I am confident that we remain committed to this 
issue, continue to work together, both coastal States and 
interior States, with our eyes on what is beneficial for the 
people who need this program as well as the taxpayers that pay 
a portion of it. We have to be sensitive to the fisc of the 
Nation. I think we can build a program that works for everyone.
    So that is what our hearing is today. I thank the members 
for their attendance. We have two great panels of witnesses--we 
just heard from Senator Menendez--that will walk us through 
some of the advancements that have been made, and then we will 
ask questions. Hopefully, we can conclude here by no later than 
4 o'clock or 4:15.
    Senator Coats, your opening statement.

                   STATEMENT OF SENATOR DANIEL COATS

    Senator Coats. Madam Chairman, thank you. I apologize for 
being late. It is one of those days when I have three things 
going at the same time, one of which is an Intelligence 
Committee briefing regarding the Malaysian Airliner crash and 
the Ukrainian situation. So I am kind of bouncing back and 
forth, and I may have to apologize for leaving a little early. 
I will try to stay as long as I can.
    But obviously, the chairman on my right and senior Senator 
from Mississippi on my left, who knows the role of chairman and 
ranking member well, are at that part of the United States that 
is subject to hurricanes and the kind of flooding that is 
ingrained in our brains in terms of the horrific damage that 
can occur from those kind of storms.
    Flood insurance is also important to States, noncoastal 
States like Indiana. We have had six major floods between 
January 2008 and March 2009, just within a 1-year period of 
time. We don't get hurricanes, but we get torrential rains. And 
we have rivers, and they flood. And so in 2008, the city of 
Columbus was completely isolated by floodwaters. The ensuing 
agricultural disasters cost our State over $1 billion. Nine 
percent of our farmland at one point in this period I just 
mentioned was underwater.
    So it is important that we get this right. This issue that 
has to be addressed in a way that balances our technical 
knowledge of hoping to mitigate damage by creating the right 
maps, instituting the right floodplain management, balancing 
the contributions those who occupy the land versus the 
government and others in addressing flood insurance and risk 
management.
    So I have a map here, too--I won't hold it up--of the State 
of Indiana. It has a whole bunch of blue circles on it 
indicating where we have had significant floods in Indiana. So 
we clearly have a stake in this issue also.
    I look forward to hearing from the witnesses here, in terms 
of where we have been, where we are, and where we need to go.
    With that, Madam Chairman, I will yield my time back to 
you.
    Senator Landrieu. Thank you very much.
    Do we have any other opening statements, Senator Cochran, 
Senator Tester?

                   STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Madam Chair, I am pleased to join you at 
this hearing and to review the situation that we have with the 
Homeowners Flood Insurance Affordability Act, in particular.
    Senator Landrieu. Thank you, Administrator Fugate, for 
testifying this afternoon. You have one tough job, to implement 
this program, which is important to the whole Nation.
    You also have some immediate issues on the border, where 
you been trying to coordinate some of that emergency response 
down on the border. So we really, really, thank you.
    And I want to personally thank you for the time and 
attention that you have given to this issue. We will be happy 
to take your opening statement, and will have a few questions, 
and then we will proceed to the second panel.
STATEMENT OF CRAIG FUGATE, ADMINISTRATOR, FEDERAL 
            EMERGENCY MANAGEMENT AGENCY
    Mr. Fugate. Thank you, Madam Chair, Ranking Member, 
Senators. I submitted my written testimony for the record. I 
will keep my opening statement short, because I know you have a 
lot of questions.
    As we talk about maps, and we talk about all of these 
changes that we are trying to implement, we have to go back to 
some numbers, which to me are still issues that we need to 
resolve before we reauthorize the flood insurance bill in 2017.
    You currently have an exposure over $1 trillion in flood 
insurance policies. We are currently $24 billion in debt, and 
at the rate the program is going, as long as Treasury gives us 
the best discount rate it can, I can keep up with the interest 
payments and run the program.
    Madam Chairman, we had discussions about this after 
Biggert-Waters. My concern was we were going to force people 
that currently had homes, through no fault of their own, and 
price them out of their homes, because there was no way for me 
to check those increases. So I thank you for giving us the 
tools to look at affordability.
    But we also have to look at sustainability. Part of this 
is, we have to acknowledge we have built infrastructure we own. 
It is not going to go away anytime soon. We have to figure out 
the best way to manage that risk through making insurance more 
affordable to keep that property where it is viable. But we 
also have to make decisions about where we build going forward. 
This is not a sustainable risk we can continue to do with no 
change. That is why I really appreciate the support you give us 
in mapping.
    Maps are a two-way street. When the maps tell you your 
flood risk isn't as bad, communities want to adopt them faster 
than I can get them through the process. And when those maps 
show that the risk is much greater than a community thought 
before, I hear this a lot, ``I have lived here all my life. It 
has never been that bad. You don't know what you are talking 
about.''
    I generally hear the same thing when I go to the floods, 
and they tell me, ``I lived here all my life. I never knew it 
could be this bad.''
    So I know that the history of the flood maps, the 
technology has changed, and that we are dealing with maps that 
range from basically coming off paper maps that the U.S. 
Geological Survey (USGS) printed 20 years ago to the most 
modern light detection and ranging (LIDAR) maps, which give us 
high resolution.
    But until we have a common reference point, no matter which 
side of the debate we are on, that we can agree to, this is the 
risk. We end up talking about maps, not about how we are going 
to manage that risk and go forward.
    So the tools you have given us, with the Technical Mapping 
Advisory Council of outside experts working with groups such as 
the National Academy of Sciences that has pointed out errors or 
concerns about how we do mapping, get us to the point where we 
get maps that the community is engaged in, and the community is 
actually part of that process and ultimately adopts their maps 
as the reference from how we make our investments going 
forward.

                           PREPARED STATEMENT

    We have to acknowledge what we have today. And we have to 
protect those investments. But we also have to make sure that 
as we invest in the future, as we rebuild from disasters, we 
are making investments for future risk, not for old data.
    So with that, Madam Chair, I appreciate your support in the 
mapping program and this hearing. And with that, I will 
conclude my remarks.
    [The statement follows:]
                   Prepared Statement of Craig Fugate
    Good afternoon Chairwoman Landrieu, Ranking Member Coats and 
Members of the Subcommittee, I am Craig Fugate, Administrator at the 
Department of Homeland Security's (DHS) Federal Emergency Management 
Agency (FEMA). Thank you for the opportunity to be here today to 
discuss our implementation of the Homeowner Flood Insurance 
Affordability Act of 2014 (HFIAA).
                historical background and nfip benefits
    Flooding has been, and continues to be, a serious risk in the 
United States. Most insurance companies exclude flood damage from 
homeowners insurance because of adverse selection--only those most 
susceptible to flooding will purchase coverage. To address this need, 
Congress established the National Flood Insurance Program (NFIP) 
enacted in 1968 to make flood insurance available, identify flood risks 
and encourage sound local flood risk management. The NFIP is 
administered by FEMA.
    The National Flood Insurance Program (NFIP) serves as the 
foundation for national efforts to reduce the loss of life and property 
from flood. The program identifies areas with risk of flood, mitigates 
the long-term risks to people and property from the effects of 
flooding, and makes insurance against the risk of flood generally 
available in participating communities. More than 15.4 million people 
across the nation have NFIP coverage.
    The NFIP was, by statute and design, not intended to be actuarially 
sound. Specifically, 20 percent of policyholders, including many of the 
NFIP's highest risk structures, paid premiums that were less than 
actuarially rated and the government was subsidizing on average 60 
percent of the loss. The NFIP was broadened and modified with the 
passage of the Flood Disaster Protection Act of 1973 and other 
legislative measures. It was further modified by the National Flood 
Insurance Reform Act of 1994, and the Flood Insurance Reform Act of 
2004. The most recent reforms have come after numerous short-term 
reauthorizations and lapses in Program authority over the past several 
years. The debt resulting from Hurricanes Katrina and Sandy, the two 
costliest storms in NFIP history, illustrate the financial challenges 
for the NFIP. The total NFIP debt is currently $24 billion, with $17.5 
billion from Hurricane Katrina and $6.25 billion from Hurricane Sandy.
    Significant concentrated losses in high policy coverage areas could 
set the program up for future losses beyond the authorized borrowing 
authority. In addition, the financial challenges are heightened due to 
subsidies established to encourage older structures to participate in 
the Program and make premiums affordable for these policyholders in 
high risk areas.
    Congress and the Administration determined that further reforms 
were needed to make sure the NFIP was financially sustainable. To 
execute these reforms, Congress passed and President Obama signed into 
law the Biggert-Waters Reform Act of 2012 (Biggert-Waters). The law 
required major changes to components of the program. Many of the 
changes were designed to strengthen the fiscal soundness of the NFIP by 
ensuring that flood insurance rates more accurately reflect the real 
risk of flooding. FEMA began phasing in the rate increases for certain 
subsidized properties in 2013.
    On March 21, 2014, Congress passed and President Obama signed HFIAA 
into law, repealing and modifying certain provisions of Biggert-Waters 
and making additional program changes to other aspects of the program 
not covered by that Act. Many provisions of Biggert-Waters remain and 
are still being implemented. Like Biggert-Waters, HFIAA requires 
changes to the major components of the NFIP, including flood insurance, 
flood hazard mapping, grants and floodplain management.
                     key implementation priorities
    Changes under HFIAA are being phased in over time. FEMA has already 
implemented its highest priority from the Act: to stop the largest of 
the Biggert-Waters premium increases by restoring eligibility for 
subsidized premiums for certain policyholders. FEMA has also provided 
detailed guidance for the Write Your Own (WYO) insurance companies to 
begin issuing refunds to eligible policyholders. The WYO companies will 
begin issuing refunds on October 1, 2014.
    Key priorities for implementation include:
  --Refunds, Rates, and Surcharges;
  --Mapping;
  --Promoting Mitigation; and
  --Flood Insurance Advocate.
    We are working to implement these provisions, as well as actively 
analyzing and prioritizing implementation of HFIAA. At this point, we 
are ahead of the timelines set by Congress for refunds.
    FEMA senior leadership have traveled in many of the states with 
high concentrations of insurance policies and subsidies, and listened 
to the impacts of the new laws. Notably, we have travelled to 
Louisiana, Alabama, Mississippi, New Jersey, and New York to 
specifically discuss the impact of flood insurance reform legislation.
                     refunds, rates, and surcharges
Bulletins
    Immediately after the passage of HFIAA, FEMA began consultations 
with the Write Your Own (WYO) insurance companies to accelerate the 
timetable for reinstating certain subsidized rates and ensuring refund 
guidance was released to enable faster refunds to eligible 
policyholders. FEMA held numerous consultation calls with the companies 
and multiple in-person meetings to develop the guidance. These 
consultation calls are continuing as we move forward to get refunds out 
in coordination with the WYO companies ahead of the timeline in HFIAA. 
The NFIP is providing bulletins to its WYO company partners that 
outline what changes these partners need to make to their programs as a 
result of HFIAA.
    The first bulletin, released on April 15, 2014, advised partners on 
how to adjust rates for certain subsidized, Pre-Flood Insurance Rate 
Map (FIRM) properties as described by section three of HFIAA. Releasing 
this guidance was a major priority for FEMA given that it impacted a 
large number of policyholders. Pre-FIRM properties are properties 
typically built before detailed flood maps were developed with a 
community. The bulletin reinstated subsidies for new buyers of certain 
properties and for property not insured when Biggert-Waters was 
enacted, thus reopening the real estate markets in communities where 
Biggert-Waters impacted real estate sales.
    This bulletin detailed steps that WYO companies needed to take to 
stop rate increases and directed these partners to use the October 1, 
2013 Pre-FIRM subsidized rates (when more favorable for properties 
covered by Section 3 of HFIAA) beginning on May 1, 2014 for all new 
applications for flood insurance and for the renewal of flood insurance 
policies for properties covered by Section 3. The use of the 2013 rates 
was necessary in the short term while FEMA developed new rate tables 
and guidance to process and issue refunds for policyholders covered by 
Section 3 who were charged full-risk premiums under Biggert-Waters or 
were charged rates in excess of the increase in premium caps in section 
5 of HFIAA. FEMA released this bulletin ahead of schedule, making the 
processing of refunds smoother and positively impacting approximately 
one million policyholders. By applying the pre Biggert-Waters rate 
table, the amount and size of refunds was substantially reduced and 
also at least half of the renewals were not getting the full risk rate 
phase in. Since the release of the first bulletin, FEMA has issued two 
major bulletins issuing new rate takes and instructions to WYO 
companies on refund procedures.
Premium Rates for Subsidized Policies
    HFIAA requires gradual rate increases to properties now receiving 
artificially low (or subsidized) rates instead of immediate increases 
to full-risk rates required in certain cases under Biggert-Waters. 
These rates were developed and released for use on policies effective 
on October 1 2014.
    Under HFIAA, FEMA is required to increase premiums for subsidized 
properties by no less than 5 to 15 percent annually, until the class 
premium reaches its full-risk rate--but by no more than 18 percent 
individually. It is important to note that close to 80 percent of NFIP 
policyholders paid a full-risk rate prior to either Biggert-Waters or 
HFIAA, and are minimally impacted by either law. With limited 
exceptions, flood insurance premiums for individual policyholders 
cannot increase more than 18 percent annually.
    There are some exceptions to these general rules and limitations. 
The most important of these exceptions is that policies for the 
following properties will continue to see up to a 25 percent annual 
increase as required by Biggert-Waters until they reach their full-risk 
rate:
  --Older business properties insured with subsidized rates;
  --Older non-primary residences insured with subsidized rates;
  --Severe Repetitive Loss Properties insured with subsidized rates; 
        and
  --Buildings that have been substantially damaged or improved built 
        before the local adoption of a Flood Insurance Rate Map (known 
        as Pre-FIRM properties).
    To enable new purchasers of property to retain Pre-FIRM rates while 
FEMA is developing its guidelines, a new purchaser will be allowed to 
assume the prior owner's flood insurance policy and retain the same 
rates until the guidance is finalized. Also, lapsed policies receiving 
Pre- FIRM subsidized rates may be reinstated with Pre-FIRM subsidized 
rates pending FEMA's implementation of the rate increases required by 
the HFIAA.
    On May 29, 2014, FEMA released a second bulletin that established 
new flood insurance rates consistent with the new cap on rate increases 
mandated by HFIAA. Those rates will be effective October 1, 2014.
Refunds
    On June 26, 2014, FEMA issued a Bulletin to our WYO insurance 
partners on how to process refunds for qualified policy holders. The 
Bulletin provides information on who qualifies for a refund, how the 
refund will be calculated, and provides a timeframe for completing the 
refunds.
    We are asking companies to complete their work on refunds by 
December 31, 2014 provided we do not have another large flooding claims 
event in the meantime.
    For certain flood insurance policies affected by the Pre-FIRM 
subsidy elimination required by Biggert-Waters, HFIAA mandates refunds 
of the excess premiums that those policyholders were charged. Refunds 
may also be due to policyholders whose rates increased more than 
permissible under the new premium increase cap of HFIAA. FEMA estimates 
there will be 1,000,000 refunds totaling $100 million. The refunds will 
range from a few dollars to $10,000 or more. The average refund is 
$100.
    It is important to note that not all policyholders will receive a 
refund and nearly 80 percent of the programs policyholders paid a full-
risk rate prior to both laws and continue to be minimally impacted by 
the implementation of rate changes and refunds. Refunds will only 
affect policyholders for whom the rate increases under Biggert-Waters 
were revoked.
New Mandatory Surcharges
    As stipulated under HFIAA, a new surcharge will be added to all new 
and renewed policies to offset the subsidized policies and increase the 
solvency of the NFIP program. A policy for a primary residence will 
include a $25 surcharge annually and all other policies will include 
a$250 surcharge annually. This surcharge will be included on all 
policies, including full-risk rated policies until all Pre-FIRM 
subsidies are eliminated. We are still working on guidance related to 
the surcharges and expect for the guidance to be released this fall, 
with surcharges beginning in spring of 2015 after 6 months of notice to 
the companies as required by law.
Grandfathering
    HFIAA restores FEMA's ability to grandfather properties into the 
risk classes they were in when the buildings was constructed. For 
properties newly mapped into a Special Flood Hazard Area (SFHA), HFIAA 
sets first year premiums at the same rate offered to properties located 
outside the SFHA (Preferred Risk Policy rates). These premiums will be 
increased annually within the premium increase cap set by HFIAA until 
they are actuarially rated.
Affordability Study
    The HFIAA requires FEMA to draft an affordability framework, which 
is due to Congress 18 months after completion of the affordability 
study required by Biggert-Waters. Conducted by the National Academy of 
Sciences, this study will inform FEMA's affordability framework 
required by HFIAA.
    In developing the affordability framework, FEMA must consider:
  --Accurate communication to customers of the flood risk;
  --Targeted assistance based on financial ability to pay;
  --Individual and community actions to mitigate flood risk or lower 
        cost of flood insurance;
  --The impact of increases in premium rates on participation in NFIP; 
        and
  --The impact of mapping update on affordability of flood insurance.
    The affordability framework will include proposals and proposed 
regulations for ensuring flood insurance affordability among low-income 
populations.
                            other provisions
    HFIAA also contains certain other provisions, including:
  --Requiring FEMA to consider flood mitigation of the property in 
        determining a full-risk rate (Sec. 14). This requires 
        rulemaking.
  --Mandating that FEMA develop a monthly installment payment plan for 
        non-escrowed flood insurance premiums, which will require 
        changes to regulations and the Standard Flood Insurance Policy 
        contract.
  --Increasing maximum deductibles for residential properties (Sec. 
        12).
  --HFIAA encourages FEMA to minimize the number of policies where 
        premiums exceed 1 percent of the coverage amount, and requires 
        FEMA to report such premiums to Congress.
    With regard to rulemaking, FEMA is in the process of developing 
regulations to implement provisions of HFIAA. This process includes 
complicated environmental, economic, and regulatory analyses. Upon 
completion of the Administration's review, FEMA will publish a notice 
of proposed rulemaking in the Federal Register, and interested members 
of the public will have an opportunity to submit their comments. At the 
end of the 60-day comment period, FEMA will carefully consider all 
comments received as part of the public docket and prepare a final 
rule. We have made rulemaking a priority for the provisions in the 
flood insurance reform laws and additional resources have been made 
available to implement the requirements of the new law.
                                mapping
Value of Maps
    Mapping and identifying flood hazards enables informed, smart 
development and encourages communities to adopt and enforce minimum 
floodplain management regulations. These efforts minimize the financial 
impact of flooding on individuals and businesses, and mitigate the 
effects of flooding on new and improved structures.
    FEMA consistently releases new flood maps and data, giving 
communities across America access to helpful, authoritative data that 
they can use to make decisions about flood risk, enabling safer 
development and rebuilding following disasters.
    FEMA has worked with its partners to map 1.14 million miles of 
flood study miles for the NFIP. FEMA monitors and manages the NFIP 
mapping inventory for these flooding sources closely through the use of 
a Coordinated Needs Management Strategy. As of March 2014, roughly 52 
percent of these studied miles are either in compliance, or are 
actively being updated to achieve compliance with current technical 
standards. Of the remaining inventory, 40 percent of these studied 
miles require further assessment and the other 8 percent have been 
determined to require an updated study. Flood maps help communities 
identify flood hazards, develop smart plans and to adopt and enforce 
minimum floodplain management regulations. These efforts minimize the 
financial impact of flooding on individuals and businesses, and 
mitigate the effects of flooding on new and improved structures.
    In fiscal year 14, approximately $215 million in funding was 
allocated to the FEMA Risk MAP program. Fifty-six percent of Risk MAP 
funds are used for map production. Map production remains the emphasis 
of the program, with the remaining funds going to supporting 
activities: 15 percent to customer support (call centers, outreach, 
etc.), 10 percent to program management, 9 percent for processing 
Letters of Map Change requests, 8 percent to support FEMA workers' 
salaries and benefits, 1 percent to risk assessment and mitigation 
planning, and 1 percent to travel, training, etc. FEMA, like many 
Federal agencies, relies on contractors to perform some of the mapping 
to create efficiencies and to keep production costs low. Of those 
working on Risk MAP, 60 percent are contractors. To control standards 
and keep oversight, 4 percent of those working are from FEMA HQ and 8 
percent are from Regional offices. The remaining 28 percent of those 
working on Risk MAP are Cooperating Technical Partners (State and local 
entities that receive grants from FEMA to produce maps and Risk MAP 
products), community-hired companies using their local knowledge to 
produce map changes, and other Federal agencies, such as the U.S. Army 
Corps of Engineers.
    FEMA consistently releases new flood maps and data, giving 
communities across America access to helpful, authoritative data that 
they can use to make decisions about flood risk, enabling safer 
development and rebuilding following disasters.
Enhanced Communication and Outreach
    The HFIAA requires FEMA to enhance coordination with communities 
before and during mapping activities. In accordance with this 
direction, FEMA notifies Members of Congress when their constituents 
will be impacted by a flood mapping update. These notifications began 
in June of 2014, and will continue on a monthly basis. Congressional 
offices have been briefed on our implementation efforts and are now 
receiving monthly reports. FEMA Intergovernmental Affairs routinely 
distributes information to update state, local, tribal and territorial 
officials and national governmental associations on the implementation 
of HFIAA. And, as requested, FEMA Intergovernmental Affairs attends and 
facilitates meetings and conference calls with stakeholders to answer 
specific questions and provide more detail about the implementation 
process.
Technical Mapping Advisory Council
    The Technical Mapping Advisory Council (TMAC) is a Federal advisory 
committee established to review and make recommendations to FEMA on 
matters related to the national flood mapping program required by 
Biggert-Waters. This Council is currently organizing and will host its 
first meeting shortly. The TMAC is comprised of experts from Federal, 
state, local, academic, and private sector organizations as mandated by 
legislation and governed by the Federal Advisory Committee Act 
requirements.
    HFIAA requires the TMAC to review the new national flood mapping 
program authorized under Biggert-Waters and for FEMA to submit the TMAC 
review report to Congress. Similarly HFIAA requires the Administrator 
to certify in writing to Congress that FEMA is utilizing ``technically 
credible'' data and mapping approaches. FEMA will look to the TMAC for 
recommendations on how best to meet the legislatively mandated mapping 
requirements for the new mapping program including the identification 
of residual risk areas, coastal flooding information, land subsidence, 
erosion, expected changes in flood hazards with time and others.
    As the new national flood mapping program is being established, 
FEMA expects there will be opportunities to make incremental 
administrative improvements to current procedures as it provides flood 
hazard data and information under the NFIP. FEMA will make those 
improvements where necessary to ensure all ongoing changes to flood 
hazards continue to be effectively communicated, mitigated, and 
properly insured against.
                 levee analysis and mapping procedures
Levees
    Levees continue to be a major concern to many communities. 
Residents may be significantly impacted by the depiction of flood 
hazards, especially when the accreditation status of a levee system 
changes. To address the impacts of the depiction of flood hazards on 
Flood Insurance Rate Maps (FIRMs) to residents, FEMA has continued to 
refine the treatment of levee systems and how associated hazards are 
identified and mapped. A major step forward was the establishment of 
the updated Levee Analysis and Mapping Procedures (LAMP) to facilitate 
coordination and communication with communities to account for the 
flood hazard reduction granted by non-accredited levee systems on the 
FIRMs. FEMA initiated 25 pilot projects and plans to begin an 
additional 50 projects in the second year of applying these updated 
procedures.
    FEMA is working to update the regulatory requirements to obtain an 
``Adequate Progress'' or a ``Flood Protection Reconstruction'' 
determination to align with those outlined in HFIAA. Because of HFIAA, 
FEMA is authorized to consider requests for projects constructing or 
reconstructing flood protection systems; requests will not be limited 
to projects with Federal funding; and the present value of the system 
can be considered in making determinations on applications requesting 
A99 zones to be mapped. A99 designates an area of special flood hazard 
where enough progress has been made on a flood protection system to 
consider it as complete for flood insurance rating purposes.
    A community whose flood protection system can no longer be 
certified, but those who are in the process of restoring the system may 
be eligible for a flood control restoration zone reflecting temporary 
flood hazard areas in order to obtain reduced flood insurance rates and 
floodplain management requirements although the mandatory purchase 
requirement still applies. The HFIAA authorizes FEMA to consider Zone 
AR requests that may be submitted for levees in riverine and coastal 
areas, except when the landward flood zone of the existing structure 
would be defined as a Coastal High Hazard Area; requests will be 
reviewed without regard to Federal funding or participation; and 
restoration projects must be complete or meet the requirements to 
submit a request for a Zone A99 determination within a specified 
timeframe, not to exceed 10 years, from the date the community submits 
the request for a Zone AR determination by FEMA. FEMA is working to 
update its Zone AR regulations as well.
Other Provisions
    HFIAA exempts mapping fees for flood map changes due to habitat 
restoration projects, dam removal, culvert re-design or installation, 
or the installation of fish passages. HFIAA requires FEMA to consider 
the effects of non-structural flood control features, such as dunes, 
and beach and wetland restoration when it maps the special flood hazard 
area.
                          promoting mitigation
    FEMA helps thousands of communities and tens of thousands of 
individuals avoid the suffering and economic loss associated with 
disaster damage through encouraging the development of mitigation 
plans, funding mitigation activities, incentivizing sound floodplain 
management strategies and developing resources--such as maps--that 
inform risk.
    FEMA promotes effective hazard mitigation through community 
education, outreach, training and coordination with the public and 
private sectors. To achieve these goals, the outreach group provides 
advice to the public on hazard mitigation techniques and measures 
through Disaster Recovery Centers, other disaster assistance 
facilities, community meetings and special events.
    In cooperation with the state, this group also promotes 
partnerships and trains local officials, the construction industry, and 
residential and commercial building owners. It also identifies, 
documents and disseminates mitigation best practices.
Incentivizing Communities: Community Rating System
    FEMA is also actively involved with increasing community 
participation in the NFIP Community Rating System (CRS). The CRS is 
administered by FEMA and provides reduced flood insurance premium rates 
for policyholders in CRS communities. The amount of premium reduction 
is tied to the effectiveness of a community's floodplain management 
program and other mitigation activities. Communities apply to 
participate in the CRS, are reviewed to determine eligibility, receive 
an assessment of their floodplain management loss reduction program and 
then are assigned a CRS Class rating that determines premium discounts. 
Through the CRS, the cost of insurance is reduced for policyholders in 
communities that take action to reduce flood risk.
    The CRS is seeing a significant growth in recent participation. 
From 2011-2014, an average of 49 communities joined the CRS each year. 
In the previous 3 years, we saw an average of 32 new communities join 
each year. Similarly, there is growth in the number of existing CRS 
communities improving their CRS Class. An average of 91 communities 
have improved their CRS Classes in each of the last 3 years. An average 
of 82 CRS communities improved their CRS Class during each of the 
previous 3 years.
    In total, 1,296 communities participate in the CRS program, 
representing 69 percent of all NFIP flood insurance policies.
    In Maryland, 11 communities participate in CRS, which includes 
Unincorporated Prince George's County. This county is the most advanced 
CRS community in the state, with a CRS Class 5 rating. As a CRS Class 5 
community, policyholders in the Special Flood Hazard Areas receive a 25 
percent discount on flood insurance premiums. In Prince George's 
County, 932 policy holders receive this discount.
    In Alabama, 14 communities participate in CRS. The City of 
Birmingham and Unincorporated Baldwin County both have a CRS Class 6 
rating, which is the most advanced CRS Class in the state. As CRS Class 
6 communities, policy holders in the Special Flood Hazard Areas receive 
a 20 percent discount on their flood insurance premiums. In the City of 
Birmingham, 777 policyholders receive this discount. In Unincorporated 
Baldwin County, 6,034 policy holders receive the discount.
    In Louisiana, 42 communities participate in CRS. Jefferson, East 
Baton Rouge and Terrebonne Parishes have the most advanced CRS ratings 
in the state as CRS Class 6 communities. The CRS Class 6 rating enables 
policy holders in the Special Flood Hazard Areas to receive a 20 
percent premium. More than 94,000 policy holders in the three parishes 
receive a CRS discount.
    In Indiana, 21 communities participate in CRS. Unincorporated 
Hamilton County has the most advanced CRS rating in the state as a CRS 
Class 7 community. A CRS Class 7 rating enables policy holders in the 
Special Flood Hazard Areas to receive a 15 percent premium discount. 62 
policy holders in the County receive a CRS discount.
    FEMA is pleased to see growth in CRS. We are making internal 
adjustments to accommodate this growth and will continue to do so as 
demand requires. By strengthening partnerships with our NFIP State 
Coordinating Offices, using a new web-based application tool and 
relying more heavily on new communication technologies, we are 
achieving improved efficiencies that are enabling us to keep pace with 
this growth of interest.
                        flood insurance advocate
HFIAA Requirements
    HFIAA requires FEMA designate a Flood Insurance Advocate to educate 
and assist policyholders with regard to flood mapping, mitigation, 
understanding their flood risk, and in obtaining accurate and reliable 
flood insurance rate information.
    Specifically, the HFIAA requires that the Advocate:
  --Educates on individual flood risks; flood mitigation; measures to 
        reduce rates through effective mitigation; the rate map review 
        and amendment process; changes in the program as a result of 
        any newly enacted laws;
  --Assists in understanding how to appeal preliminary rate maps and 
        implementing measures to mitigate evolving flood risks;
  --Assists in developing regional capacity;
  --Coordinates outreach and education with local officials and 
        community leaders in areas impacted by map amendments and 
        revisions; and
  --Aids potential policy holders in obtaining and verifying accurate 
        rate information when purchasing or renewing a policy.
Creating the Advocate
    FEMA is actively working to develop the concept of operations for 
the Advocate and identifying the resources required to stand up the 
office.
    To develop this concept of operations, FEMA is meeting with Federal 
agencies with advocate and consumer affairs offices to gather best 
practices and understand how these entities are structured. 
Additionally, the Agency is currently soliciting input from key 
stakeholders including WYO companies, state emergency management 
officials, hazard mitigation officers and NFIP coordinators.
Next Steps for the Development of the Flood Advocate
    FEMA will continue to meet with stakeholders and gather best 
practices from other Federal agencies throughout the summer. 
Additionally, FEMA will conduct an internal analysis of existing data, 
including data from call centers and questions from Congressional 
correspondence.
    This feedback and data will inform the recommendations that the 
Advocate working group recommends to FIMA senior leadership, which will 
then provide a recommendation to the appropriate officials.
                               conclusion
    FEMA administers the NFIP to help communities increase their 
resilience to disaster through risk analysis, risk reduction and risk 
insurance. The NFIP helps individual citizens recover from the economic 
impacts of flood events, while providing a mechanism to reduce exposure 
to flooding through compliance with building standards and encouraging 
sound land-use decisions.
    HFIAA requires changes to major components of the NFIP, including 
flood insurance, flood hazard mapping, grants and floodplain management 
and FEMA is working quickly, yet carefully to make these changes.
    Specifically, FEMA is moving ahead of schedule in prioritizing 
changes to the NFIP's business processes to stop policy increases for 
certain subsidized policyholders and in issuing guidance for the WYO 
insurance companies to begin issuing refunds to some policyholders.
    I look forward to continuing to work with Congress on HFIAA 
implementation and to ensuring the continuing solvency of the NFIP.

                        FLOOD MAPPING: ACCURACY

    Senator Landrieu. Thank you very much.
    Let's talk about the maps for a minute. I know David Miller 
is on our second panel, and we can direct some of the more 
technical questions to him.
    But if you had to explain to the Congress where the flood 
mapping is most accurate, where it is least accurate, how long 
it is going to take you to get very high resolution, accurate 
maps of the country, how would you do it? And is there a 
picture that you can show us of where the flood mapping is 
accurate and where it is not?
    Mr. Fugate. Madam Chairman, I think either David can answer 
your questions or we can take a question for the records.
    What we do know is this, in looking at our current 
inventory maps, about half the maps are current with good data 
or that we don't think that there is anything that has 
substantially changed since the last mapping was done.
    There is 40 percent that will need to be reviewed that we 
are not able to determine if those data or any changes would 
warrant the map update.
    For roughly 8 percent to 10 percent, we know that the data 
are out of date. We know they need to be updated. So, in rough 
numbers, that is how it breaks down.
    More importantly, the better the data, particularly things 
such as digital elevation maps, that we have in developing the 
maps, the more accurate the maps are. So where communities have 
invested or we have been able to partner with other Federal 
agencies to get better digital elevation maps, one of the tools 
often used in that is called LIDAR, we get much better map 
products, and we get resolutions much greater than the tools we 
have used previously, as this has continued to evolve, as new 
technology comes on board.
    Senator Landrieu. And the reason I am pressing this, and I 
think this is color-coded, and I want to say, do you basically 
agree? I think you all provided this map. Who made this map? 
FEMA did. So this is your map.
    What it shows me is that we have a lot of work to do. The 
blue are flood maps that are in effect, but they may not be 
accurate. The green are proposed flood maps that have been 
introduced, but they haven't been accepted. And the yellow are 
new flood maps that we need.
    Now this is a subcommittee of the Committee on 
Appropriations. That is why we are having this hearing. This 
subcommittee has to supply the funding for these flood maps. So 
I want to ask you, what has the President asked in his budget 
for flood maps? What did we give you? How much more do you 
need? And at the pace we are giving it to you, are you going to 
have enough data before 2017, so before we go through this 
exercise again, we can actually have accurate flood maps? Or 
are we going to do another bill without them?
    Mr. Fugate. Probably, with the amount of money that we have 
and the work we are doing, I would have to have staff say what 
percentage of maps can be updated by 2017, but I can assure 
you, I doubt we will be complete in 2017.
    The other thing that is changing, though, is looking at 
some new techniques. You have given us and the USGS some 
appropriations, to look at how we partner with LIDAR.
    What I want to do is drive down the cost of base map 
development and the timeframe it takes to get the maps into 
draft forms to present them to local governments, because this 
process is not just FEMA doing a map. We do this in conjunction 
with local officials, who ultimately will use that map and 
adopt that map. And what we are looking at is, with the new 
technology, can we speed up the process of getting the base 
maps updated at a lower cost? That would accelerate how many 
maps we can do in the future.
    So we are partnering with USGS to look at those tools and 
techniques to move this forward.
    Senator Landrieu. I just want to say that I am going to 
really be pushing this subcommittee, the whole Committee on 
Appropriations, the Committee on Banking, and the Congress to 
get complete and accurate flood maps done before we engage in 
trying to rewrite a flood insurance program.
    I am just not convinced that you can do a good job without 
that. It is basic data that you have to have, I think, in order 
to write a program.
    Now if somebody wants to testify to this subcommittee in 
opposition to that position and give me some evidence that will 
move me off of that position, I am open to hear it. I haven't 
heard it yet.
    So we are going to listen to the second panel, but as the 
guy who has the buck stop at your desk, I hope you can find a 
more cost-effective way. Tell me how much more money you need. 
I will do my best. We have very tight constraints.
    But as I said, this is not just a Louisiana, Mississippi, 
coastal issue. The 450 counties that are most threatened 
produce 50 percent of the GDP of this Nation.
    And having them relocate to other places does not solve the 
problem. I know that is what people think, but you can't 
relocate mouths of rivers. You can't relocate canals. You can 
relocate five-lane highways without a tremendous amount of 
expense, or 10-lane highways, five on each side.
    People think, why do those people live there? Well, they 
live there because that is where the jobs, the economy--you 
just can't move it. That is not to say you can't have 
prospective building codes. But this is all retrospective that 
we are dealing with. This is done. This is in the ground. And 
this is serious.
    I have exceeded my time. I have many more questions. I will 
submit them for the record.
    But I am going to turn it over to Senator Coats.
    Senator Coats, I just what to make sure, because I think I 
put this up before you got here. Could you all show the 
interior map, please?
    We finally got FEMA to map the interior. Interestingly, the 
darker shades are the communities that have some serious flood 
risk. I guess you can see that in North Dakota, Nevada, New 
Mexico, parts of East Texas, Indiana.
    It is very interesting. People say, well, it is a coastal 
issue. Well, no, it is not. But on the coast, though, the 
population is on the coast. So it sort of disproportionately 
affects high population cities like Miami and New Orleans and 
some of the coast. But in the interior, you may not have a lot 
of people, but you still have a great amount of area.
    Mr. Fugate. Senator, we have the same issue in Alaska. We 
have the same issue in the islands with Hawaii. Most of the 
disasters we deal with in Puerto Rico are due to flooding in 
the mountains.
    Senator Landrieu. And I am sorry that we have left out 
Alaska and Hawaii. I am sorry, Senator Murkowski. We will fix 
that. We have to get Hawaii and Alaska on our maps as well.
    But, Senator Coats.

                   INSURANCE, COMMUNICATING NEED FOR

    Senator Coats. Thank you, Madam Chairman. We may need to 
add some of your staff to the mapping process to get it done a 
little bit faster. Somehow you came up with some pretty good 
maps.
    Director, thanks for your service, number one. We worked 
together on some disasters impacting the State of Indiana, and 
I commend you as I did then, and want to repeat it now, the 
efficiency and effectiveness of FEMA's response shows dramatic 
improvement in FEMA under your direction. So I compliment you 
on that and thank you.
    Let me just ask one question, because I would also like to 
ask the second panel, we all know in insurance that adverse 
selection can be a killer. And those most subject to the risk 
purchase the insurance, and those more on the fringe think they 
don't need it or are willing to take the risk.
    But we also know that the whole basis of insurance is to 
spread that risk. So my question is, how are you working with 
local communities? You have advocate the whole of community 
approach to prepareness. How is that working? What more needs 
to be done? And is there something that we can do in Congress 
or local officials can do to get this concept of community 
involvement adopted? Even though it might be perceived for 
example that the houses down along Elm Street are more subject 
to flooding and, therefore, they are likely to purchase 
insurance, but the ones on Oak Street, well, we are higher, so 
we don't need to worry about that.
    How can we counter that attitude spread that risk, and get 
the community engaged, and making flood insurance more 
affordable but also more manageable?
    Mr. Fugate. We work on this, but it is difficult. When 
people talk about flood insurance rate maps, their assumption 
is that if they are not in the special risk area, they are told 
they don't need to buy flood insurance. What they really should 
have been told is, it is not a requirement of your federally 
backed mortgage, however--this is the education piece--most of 
middle America, the biggest single investment is their home. 
And without flood insurance, the average homeowner's policy 
will not cover that risk. So whether you are in a special risk 
area where you are going to pay proportionately more or outside 
of that special risk, or where we have preferred rates of 
hundreds of dollars for that $250,000 of coverage, without 
that, people put at risk one of their biggest single 
investments by not having flood insurance under the 
determination that, well, I wasn't required to buy it, 
therefore, it must not be needed.
    I think we have to continue to educate people that the 
flood risk, particularly in Sandy and Katrina and most of other 
floods, in much of the areas that flood are not just in the 
special risk areas. And the people who lose everything because 
they didn't have flood insurance and could not make their 
mortgage payments, could have had coverage for literally $300, 
$400, as much as $500, and had full coverage each year for that 
risk.
    Senator Coats. How do we communicate that? I would think 
that it would take a communitywide effort to communicate that 
throughout the community?
    Mr. Fugate. I think some of our allies in that will be on 
the next panel, because realtors and others are able to educate 
buyers and because we are able to work with the Write Your Own. 
Because you allow us to use money to do public information 
campaigns where we do the PSAs about flood risk, it is not 
always about being in that special flood risk and the need to 
have insurance. We work through a variety of groups and work 
with people talking about financial disaster planning, the 
things you need to do and check.
    But again, it is an additional cost for many people, and so 
we have to change the terminology when we talk about our risk 
maps. Just because you are not required to buy flood insurance 
doesn't mean you are not at flood risk.
    Too oftentimes, that is communicated as, ``You don't have a 
flood risk. You don't have to buy flood insurance.''
    Senator Coats. Thank you, Madam Chairman.
    Senator Landrieu. Senator Tester.

                        INSURANCE POLICY FORMAT

    Senator Tester. Thank you, Madam Chair.
    The same argument could be made for the Affordable Care 
Act, reducing risk by broadening the pool.
    I want to thank Administrator Fugate, also. I appreciate 
your work. You have had to make some tough decisions, and you 
have, and I appreciate that.
    I think all of this is somewhat compounded by climate 
change, changing water levels, changing storms.
    My dad always told me that if you build on a floodplain or 
in the middle of the forest, you better be able to expect to be 
flooded or burnt. And we are seeing exactly that happening with 
more regularity now.
    So we are in the 21st century, and we have to make some 
decisions. But I have a much easier problem for you to solve 
than all of that.
    It really deals with Biggert-Waters and section 100234, 
which you are probably the only one with just a couple more 
nodding their heads who know what that is.
    Mr. Fugate. The no small print or the big font.
    Senator Tester. That is the big font. It is increasing the 
printing and postage costs for insurers. I think you have been 
working with the stakeholders. Can you give us an update on 
your work with the stakeholders?
    Mr. Fugate. The first question we had to ask our legal team 
was, given the language was pretty explicit that the Write Your 
Owns companies would need to send the policy in the big font, 
and we were questioning what discretion would the 
administration have given the language of that section, the 
attorneys think that this comes back to if we allow the 
individual to make that decision, do you want it in big print 
or do you want it electronically? So we are currently working 
with that.
    There is some push back in the House, but I think we are 
going to work this in a way that it be a compromise on both 
sides. But we want to make sure if anybody wants their policy 
in print, there should not be any barriers or any additional 
steps they should have to take.
    But if they wanted electronically, like most people now 
tend to want things electronically and go paperless, we don't 
think we should preclude them from going paperless, because we 
have to send them a large font copy.
    Senator Tester. So you just answered the next three or four 
questions I have, so I just want to recap it very quickly.
    What you are saying is that if the consumer asks for it in 
small print, they can have it in small print. And if the 
consumer asked for it to be delivered to them electronically, 
it can be delivered to them electronically, without any 
changes. You have the authority to be able to authorize that.
    Mr. Fugate. That is what we understand, although I will 
caution that in discussing this in the House, there is some 
concern that they want more discussion on that. But we are 
working toward that, to allow people to self-determine 
electronic or the big font.
    Senator Tester. So you have the resources to do this? You 
have the language to do this? And, basically, as usual, the 
House is screwing things up.
    Mr. Fugate. Well, I will tell you what we will do, Senator. 
We reached one determination. We think we have the 
administrative tools. We are currently finalizing that. I will 
be more than happy to share that back with you when we share 
that with the House, how we see this going.
    But I think the intent should be to allow the policyholder 
to self-determine whether or not they want paper or go 
paperless.
    Senator Tester. I would just ask, and I would ask you, 
Madam Chairman, Ranking Member Coats, in all seriousness, if we 
can do some things to advance this issue forward, I think it 
helps policyholders with affordability, and affordability is 
the big concern that I have heard so far today.
    This is something that we can do that we don't have to 
worry about storms. We can do it.
    I want to once again thank you, Administrator Fugate, for 
your hard work. And if we can help you advance this, would you 
please just let us know, because I think it is important for 
the consumer.
    Thank you.
    Senator Landrieu. I just want to submit for the record, 
because this is a very important issue, this is the large font 
that FEMA believes is required, and this is the document that 
FEMA is saying must be mailed.
    I have just read the law. Nothing in the law says this has 
to be mailed.
    ``The form as developed under section A shall be given 
to.'' It doesn't say ``mailed.'' ``Given to all holders,'' et 
cetera, et cetera, et cetera.
    [The information follows:]
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Senator Landrieu. But the law does say very clearly here 
that it has to be in plain English. This is the language, ``in 
plain English in boldface type in a font that is a size that is 
twice the size of the text of the body of the policy.'' So the 
lawyers can figure out what the size is.
    But if it is this size, this is what it is, just for the 
record.
    This is an important issue, because there are expensive 
ways and inexpensive ways to do this. But what is important, I 
think Senator Tester will agree, that people do need plain 
English to understand what is in their policy. And I think that 
Congress feels pretty strongly about that.
    Senator Tester. There is no doubt about that. And there are 
some places, Alaska is a prime example, where you might not 
have the broadband to be able to send it electronically, so the 
mail is entirely appropriate. But where electronic will work, I 
think it will save money.
    Mr. Fugate. Senator Tester, I think my guiding principle to 
my guys is, the customer should select what their option is. 
But no matter how they get it, it should meet the intent of 
that section, that it is large enough to read, it is clear, 
plain English, and whether you want it writing or you want it 
electronically, we should allow the customer to determine that.
    Senator Landrieu. Thank you very much.
    Senator Cochran.

                            NEW REGULATIONS

    Senator Cochran. Mr. Administrator, I am curious to know 
when you expect to have all the methodologies available for 
publication and dissemination?
    Mr. Fugate. Which areas of the program, sir?
    Senator Cochran. Areas that are covered by the new 
regulations.
    Mr. Fugate. We are rolling these out, Senator. The first 
thing we did was to the Write Your Owns, because you have a 
requirement in the law that before we make a change, we have to 
send notice to the Write Your Owns and do consultations. So the 
first thing we did was to stop any rate increases on 
transactions and roll those back to the previous rates before 
Biggert-Waters.
    The second part we are doing now are the refunds. So we 
have been working with the Write Your Owns to get that guidance 
out. Our goal is, as long as we don't have any large-scale 
events that would disrupt us for the Write Your Owns, they will 
start doing reimbursements this fall, completed by December. We 
expect about $100 million. That is going to range from dollars 
to thousands of dollars, depending on how much they paid.
    The next step is that we hope to also work on the guidance 
on the fee surcharge, which will go across all the policies for 
next winter as we come out of this year, as we get the first 
two done. And that would then get the Write Your Owns the tools 
to begin doing the surcharge.
    So we are marching through this, but we took it kind of in 
the order of let's stop the rate increases on transactions, 
because what we were hearing from realtors and others was, ``I 
can't sell my house because the rates are too high and there is 
no way to build that in.''
    So that was the first thing that we did with the Write Your 
Owns. The second step will be the refunds. The third step will 
be finally implementing additional surcharges that will be part 
of that program in the out-years.
    Senator Cochran. Thank you, Madam Chairman.
    Senator Landrieu. Senator Murkowski.

                        FLOOD MAPPING ELEVATION

    Senator Murkowski. Thank you, Madam Chairman
    Administrator, thank you for being here today. I came in as 
Senator Landrieu was asking questions about the mapping and the 
quality of the mapping.
    I hear so much about this from my constituents. I have 
shared some of their concerns with you. But whether they are 
the local governments, whether they are the individual 
homeowners, what they are complaining about is what they 
perceive to be the quality of the data that FEMA relies on that 
ultimately forces those homeowners to pay for their flood 
insurance premiums.
    They are looking at these maps, and they are saying these 
are illogical. They are inaccurate. And then FEMA comes back 
and says, well, hire yourselves an engineer, get an elevation 
certificate, file for a letter of map amendment (LOMA) if you 
don't like it. Of course, that just further infuriates them, 
because they figure, look, you should have gotten the facts 
right in the first place rather than have them pay for 
something they don't necessarily want.
    So the question to you this afternoon is whether or not the 
act that we have passed has provided FEMA with any new tools to 
improve the quality of maps so that we can get it right the 
first time. Because I think that is what people are hoping for, 
that we are going to get it right the first time. So do we have 
a better way to do this?
    Mr. Fugate. Yes, Senator. It goes back to the way the maps 
are done now. They are not house-by-house. They are done by 
areas, and they set a rate for an area, not for a house. Unless 
we know what the elevation of that house is, you are going to 
get the rate that is established for that area.
    So if a house has a higher elevation, that is why we need 
the elevation certificate. If it is above the base flood 
elevation, they don't have to pay the higher rates. They get a 
preferred rate.
    But the maps currently do not map the base elevation of a 
house. But technology is changing. This is one of the things 
that Senator Landrieu has been supporting, and it is that we 
have funds in our budget to support the USGS. And there are 
some funds for USGS, to look at how we do better modeling with 
LIDAR.
    Some of the techniques now get to a point where we think it 
is becoming economical not just to shoot a neighborhood or an 
area but actually do it house-by-house. Part of this is going 
back to that we need to validate the science behind this, make 
sure it is accurate and we are getting good results, because I 
don't want to spend a lot of money and generate information we 
can't use. We are looking at how we move the mapping so it is 
not just doing the area but we can actually get to a pretty 
good idea, particularly in residential structures, what that 
first floor elevation is.
    Senator Murkowski. How soon do you see that being 
available? We know it is out there, but readily available?
    Mr. Fugate. The challenge for government is that we had 
never been what I would say is rapid at adapting new 
technology. But the good part about that is that FEMA does not 
do the actual mapping. We contract with engineering firms. So 
my hope is, if we can validate the new tools, by working with 
the private sector and contracting for the map development, we 
can partner up with work that other Federal agencies are doing, 
as well as new techniques to get better maps.
    But if you really want to get to that whole issue of why do 
I have to go and get all this additional information about my 
home, I don't think it is that low. I need to be able to get 
maps that show on a residential basis what that elevation is, 
to risk map it.

                             VELOCITY ZONE

    Senator Murkowski. Let me ask a couple more local to the 
State issues. The first one relates to the situation in Juneau, 
and the city and borough of Juneau's claim that they should be 
permitted to develop in the velocity zone because they are in a 
very protected position as an island community within the 
inside passage there in southeast.
    But the National Flood Insurance Program (NFIP) regulations 
put an absolute block on development in the velocity zone. 
Juneau has acknowledged that it is going to stifle their 
ability to develop at all.
    FEMA has expressed a willingness to undertake this study 
here, and we inserted some language in the fiscal year 2014 
Homeland Security appropriations bill to encourage FEMA to take 
a look at this issue. But we were still sitting here now, a 
couple years out.
    Is there any progress that you can report on this? Is FEMA 
willing to work with Juneau on this?
    Mr. Fugate. We are willing to work with the city. I would 
have to have staff respond in writing.
    Senator Murkowski. Could you do that?
    Mr. Fugate. Yes, Senator. I will.
    Senator Murkowski. I would appreciate that.
    [The information follows:]
                        velocity zones in juneau
    FEMA is working to complete the study to address options for 
development in High Velocity Zones (V Zones), such as those V-zones 
found in Juneau. The Senate report accompanying FEMA's fiscal year 14 
appropriations act directs FEMA to conduct a study assessing the 
feasibility of waiver authority for floodplain management requirements 
within designated V Zones on a National Flood Insurance Program (NFIP) 
rate map. FEMA has a team that is actively working on this study. This 
team includes FEMA staff and outside experts in risk analysis, flood 
loss reduction, building science and geotechnical sciences. Significant 
work has been completed to validate the current flood damage reduction 
criteria and regulations applicable in V Zones for communities 
participating in the NFIP. FEMA expects to have this study completed by 
the end of 2014 or early 2015.

    Mr. Fugate. But this goes back to an issue that Senator 
Landrieu has raised. The reason we tend to want not to build in 
velocity zones is because that is the most vulnerable area to 
any type of flooding. But as Senator Landrieu points out, there 
are sometimes infrastructure, or greater interests. That means 
we have to find a way to balance the risk versus the needs of 
the community. I think that is the direction we are trying to 
go in.

            NATIONAL FLOOD INSURANCE PROGRAM: POLICY UPDATES

    Senator Murkowski. Again, this is an issue that apparently 
there was some willingness by FEMA to look at it. We have 
encouraged that, and we just haven't seen any further progress. 
I know this is something that we would like to try to address.
    I wanted to ask one brief question on Galena. As you know, 
we had major flooding in Galena last year. This is my first 
opportunity to talk to you since we have dealt with that 
disaster and the inspector general has issued his report on 
FEMA's experience.
    The inspector general concluded, as I had, that working in 
a remote native community like Galena posed some unique 
challenges for FEMA, whether it was policy issues, logistics, 
or the cultural.
    And as we look to application of the NFIP on a community 
like Galena, I think it becomes clear to me that it just wasn't 
set up to deal with a remote Indian community where people live 
a subsistence lifestyle on their ancestral native lands.
    And I guess my question to you is whether or not you think 
it makes sense to perhaps revisit whether these flood insurance 
laws should operate differently in some communities like 
Galena. We are going to be having a hearing in Indian Affairs 
next week on the broader subject about lessons learned from 
that. But it is clear to me that we need to do more to improve 
disaster response in some of these areas. If you would care to 
comment?
    Mr. Fugate. Yes, Senator, I will break this into two 
pieces. Quite honestly, on the flood insurance, that would be 
something new to look at.
    On the response side, we have been looking at the inspector 
general report and your concerns. We are updating and 
redesigning our policy when we are dealing in these types of 
situations. We also have revamped our tribal consultation 
policy, which we think was part of the inherent issues. 
Although we are now recognizing tribal governments under the 
Stafford act for disaster assistance directly, the consultation 
policy was only recently updated as well as the declaration 
policy, the draft policy we are working from.
    So we have been working on this from the standpoint of 
responding to your concerns and the inspector general by 
updating and changing our response policy, and that is nearing 
completion. As we do that pilot as well as our consultation, we 
will take the flood insurance as well and put that into our 
consultation process and begin that work.
    Senator Murkowski. Well, we may wish to have further 
discussion about the lessons learned from Galena. And then if 
you get me information on the Juneau velocity zone, I would 
appreciate it.
    Thank you, Madam Chair.
    Senator Landrieu. Thank you, Senator.
    And let me put up my favorite map again, and ask FEMA, 
would you please produce a map for Alaska that looks just like 
this, and for Hawaii?
    Mr. Fugate. Yes, Senator. We can do it for all of the 
territories.
    Senator Landrieu. And the territories and Alaska. Alaska 
will take up half of the geographic space of the lower 48, and 
it deserves its own map.
    Senator Murkowski. Thank you, Madam Chairman.

                   TECHNICAL MAPPING ADVISORY COUNCIL

    Senator Landrieu. You are welcome. You are going to get 
your own map. And Hawaii is going to get its own map. We really 
have to be careful with this.
    Second, I have the same problem with velocity zones that 
you do. I have a parish, and you know it, because I brought it 
to your attention, Cameron Parish, which happens to be the home 
of the two export facilities for liquefied natural gas.
    Now why would they be there? Because they have to be near 
the coast. And you can either put them in the middle of Los 
Angeles, which would be very hard to site, or you can put them 
out in the middle of not nowhere, because it is our where. It 
is a very important place to us. Not many people live there, 
but you have a place some of your physical infrastructure that 
is necessary for the country in the velocity zone.
    So the two new permits, which you have helped to permit, 
Senator, are now in Cameron Parish, and Cameron Parish has a 
big ``V'' over it. We couldn't get a gas station built. We 
couldn't get a restaurant built.
    Now, this is not going to work. So I am just saying that 
this one-size-fits-all approach on this flood insurance is not 
going to work. We have to have a multi-plan.
    And then the tribe issue is a whole other dimension that I 
think really has to be taken into consideration.
    But my last question is this. As you know, I was 
disappointed that when the task force was put into effect, we 
seemed to have missed out on one or two or three States that 
have most policies. Can you at least assure me that you will 
take a look at that and see at least about this new committee 
that is established has some representation of the States that 
have the most policies? Of course, Louisiana would be one of 
those.
    Mr. Fugate. Yes, Senator. Because it is a Federal advisory 
committee, we can still have input from the States and 
representatives participating through the subject matter expert 
process.
    The other thing, this committee was established where you 
have rotating positions, so under the initial appointments, 
some people were appointed for 1 year, some were for 2 years, 
and some were for 3 years. So as we go through the first year 
and we repost, we will be reaching back out to your staff, 
hopefully, to solicit candidates in the next nomination for the 
first opening that will occur on that committee.
    Senator Landrieu. Okay, thank you very much. I think we can 
move to the next panel.
    Thank you, Administrator Fugate.
    Mr. Fugate. Thank you, Senator.
    Senator Landrieu. Panel three, we have Mr. Chad Berginnis, 
Association of State Floodplain Managers; Ms. Patricia 
Templeton-Jones, Property Casualty Insurers Association of 
America; and Ms. Donna Smith, National Association of Realtors 
Flood Insurance Task Force.
    If you all can take your seat, and get comfortable, make 
sure you have water?
    We thank you all very much for agreeing to participate in 
this panel. I want to begin, I will recognize, of course, of 
floodplain managers first and then the insurers second, and 
then the realtors third.
    But I do want to really thank the realtors for your 
extraordinary work in helping to educate the Members of 
Congress about the real threat and crisis that we were facing. 
You all were one of the key stakeholders that stepped up, along 
with the National Homeowners Association. The realtors were 
particularly active as well as the community banks and all of 
our communities that really helped our members understand what 
was actually happening, along with NACO and our local partners.
    So we really appreciate, Ms. Smith, you being here. We are 
anxious to question you on some of your excellent testimony 
that you presented.
    Let's start with Mr. Berginnis. Please begin.
STATEMENT OF CHAD BERGINNIS, EXECUTIVE DIRECTOR, 
            ASSOCIATION OF STATE FLOODPLAIN MANAGERS
    Mr. Berginnis. Thank you, Chairman Landrieu, Ranking Member 
Coats, and the subcommittee for holding this hearing. I am Chad 
Berginnis, executive director of the Association of State 
Floodplain Managers, a national professional organization of 
16,000 members and 35 chapters working to reduce flood losses 
and recognize floodplain values throughout the Nation.
    My remarks today are going to focus on the implementation 
of NFIP reforms over the past 3 years. Together, they represent 
a significant and thoughtful reform of the NFIP.
    Unintended consequences from the 2012 reform were corrected 
in 2014, such as immediately moving to full risk rates. Many 
other reforms are in the queue to be implemented.
    This leads to my first point in that everyone must have 
realistic expectations of the timeframe for implementation 
under current conditions. Few would argue with FEMA's 
prioritization of dealing with the risk rate and refund issue. 
However, there is a lot more that needs to be done to implement 
the reforms: additional rulemaking, policies and procedures 
must occur, and ASFPM is very concerned, given current 
bottlenecks, how fast that can realistically happen.
    Second, flood mapping is the foundation to all efforts to 
manage flood risk in the country and the establishment of the 
national flood mapping program was among the most important 
reforms passed by Congress. Prior to its authorization, flood 
mapping was done by FEMA, primarily to support implementation 
of the NFIP, specifically insurance rate making and land-use 
measures.
    However, with the program that has now been authorized by 
Congress, there was formal recognition of what the American 
people already knew, that FEMA flood maps were the go-to data 
source for all flood information. ASFPM has been disappointed 
with the slow pace of establishing the Technical Mapping 
Advisory Council, but now hopes that progress can be made, 
including new ways to measure the mapping program's success, 
such as getting the mapping job done through the country.
    Simply put, the Congress has established an outstanding 
framework. Together now with the administration it must 
prioritize flood mapping as important and provide the 
appropriate resources to finish the initial job.
    In ASFPM's mapping the Nation report, we put a cost model 
together that affirms your decision to authorize $400 million a 
year for the mapping program. Once we have mapped the Nation, 
then we must adequately fund mapping updates.
    ASFPM is especially appreciative of the subcommittee's 
leadership in providing $100 million in appropriated funds for 
mapping and hopes that the administration will place an 
increased priority for this in next year's budget request.
    We also want to acknowledge the Cooperating Technical 
Partner (CTP) program where capable States and communities are 
delegated the authority to perform their own mapping studies. 
Indiana has been a longtime State CTP. And one of the benefits 
of the program is when the State or community performs the 
mapping updates, it significantly reduces the us versus FEMA 
mentality that often occurs.
    Third, the reforms while addressing the acute affordability 
problem created by Biggert-Waters still leaves a flood 
insurance affordability gap. In fact, affordability was 
something that you, Senator Landrieu, recognized at the time 
Biggert-Waters was passed.
    ASFPM was the only organization that at that time testified 
that the cumulative impact of the 2012 reforms would cause an 
affordability crisis. While ASFPM supports affordability study, 
more needs to be done to address this gap.
    One of the best approaches is hazard mitigation. Mitigation 
is a triple bottom line win addressing flood insurance 
affordability, NFIP solvency, and homeowner resiliency. This is 
a fertile area where future reforms should be considered.
    We will never be able to transition the NFIP into a 
financially solvent program unless there is a good dose of 
mitigation support.
    Again, ASFPM recognizes and thanks the committee for its 
support of these critical mitigation programs, including the 
flood mitigation assistance and the predisaster mitigation 
program.asdfasdf=
    Also, there are several good ideas, such as vouchers and 
community-based policies, that might come forth from the 
affordability study, as well as the reforms.

                           PREPARED STATEMENT

    In conclusion, floodplain managers are at the frontline of 
implementing NFIP reforms. Given FEMA's resources, we think 
they are prioritizing the most important changes first, but we 
cannot accomplish all of the needed reforms and keep an NFIP 
that works for all in a piecemeal and strung-out approach. An 
affordability issue still exists, and mitigation is the key way 
of solving it.
    Above all, we must have an accurate understanding of the 
flood risk we face. Thank you.
    [The statement follows:]
                  Prepared Statement of Chad Berginnis
    The Association of State Floodplain Managers is very pleased to 
offer our thoughts and recommendations on floodplain mapping and 
implementation of the Homeowners Flood Insurance Affordability Act of 
2014 (HFIAA) as well as the key role of hazard mitigation grant 
programs in making any transition of the NFIP to be more financially 
sound and better promote community resilience. We thank Chairman 
Landrieu and Ranking Member Coats for your attention to the importance 
of this issue and how we can improve the National Flood Insurance 
Program (NFIP) throughout the nation.
    ASFPM and its 35 Chapters represent over 16,000 state and local 
officials and otherprofessionals who are engaged in all aspects of 
floodplain management and hazard mitigation, including management, 
mapping, engineering, planning, community development, hydrology, 
forecasting, emergency response, water resources, and insurance for 
flood risk. All ASFPM members are concerned with working to reduce our 
nation's flood-related losses. For more information on the association, 
our website is: http://www.floods.org.
                        disasters cost taxpayers
    As we reflect over the early years of this century, disaster losses 
and costs have risen substantially. Flood losses have climbed to 
average over $10 billion per year 2012 resulted in 11 weather and 
climate disaster events each with losses exceeding $1 billion in 
damages. This makes 2012 the second costliest year since 1980, with a 
total of more than $110 billion in damages throughout the year. The 
2012 total damages rank only behind 2005, which incurred $160 billion 
in damages.


    Unfortunately, this is neither unanticipated nor is it as bad as it 
could get. The recently published ARkStorm scenario modeling for the 
Sacramento area based on a scientifically realistic flood event, 
similar to those that occurred in California in 1861 and 1862, 
indicates that three quarters of a trillion dollars in damage (business 
interruption costs of $325 billion in addition to the $400 billion in 
direct property loss) would occur if that event happened today. The 
National Climate Assessment recently released indicated that flooding 
may intensify in many regions of the United States due to increased 
heavy precipitation events in areas where total precipitation is 
projected to decline. This will impact private property and cause 
increased damages to our nation's infrastructure.
    the nfip reduces costs of flood disasters and eases recovery of 
                        businesses and families
    The NFIP is the key national program used to reduce flood losses. 
Of course, the NFIP is not just an insurance program, but a hazard 
mitigation program with four key components: (1) Insurance to protect 
financially against flood losses, (2) locally adopted standards for 
land use and buildings to improve resiliency, (3) flood maps to 
identify risk areas, and (4) flood mitigation programs to eliminate 
risk to older buildings that existed before modern codes and standards. 
The damages avoided due to compliance with the required NFIP standards 
saves the nation $1.7 billion each year. From 1997 to 2011, ICC 
(mitigation funds available within a flood insurance policy) has 
resulted in over $513 million in mitigation to nearly 25,000 at-risk 
structures resulting in at least $2.5 billion in benefits \1\ over the 
life of the structure. Since inception, the Flood Mitigation Assistance 
Program has provided over $318 million in Federal funds for nearly 
1,000 projects across the country mitigating over 2,700 structures.
---------------------------------------------------------------------------
    \1\ Based on 2005 MMC study ``Mitigation Saves'' which calculated 
that benefits from FEMA flood mitigation projects were $5 for every $1 
invested.
---------------------------------------------------------------------------
    Purchasing a flood insurance policy is the most accessible, 
widespread, and easiest mitigation option a home or business owner can 
take to protect their long term financial interest.
floodplain mapping is the cornerstone of the nfip and all flood hazard 
              mitigation efforts to reduce disaster costs
Value of Flood Mapping to the Nation
    Flooding is a natural phenomenon. Maps will not prevent floods from 
occurring, but they are an essential tool in avoiding or minimizing the 
damage to property and loss of life caused by floods, and for 
communicating flood risk. Without accurate flood maps, local officials 
face serious difficulties in guiding development away from the most 
hazardous areas or in ensuring that development in or near the hazard 
area is properly built and protected.
    The ASFPM very much appreciates the interest of Chairman Landrieu 
and the members of the Subcommittee in understanding and addressing the 
nation's mapping needs. We appreciate that Senator Landrieu requested 
and sponsored a briefing by the Hazards Caucus Alliance in October, 
2013 on the science behind floodplain mapping. We also note the 
language in your Committee Report accompanying the fiscal year '15 
Homeland Security appropriations bill requesting further information on 
FEMA's map update processes.
    Flood maps are used for many purposes. FEMA's Flood Insurance Rate 
Maps--the primary type of flood maps in the United States--are used to 
determine flood insurance rates, development regulations, and flood 
preparation for those at risk. Government officials use them to 
establish zoning, land-use, and building standards; to support land 
use, infrastructure, transportation, flood warning, evacuation, and 
emergency management planning; and to prepare for and respond to 
floods. Insurance companies, lenders, realtors, and property owners 
depend on these maps to determine flood insurance needs and risk to 
properties. For citizens, businesses and communities, the FEMA flood 
maps are the essential tool for reducing flood losses and are the 
nation's default source of flood hazard information.
    In the creation of quality flood hazard data, high quality ground 
elevation (topographic) information is essential. This elevation 
dataset has multiple uses, and associated costs are avoided since these 
data can be used by multiple programs and agencies. Communities can use 
these data to determine safe evacuation routes for citizens, support 
first responders in emergencies, account for changes in tax base, and 
update a variety of local plans (e.g. hazard mitigation, comprehensive 
land use, and capital improvement plans).
    Such data can reduce the need to conduct field surveys by agencies 
such as departments of transportation, and to plan for resilient 
community growth. The Congressional Budget Office found that lack of 
up-to-date topographic information causes a downward bias on the 
actuarial soundness of the maps depicting flood hazard areas. The maps 
are not only the foundation of the NFIP, but also the basis of sound 
floodplain management policies at the local, state, and Federal levels. 
Adequate, accurate, and current maps are essential for the program to 
function. If a potential flood prone area is not mapped, the community 
has no tool to adequately guide development to be safer and to mitigate 
future flood losses.
    Local governments, with state assistance and authority are the key 
level of government with the tools to reduce future flood losses. Those 
tools are land use and building codes, which they use to guide 
development to lower flood risk areas, and to build in a resistant way 
in flood risk areas so future damages and risk are reduced. Currently 
many communities assist in cost sharing or in providing modern 
topographic mapping. Without mapping of the flood prone area, there is 
no real tool to communicate flood risk to community officials, 
citizens, or businesses. The sale of flood insurance is not mandated in 
areas outside floodplains mapped on FIRMs. Without adequate, accurate, 
and current maps, neither construction nor the insurance elements of 
the program can be effective.
    Floodplain mapping is a cost-effective taxpayer investment. In 
1997, FEMA conducted a benefit-cost analysis of its proposed flood 
mapping program (Map Modernization). Based on that analysis, floodplain 
mapping showed a benefit to the taxpayer of over $2 for every $1 
invested in flood mapping. Later, the State of North Carolina used the 
same methodology as FEMA and calculated a benefit-cost ratio of 2.3 to 
1. The North Carolina report indicates that for the 29,733 stream miles 
studied throughout the state, the average benefit provided is $3,400 
per year per mile and clearly shows significantly higher benefits of 
having more detailed flood studies
    Finally, flood mapping reduces disaster costs. Development that 
complies with the floodplain management requirements is better 
protected against major flood-related damage. Since flood mapping is 
the basis for community floodplain management regulations, then it 
stands to reason that new construction in mapped floodplains would have 
to comply with such codes and be constructed to be more resilient in 
future disasters. In fact, buildings constructed in compliance with 
NFIP building standards suffer approximately 80 percent less damage 
annually than those not built in compliance. Lower damage amounts can 
be a proxy for lower impacts and demands on disaster assistance. In its 
final report, the first Technical Mapping Advisory Council (TMAC) 
indicated that a small investment in mapping can result in huge savings 
in flood-related disaster assistance in the future.
Floodplain Mapping Needs
    What is the current state of floodplain mapping needs in the 
country? First, only 1.1 million of the nation's 3.5 million miles of 
waterways have flood hazards identified. Of that 1.1 million miles, 
only 20 percent of that subset have detailed flood elevations. Second, 
after the FEMA Map Modernization Program only 62 percent of the land 
area had maps in a digital format. That means that many communities 
still have paper map sets, many communities have no flood maps and as a 
nation we are maintaining map sets at which is inefficient and costly. 
Third, through 2012, $4.3 billion has been invested in the nation's 
flood mapping program ($6.2 billion adjusted to 2012 dollars).
    Section 100216 of the Biggert-Waters Flood Insurance Reform Act of 
2012 (BW-12), establishes the National Flood Mapping Program and 
describes the responsibility of FEMA to develop and maintain flood maps 
that are adequate to: 1) Make flood risk determinations and 2) be used 
by state and local governments in managing development and reduce the 
risks associated with flooding. To accomplish this, the 2012 Act 
requires that FEMA shall review, update, and maintain NFIP maps with 
respect to:
  --All populated areas and areas of possible population growth located 
        within the 100-year and 500-year floodplains;
  --Areas of residual risk, including areas that are protected by 
        levees, dams, and other flood control structures and the level 
        of protection provided by those structures;
  --Ensuring that current, accurate ground elevation data is used;
  --Inclusion of future conditions risk assessment and modeling 
        incorporating the best available climate science; and
  --Including any other relevant data from NOAA, USACE, USGS and other 
        agencies on coastal inundation, storm surge, land subsidence, 
        coastal erosion hazards, changing lake levels and other related 
        flood hazards.
    In the past, and in the absence of clear Congressional direction, 
the mapping program was almost solely focused on supporting flood 
insurance rating as well as serving as a tool for the adoption and 
enforcement of local floodplain management regulations. However, the 
purpose of the National Flood Mapping Program is clearly meant to 
fulfill a broader mandate--to create the nation's flood risk data set 
so communities, states, and individuals can take action to reduce 
losses. The Act makes a clear and unequivocal statement that flood maps 
produced by FEMA will be forward looking and inclusive of several types 
of flood risk data. The Congress has, in effect, acknowledged what most 
state and local officials already know--that the FEMA Flood map data is 
and should be the default national dataset for flood risk.
    In 2013, ASFPM developed the report Flood Mapping for the Nation 
which is an estimate of the total cost to provide floodplain mapping 
for all communities in the nation based on the parameters specified in 
Biggert-Waters. ASFPM has identified criteria of what constitutes 
adequate flood mapping for the country, and has produced an estimate 
showing the initial cost to provide flood mapping for the nation 
ranging from $4.5 billion to $7.5 billion. The steady-state cost to 
then maintain accurate and up- to-date flood maps ranges from $116 
million to $275 million annually. This national investment in a 
comprehensive, updated flood map inventory for every community in the 
nation will drive down costs and suffering of flooding on our nation 
and its citizens, as well as providing the best tool for managing flood 
risk and building resilient communities.
    ASFPM believes that the authorization in Biggert-Waters 2012 of 
$400 million annually is appropriate. The Association is disappointed 
by the Administration's lack of prioritization of flood mapping. Budget 
requests for the past 2 years have severely underfunded mapping at 
approximately $85 million. Fortunately, the Congress (notably the House 
and Senate Appropriations Subcommittees on Homeland Security),has 
recognized the importance of mapping and provided about $10--$15 
million over the budget request. Based on ASFPM's own cost analysis for 
mapping the nation,however, flood mapping investments at this level 
virtually guarantee that the flood risk data will become outdated and 
less reliable over time and don't provide for any new mapping efforts.
    ASFPM recommendations related to floodplain mapping:
  --Implement the National Flood Mapping Program that is measured 
        against the following: 1) Eliminating the current inventory of 
        old paper maps, 2) Mapping all of the nation's flood hazards so 
        that such hazards are proactively identified before development 
        and investments in infrastructure occur, and 3) Update maps for 
        those who have detailed data but need to reflect changed 
        conditions. We must first or at least simultaneously prioritize 
        getting the flood mapping job done throughout the nation, 
        eliminate the paper inventory of flood maps, and undate 
        existing flood maps.
  --Fund floodplain mapping at the full authorized level of $400 
        million per year so we can complete the job of initially 
        mapping the nation in 10-15 years.
Floodplain Mapping Implementation Issues
    With respect to floodplain mapping, there are three implementation 
issues ASFPM will comment on: Technical Mapping Advisory Council 
(TMAC), levees and Cooperating Technical Partnerships.
    1. The reconstitution of TMAC in BW-12 was a critical measure 
needed to provide FEMAexpert advice and guidance on the strategic 
direction and implementation of the National Flood Mapping Program. The 
original TMAC created by the 1994 NFIP reform act performed a very 
valuable function that essentially led to the FEMA Map Modernization 
program. ASFPM expects and hopes that the new TMAC is empowered to 
fulfil its wide ranging duties established by Congress. Some of the 
priorities ASFPM sees include 1) reviewing and overhauling the flood 
map update process including paying particular attention to the 
procedures for calibrating models and the necessary engineering inputs 
to make accurate, quality maps, 2) incorporating best available climate 
science into flood mapping, and 3) making recommendations for 
appropriate measures of success that prioritize getting the initial job 
done. Just this past week TMAC appointees were announced. ASFPM is 
anxious for the Committee to get up and running. Based on the success 
of the original TMAC, ASFPM has no reason to doubt that the 
reconstituted committee will be successful.
    2. In response to Congressional concerns about mapping levees, FEMA 
created the LAMP process to replace a largely binary system of 
evaluating levees (they either met standards or did not) with a more 
refined and flexible process for evaluating levees. Feedback we have 
heard so far is that communities are largely pleased with the process 
but there is some fatigue and skepticism that the final mapping 
products will be reflective of the more refined levee evaluation 
process. ASFPM hopes that FEMA continues to work closely with 
communities and to the extent possible utilize, refine, and develop 
methodologies that appropriately credit flood control structures for 
the protection they provide.
    3. The Cooperating Technical Program (CTP) is an important 
component of flood mapping that allows capable states and communities 
to assume ownerships over certain elements up through the entire flood 
mapping process. Initially the CTP program also was used to build 
capability in willing, but inexperienced, states and communities who 
hoped to assume more responsibility for floodplain mapping. ASFPM has 
been concerned that the CTP program had not had the adequate support 
and guidance from FEMA. However, more recently we are pleased to see 
more of a commitment to the program by FEMA including pledges of 
continued support for this program.
                        implementation of hfiaa
    The Homeowners Flood Insurance Affordability Act did remove the 
most troublesome flood insurance rate increases imposed by the Biggert-
Waters Flood Insurance Reform Act and provided for reimbursement of 
policy holders adversely impacted by those rate increases. It also put 
other rate increases on a longer glide path toward actuarially sound 
rates. The requirement that premium rates move to full risk rates at 
the point of sale of a primary home began to have significantly 
negative effects on home sales, so eliminating that requirement and 
replacing it with gradual movement toward actuarial rates was an 
important correction. In a related correction, it was important that 
those new property owners already affected by the provision receive 
reimbursement. FEMA has prioritized these elements in its 
implementation of HFIAA and appears to be moving expeditiously.
    The Association of State Floodplain Managers (ASFPM) supported 
these actions, and also expressed appreciation that the legislation 
included a provision requiring that policy holders be informed of their 
projected full risk premium. Since the many pre-FIRM properties in 
Special Flood Hazard Areas (SFHAs) had been substantially subsidized 
since the inception of the NFIP, those property owners were unaware of 
their subsidy and also unaware of what their true risk premium would 
be.After enactment of the Biggert-Waters legislation reducing those 
subsidies and after the damages from Hurricane Sandy, it became clear 
that expectation of full risk premiums was leading to a significantly 
increased interest in hazard mitigation actions which could both reduce 
risk and lead to reduced flood insurance premiums. ASFPM was very 
supportive of the language in HFIAA requiring that homeowners be 
informed of their full risk rate, since this knowledge does often lead 
to risk reduction actions.
    Although HFIAA did reduce the possible dramatic rate increases 
resulting from the Bigger- Waters legislation (2012), it did not 
provide for any steps to provide assistance with the cost of flood 
insurance to truly lower income homeowners or to low income renters 
(contents insurance). Since there are many properties owned by lower 
income persons, often through inheritance, and many renters whose rent 
could be increased to help the landlord pay for increased flood 
insurance and whose personal belongings are at risk, there should be 
some means developed to assist low income homeowners and residents that 
is means tested and outside of the insurance rating structure.
    For an NFIP we can live, grow and prosper with, ASFPM looks forward 
to further refinements in the program when it is next reauthorized, to 
completion of studies on affordability and community based flood 
insurance called for in HFIAA, to development of recommendations from 
those studies and to improved incorporation of hazard mitigation in the 
flood insurance program, resulting in more reduction of risk. 
Mitigation needs to be enhanced both at the individual property level 
and at the community-wide level. This means steps to dramatically 
improve operation of the Increased Cost of Compliance (ICC) program 
which is part of any policy holder's policy and paid for by a minimal 
surcharge, further streamlining of the Severe Repetitive Loss and other 
repetitive loss assistance under the Hazard Mitigation Assistance 
programs of the NFIP, and promotion of community-wide premium 
reductions through the Community Rating System.
Specific Comments From State Floodplain Managers and State Hazard 
        Mitigation 
        Officers
    In preparation for this hearing, the ASFPM sought informal comments 
from State Floodplain Managers and from State Hazard Mitigation 
Officers. Some of those are included below:
            Mapping
    In almost every response, the need for a more robust effort to 
update and improve the nation's flood risk maps was identified as a key 
to identifying and then reducing risk and flood insurance premiums. It 
was clearly noted that this would require a more substantial national 
investment, but a very worthwhile investment.
    One state official said: ``It is critical that Congress and the 
President know the amount of funding that is needed and understand that 
shortchanging the program is putting people at risk and increasing the 
nation's costs for disasters.'' After stating that much higher funding 
is needed nationwide for map updates, another state official added that 
more accurate methodology is needed which should include riverine 
erosion and flood impacts from climate change. Another official 
suggested that states should contribute 25 percent of the cost of their 
mapping. Yet another state official suggested that FEMA should provide 
more autonomy for states to engage in the mapping process. Another 
noted that the new coastal maps appear to have accuracy problems and 
stated that sometimes complaints are that the Base Flood Elevations for 
coastal areas are too low, while more inland area BFEs are too high. 
This official pointed to insufficient precision as the problem and said 
this is an issue of how much money is spent on the engineering studies. 
Several states expressed concerns about doing an adequate job 
calibrating the new engineering studies against historical flood 
events.
            HFIAA and the NFIP
    One official reported on a recent meeting with local residents who 
had the following concerns: The connection between investment in 
compliance and future property sales, frustration with communication 
about flood insurance reform, problems with no word on refunds due, yet 
policies renewed at the higher actuarial rate, frustration about 
limited funding assistance available for mitigation, and concerns about 
the amount of coverage required.
    A state official stated that the rate increases should be 
implemented even more gradually than provided for under HFIAA. Another 
state official suggested that the surcharge in HFIAA should not apply 
to properties in compliance with floodplain management building 
standards. Another noted there still remains a need for subsidizing 
premiums for low-income homeowners. Another state official said that 
the rate reductions in HFIAA are helpful including the extension of 
Preferred Risk Rate policies and the restoration of grandfathering. 
This same official said that still more reform is needed and noted the 
difficulty of achieving balance between actuarial soundness and 
affordability. He pointed to a significant problem with misrating of 
policies, guessing it involves about 25 percent of policies in his 
state, although not always in favor of the NFIP. He also noted 
difficulties in getting property specific information on premiums to 
facilitate insurance and mitigation decisions. Finally, another state 
official suggested that FEMA reinvigorate the ``Re Thinking the NFIP'' 
project it undertook a number of years ago to produce ``big ideas'' for 
restructuring the NFIP.
            Mitigation
    Several state officials suggested that the streamlining of the 
mitigation programs in the legislation is helpful but that further 
steps need to be taken to lessen the bureaucratic burdens. Several 
suggested more management of the mitigation application process at the 
state level. Another suggested that local hazard mitigation plans 
should be a condition for NFIP participation.
mitigation grants that have an impact on flood insurance affordability 
                        and success of the nfip
    Since 2011 ASFPM has cautioned numerous times in testimony that the 
cumulative impact of all of the needed flood insurance reforms would 
result in significant affordability issues and that affordability must 
be a component of any NFIP reform. Policyholders need to have an 
accurate assessment of their risk, but we also need stronger programs 
to help them mitigate flood risk and to assist those who truly cannot 
afford risk based premiums. NFIP reforms in 2012 and 2014 were 
necessary from the standpoint that the NFIP needed to be made more 
actuarially sound so it could serve the nation well into the future. 
HFIAA has now set that transition into motion. However, what Congress 
did not address in 2012 is flood insurance affordability and only 
somewhat in 2014. ASFPM supported the Congress in repealing provisions 
requiring moving immediately to full risk rates and replacing it with a 
more pragmatic approach as was done with HFIAA. And while the NFIP can 
be considered a more actuarially sound program now than prior to these 
reforms, there are property owners that still cannot absorb these flood 
insurance increases. For 1.1 million policy holders, rates will be 
going up between 18 percent and 25 percent per year, not including new 
surcharges.
    It is impossible to have a NFIP that is both actuarially sound and 
affordable without significant investment in hazard mitigation funding. 
Specifically, investments in hazard mitigation must surge during the 
transition period until all properties are rated actuarially and then 
be maintained at an appropriate level to help contain losses--and 
future costs--to the NFIP. This was not done during either the 2012 or 
2014 reform efforts. Unfortunately, the surcharge in 2014 was 
specifically earmarked to pay future claims. A better idea might have 
been investing that surcharge in mitigation to eliminate future claims. 
ASPFM has several recommendations related to mitigation programs that 
must be enhanced to help the NFIP through this transition period in 
moving to a more actuarially sound program.
Increased Cost of Compliance (ICC)
    The fastest post-disaster hazard mitigation ``grant'' program is 
the Increased Cost of Compliance (ICC) element of a NFIP policy. This 
mechanism can very quickly result in both speedy recovery and 
mitigation. Sixty percent of properties mitigated through ICC are 
elevated. Often property owners who use ICC to mitigate can have their 
mitigation completed before any other mitigation grant through the 
Federal government is even approved.
    However, because an ICC claim is triggered by a local official 
declaring a structure substantially damaged, the process can be slowed 
down when a community does not have the capacity to do a large number 
of post-disaster inspections in a short time. This provides a great 
opportunity for FEMA assistance to communities to cost share these 
inspections and to facilitate the assistance of inspection officials 
from other jurisdictions.
    The implementation of ICC today is far from optimal. Currently, 
there are restrictions on what elements are covered by ICC versus what 
a typical mitigation grant may pay for. In 2004 Congress made changes 
so ICC would be more widely available by functioning in a pre-disaster 
environment and triggering availability of ICC funds by a mere offer of 
mitigation through another mitigation program, either state or 
Federal--not by being substantially damaged. This has not been 
implemented by FEMA which is very unfortunate because it would have 
allowed mitigation grant program dollars to be stretched further and 
helped many more property owners who are dealing with increased flood 
insurance rates. While the average cost to fully undertake mitigation 
for insured structures ranges from $20,000 to well over $100,000, ICC 
is capped at $30,000 and that amount plus any insurance claim cannot 
exceed the overall policy limit. ASFPM believes that the cap must be 
raised as FEMA is already authorized to collect up to $75 per policy 
for ICC. Currently the average ICC policy surcharge is about $15.
    ASFPM recommendations related to ICC:
  --Immediately implement the 2004 NFIP reforms to ICC that triggered 
        availability of ICC funds upon an offer of mitigation.
  --Interpret substantial damage trigger in ICC to be from non-flood 
        related events consistent with the 2004 NFIP reform act.
  --Increase the ICC cap to $50,000.
  --Allow for ICC claims to be in addition to the policy limits.
  --Require that the new surcharges from HFIAA be used for mitigation 
        activities through ICC instead of building up the Reserve Fund 
        for future claims. An approach that addresses the problem 
        versus continual paying of claims will save taxpayers and the 
        NFIP many more dollars in the long run.
Flood Mitigation Assistance (FMA)
    When BW-12 folded FMA, the Severe Repetitive Loss program and the 
Repetitive Flood Claims program into one, the three programs were to 
keep their organic authorization intent in the new program. However, it 
seems that in implementation, an unintended consequence was largely 
focusing all of the program's funding towards repetitive and severe 
repetitive loss properties. While such properties should be high 
priorities for mitigation, the program should allow for other flood 
mitigation needs, including those properties that may not be repetitive 
loss or severe repetitive loss. Also, ASFPM is concerned about the 
cost-share in the program. A general philosophy of ASFPM is that all 
levels of government should contribute to their mitigation efforts 
therefore programs that are 100 percent funded do not leverage 
resources at the state, local or individual level. The cost shares 
should be reexamined and no program should be at 100 percent. This will 
make the Federal dollars go much further in mitigating properties.
    FMA was funded at $100 million in fiscal year 14 and we are very 
pleased to see the Senate supporting the budget request by the 
Administration for fiscal year 15 of $150 million.
Pre-Disaster Mitigation (PDM) and Hazard Mitigation Grant Program 
        (HMGP)
    PDM and HMGP are important complimentary programs to the NFIP 
authorized under the Stafford Act. They provide resources to mitigate 
structures that are otherwise floodprone and in doing so 1) permanently 
removes the flood risk or 2) modifies the flood risk so not only is the 
structure more resilient, but flood insurance rates are lower 3) 
reduces taxpayer costs for future disasters.
    ASFPM is extremely disappointed that the Administration has, once 
again, requested no funds for PDM. Ironically, the Administration has 
also suggested an appropriation of $400 million for PDM in a related 
budget proposal for Opportunity, Growth and Security. ASFPM is very 
thankful that this subcommittee has seen fit to continue to provide $25 
million for the past several years and including fiscal year 15. This 
amount does fund the per/state allocations. Ideally, we would suggest 
funding PDM at $150 million to facilitate a full, nationwide 
competitive grant program to reduce flood losses.
                           other observations
The Debt Owed Under the NFIP Will Become Untenable When Interest Rates 
        Rise
    The largest ongoing threat to the financial solvency of the NFIP is 
the accumulated debt of the program, now sitting at $24 billion. Since 
2005, NFIP has paid $2.65 billion in interest payments, and $1.82 
billion in principle payments. Luckily, FEMA has taken advantage of 
record low interest rates and the debt is financed at just below .5 
percent in short term loans (two to three year terms). If interest 
rates return to a more average 3 percent annual rate (and rates can 
only go up from here), interest payments alone would exceed $720 
million/year. For a program that is currently taking in a little more 
than $3 billion annually in premiums, which covers claims, payments to 
insurance companies, agents, flood mapping and floodplain management, 
and overall program administration, it is simply not feasible for the 
program to repay the debt, nor is it consistent with the Federal 
government's overall disaster policy.
    Until HFIAA reforms have had time to work, the NFIP will continue 
to need Federal support for catastrophic loss years (note that all $24 
billion of the current debt occurred before any significant BW- 12 or 
HFIAA reforms were in place). Prior to BW-12, this was due to the rates 
being set at levels calculated to generate enough funds to enable the 
program to pay claims in an ``average historical loss year,'' but not 
enough for a catastrophic year. The legislated limits on rate setting 
did not allowed NFIP to charge high-enough premiums to build a reserve 
for the inevitable years in which catastrophic flooding occurs. This 
meant that there was a need for Federal support to fulfill NFIP's 
contractual obligations to pay claims in some years. Before Hurricane 
Katrina, NFIP actuaries estimated this average annual premium shortfall 
was $800 million per year. Congress has reacted quickly by increasing 
the borrowing authority of NFIP after Katrina and Sandy, yet has been 
slow to recognize that catastrophic loss years cannot be repaid by 
reliance on the insurance mechanism alone at least until adequate 
reserves are built up. Lack of understanding of this issue and dealing 
with the debt will continue to put pressure on the NFIP and could put 
the whole program at risk.
The Nation's Flood Disaster Priorities are Too Focused on Response and 
        Recovery and Not Hazard Mitigation
    While gaining some visibility, as a nation we are nowhere near 
where we need to be in terms of the priority of hazard mitigation 
programs such as the NFIP and HMA, versus response and short term 
recovery. For the past several years the Federal government has 
increased the amount of disaster assistance provided to those 
individuals and communities affected by hazard events. The Center for 
American Progress reports that the Federal government spent $136 
billion total from fiscal year 2011 to fiscal year 2013 on disaster 
relief. This adds up to an average of nearly $400 per household per 
year. The upward trend of focusing on providing disaster assistance and 
not investing in mitigation is not sustainable.
    In FEMA's most recent monthly report on the Disaster Relief Fund, 
the size of mitigation programs relative to other post-disaster 
expenditures is quite clear. Appendix C of that report shows that for 
Hurricane Sandy, actual expenditures for mitigation totaled $151 
million while the total cost for all other categories (Public 
Assistance, Individual Assistance, Operations and Administrative) 
totaled $7.44 billion--or 2 percent. The increased spending has come at 
a time where mitigation resources have been decreasing, especially for 
non-disaster related mitigation programs. This has been reflected in 
FEMA's budget priorities as well. Since 2010, funding for FEMA's two 
largest mitigation programs flood mapping and the pre-disaster 
mitigation program has been decreased substantially, with PDM being 
proposed to be zeroed out over the past 3 years. Thankfully, Congress 
has thought otherwise. Language on page 154 of FEMA's 2013 budget 
narrative sums up the philosophy best when justifying a decrease in 
flood mapping funding: ``The fiscal year 2013 amount of $89.3 million 
reflects a refocus of agency-wide resources on FEMA's primary mission 
of preparing for and coordinating disaster response and recovery 
efforts while still providing support for this program, which also is 
supplemented by fees derived from the NFIP.''
    However, ASFPM is cautiously optimistic that FEMA and the 
Administration may have begun to see the value of mitigation relative 
to disaster response and recovery. ASFPM was pleased to see the 
Administration's request of an additional $50 million for the Flood 
Mitigation Assistance program in fiscal year 15 budget request, the 
President's roll-out of the Opportunity, Growth and Security Initiative 
which included $400 million for PDM to support resilience from climate 
change, and the strategy budget priority #4 which is focused on 
enabling disaster risk reduction nationally. ASFPM remains puzzled that 
FEMA once again proposed to zero out the Pre-Disaster mitigation 
program in fiscal year 15 and hopes that the priority of PDM in the 
President's OGSI will compel FEMA and DHS leadership to propose a more 
appropriate fiscal year 16 budget request.
FEMA Cannot Get Critical Rulemaking Accomplished
    ASFPM has observed over the past several years the increasing 
difficulty FEMA has in accomplishing any rulemaking. We are often told 
that at a minimum it is a 5 year process. Unfortunately this has had 
the impact of holding up the implementation of some Congressional 
actions that would have had an impact on flood insurance affordability 
as well as speeding up delivery of hazard mitigation programs. We have 
cited an example earlier in the testimony and there are still others 
such as updating 44CFR 60.3 standards (the NFIP minimums), and the 
elimination of some innovative approaches to addressing levee mapping 
issues because they would involve rulemaking such as establishing new 
levee zones. In May, the Senate Homeland Security and Governmental 
Affairs Committee explored this issue in some depth and the inability 
to initiate or complete substantial rulemaking was recognized as a 
problem. If we are to ever get ahead of the overall issue of increasing 
flood losses, all tools and policies must be brought to bear on the 
issue and waiting to implement key aspects of the overall approach 
because of the length of time to undertake rulemaking is unacceptable.
    The Association of State Floodplain Managers appreciates this 
opportunity to share our observations and recommendations with the 
Subcommittee.

    Senator Landrieu. Ms. Templeton-Jones.
STATEMENT OF PATRICIA TEMPLETON-JONES, PROPERTY 
            CASUALTY INSURERS ASSOCIATION OF AMERICA; 
            EXECUTIVE VICE PRESIDENT AND CHIEF 
            OPERATING OFFICER, WRIGHT NATIONAL FLOOD 
            INSURANCE COMPANY
    Ms. Templeton-Jones. Madam Chairwoman, Ranking Member, 
members of the subcommittee, thank you for the opportunity to 
appear before you today. I am testifying on behalf of Wright 
National Flood Insurance Company and the Property Casualty 
Insurance Association of America, or PCI.
    My name is Patty Templeton-Jones. I am the executive vice 
president and chief operating officer of Wright National Flood 
Insurance Company, a Write Your Owns flood insurance partner 
with the National Flood Insurance Program.
    Wright National through the NFIP Write Your Owns program is 
the largest writer of flood insurance in the Nation. Wright 
National is also a member of the PCI, which is composed of 
nearly 40 percent of the Nation's home, auto, and business 
insurers and includes two-thirds the Write Your Owns insurers 
that partner with the NFIP to administer the flood insurance 
program.
    Wright National and PCI share in the goal of having a flood 
insurance program that we can live with, grow with, and prosper 
with, and that best serves United States property owners, 
renters, and taxpayers.
    For this reason, Wright National was pleased to accept the 
subcommittee's invitation to provide information today about 
progress on implementation of the Homeowners Flood Insurance 
Affordability Act (HFIAA).
    The 45-year-old NFIP has experienced significant turmoil 
over the last decade. That is why Wright National Flood and PCI 
supported both the Biggert-Waters Insurance Reform Act of 2012, 
or BW-12, and most recently the HFIAA to reform the NFIP. 
Implementation of both laws is well underway.
    While challenges remain, implementation of HFIAA has gone 
much smoother than BW-12. This is largely due to a provision in 
HFIAA that requires NFIP to work cooperatively with Write-Your-
Owns throughout implementation of HFIAA. This simple but 
important provision prompted unprecedented outreach and 
engagement by NFIP staff to stakeholders.
    As a result, HFIAA implementation is moving more quickly 
and more accurately than was possible under BW-12 and then was 
envisioned earlier this year when HFIAA was taking shape.
    Since we all have a goal of serving the flood insurance 
policyholders and taxpayers, I am very pleased to be able to 
report about this positive development.
    While HFIAA allowed for 6-month implementation, pressure to 
implement HFIAA changes ultimately shortened the timeframe 
Write Your Owns had to make the changes. However, the Write 
Your Owns understood the importance of HFIAA implementation and 
worked cooperatively with NFIP to meet deadlines, despite the 
extra cost, hours, and significant number of changes required.
    As a result, we believe that the rate revision and 
adjustment process required by HFIAA has gone extremely well 
with as little confusion as can be expected, given the speed 
and volume of changes involved.
    Likewise, the NFIP prioritized releasing guidance to 
process refunds. And beginning October 1, 2014, much sooner 
than is required by HFIAA, one-time refunds can begin to be 
issued.
    Although HFIAA required the NFIP to issue refunds directly, 
the Write Your Owns have agreed to process the refunds on the 
NFIP's behalf and hope to complete the process by the end of 
2014.
    While policyholders due refunds would like to receive these 
refunds as soon as possible, NFIP understandably needs to make 
certain that refunds are processed once and processed 
accurately. Such a deliberative refund process should both 
avoid any further policyholders confusion and ensure that NFIP 
is not asking the Write Your Owns to refund money not owed to a 
particular policyholder.
    With the major sections of HFIAA implementation underway, 
there are still other provisions of the bill and BW-12 to 
address, such as establishing the office of flood insurance 
advocate. We understand it is the NFIP goal to fill that 
position by the end of the year, which will put in place a 
beneficial central location for consumers and others to ask 
questions.

                           PREPARED STATEMENT

    We hope the NFIP will be able to find candidates with both 
an understanding of mapping and flood insurance. This is 
actually crucial, as both will be needed for the flood advocate 
to best serve policyholders and the program.
    Thank you, and I am happy to answer any questions the 
subcommittee may have.
    [The statement follows:]
             Prepared Statement of Patricia Templeton-Jones
   wright national flood insurance company on behalf of the property 
                casualty insurers association of america
    My name is Patty Templeton-Jones and I am the Executive Vice 
President and Chief Operating Officer of Wright National Flood, an 
insurance company partner with the National Flood Insurance Program 
(NFIP). Wright National shares the goal of having ``a flood insurance 
program that we can live with, grow with, and prosper with'' and that 
best serves United States' property owners, renters, and taxpayers. For 
this reason, Wright National was pleased to accept the Subcommittee's 
invitation to provide information today about progress on 
implementation of the Homeowners Flood Insurance Affordability Act 
(HFIAA).
    Wright National Flood is a ``Write-Your-Own'' (WYO) flood insurance 
partner with the NFIP and through the WYO program, Wright National is 
the largest writer of flood insurance in the nation. Wright National 
Flood is also a member of the Property Casualty Insurers Association of 
America (PCI) which is composed of more than 1,000 member companies, 
representing the broadest cross section of insurers of any national 
trade association. PCI members write more than $195 billion in annual 
premium and 39 percent of the nation's home, auto and business 
insurance, epitomizing the diversity and strength of the U.S. and 
global insurance markets. PCI members also include two-thirds of the 
WYO insurers that partner with the NFIP to administer the flood 
insurance program. Thank you for the opportunity to appear before you 
today on behalf of Wright Flood and PCI.
                              introduction
    The 45-year old NFIP has experienced significant turmoil over the 
last decade. The dislocation began in 2005 following the effects of 
Hurricanes Katrina, Rita & Wilma, continued through 2008 when the then-
existing authorization period ended, and was prolonged through a period 
of more than a dozen short-term program lapses and extensions until 
2012 when some stability returned to the Program with the passage of 
the Biggert-Waters Flood Insurance Reform Act (BW-12). Implementation 
of BW-12 then caused its own period of turmoil such that the unintended 
consequences of BW-12 implementation led to passage this March of the 
Homeowners
               flood insurance affordability act (hfiaa).
    Wright National Flood and PCI supported both the passage of BW-12 
and the HFIAA. While the major provisions of the HFIAA are well along 
in the process of implementation, as are many of the remaining BW-12 
provisions, there's still much to do before we have a ``flood insurance 
program we can live with, grow with and prosper with.'' Wright Flood 
and PCI look forward to working with you, your Senate colleagues, the 
House, and FEMA to assure the accurate implementation of these two 
significant pieces of legislation while looking ahead for ways to 
continue to improve the NFIP and flood risk management in the United 
States.
              homeowners flood insurance affordability act
    We have some significant victories to discuss and some challenges 
and issues that remain, but overall, the implementation of HFIAA has 
gone much smoother than that of BW-12. I would be remiss, at this 
point, not to acknowledge and thank you, Madam Chair, for the 
consistent, vocal attention you and other members of this Subcommittee 
drew to the many ``unintended consequences'' that occurred during the 
NFIP's implementation of BW-12. That attention led to enactment of 
HFIAA which included several provisions allowing the WYOs to better 
partner with the NFIP to more efficiently and accurately implement the 
changes intended by BW-12.
    NFIP staff have worked cooperatively with the WYOs through the 
implementation of HFIAA. NFIP staff have organized regular conferences 
calls and live interaction with the WYOs and their vendors to discuss 
the detailed mechanics necessary for the roll-out of the changes 
required by the HFIAA. Importantly, NFIP staff have thoughtfully 
considered and often adopted many pieces of vital, technical commentary 
provided during this series of important, while not necessarily 
glamorous, implementation calls. This unprecedented outreach and 
engagement by NFIP staff is no doubt due to the desire to avoid some of 
the pitfalls that occurred when implementing BW-12. However, this 
important interaction is also the product of a provision included in 
HFIAA requiring the NFIP to communicate regularly throughout the HFIAA 
implementation process. Since we all have the same goal of serving the 
flood insurance policyholders and the taxpayers, I am very pleased to 
be able to report about this positive development. This newfound 
cooperation has allowed the NFIP and the WYOs to move forward with 
HFIAA implementation significantly more quickly and more accurately 
than was possible under BW-12 and faster than was envisioned earlier 
this year when HFIAA was taking shape.
    However, that doesn't mean there haven't been challenges. The 
pressure to implement the HFIAA changes ``immediately'' significantly 
shortened the timeframe WYOs had to make the changes. With HFIAA's 
three major provisions being implemented on May 1, June 1 and October 1 
and the guidance necessary being released to the WYOs on April 15, May 
29 and June 26, respectively, these implementation timeframes were far 
shorter than the six month requirement contained in HFIAA. However, the 
WYOs understood and worked cooperatively with the NFIP to meet these 
deadlines, despite the extra costs, hours, and significant number of 
changes required by the new law. As a result, we believe that the rate 
revision and adjustment process required by HFIAA has gone extremely 
well, with as little confusion as can be expected, given the speed and 
volume of the changes involved.
    Likewise, the NFIP prioritized releasing guidance to process 
refunds so that this information was made available on June 26 and WYOs 
could begin issuing accurate, one-time refunds beginning October 1, 
2014 --much sooner than is required in HFIAA. Although HFIAA requires 
the NFIP to issue refunds directly, the WYOs have agreed to process 
refunds on the NFIP's behalf and hope to complete the process by the 
end of 2014. It comes as no surprise that policyholders due refunds 
would like to receive those refunds as soon as possible. It also should 
not be a surprise that the NFIP wants to make certain that refunds are 
processed once and processed accurately, both to avoid any further 
policyholder confusion and to assure that the NFIP is not asking the 
WYOs to refund money not owed to a particular policyholder.
    With the major sections of HFIAA implementation underway, there are 
still other provisions of that bill and BW-12 to address.
                        flood insurance advocate
    HFIAA also established the office of the Flood Insurance Advocate. 
While perhaps the value of a Flood Insurance Advocate was not fully 
understood before enactment of BW-12, in light of the considerable 
effort necessary to implement BW-12 and the HFIAA, WYOs know that 
having a central location for consumers and others to ask questions 
will be beneficial for years to come. We understand that the NFIP has 
established the goal of filling that position by the end of this year 
and hope the NFIP will be able to find candidates with both an 
understanding of mapping and flood insurance, as both will be needed 
for the Flood Advocate to best serve policyholders and the program.
                        additional observations
    Recent history tells us that preparation is a key factor in 
minimizing financial loss after a natural catastrophe. Strong, uniform 
statewide building codes that are regularly updated play a significant 
role in reducing the risk of injury or death to homeowners during a 
natural catastrophe. Furthermore, structures built or retrofitted to 
comply with the most recent edition of the International Building Code, 
and other recognized building standards, incur less property damage 
during a significant weather event. Less property damage following an 
event reduces the need for Federal disaster aid, and can help expedite 
a community's recovery after a natural catastrophe. PCI recognizes that 
strong building codes and responsible land use policies are crucial for 
all stakeholders to promote public safety and to be as prepared as 
possible for the next hurricane, tornado, or flood event.
    PCI supports increasing private sector involvement in flood 
insurance. BW-12 included a provision expressly authorizing FEMA to 
obtain reinsurance from the private market. PCI looks forward to 
working with companies and regulators to make certain consumers and 
other marketplace participants are properly educated and protected 
throughout developments in this area.
    Insurers participating in the WYO program are responsible for 
helping administer the more than 80 percent of the NFIP business. 
Unfortunately, despite continued expensive education and outreach 
efforts by WYO companies, the number of homeowners and businesses 
purchasing flood insurance protection has peaked at about 5.5 million 
policyholders. In order to have a fiscally and economically viable 
insurance program it needs to continue to grow. Consumers need to be 
educated about the importance of having flood insurance and encouraged 
to continue purchasing it.
    Through the partnership established by the WYO program, our 
company, Wright National is a leading provider of flood insurance. 
Administering and marketing the flood program is very complex and 
expensive, and the number of insurers willing to do so has declined 
significantly in recent years. Many WYOs have determined that the 
reputational, legal, and financial risks are too great. Unfortunately, 
as fewer companies market flood insurance, fewer consumers will 
purchase flood insurance. The increased complexity of the NFIP, along 
with increased costs for low-risk, voluntary NFIP policyholders also 
risk decreasing NFIP participation. Together, these and other pressures 
could lead to additional adverse selection in the future, increased 
taxpayer exposure and the need for additional Federal aid following the 
next major catastrophe.
    Growing the number of both policyholders and insurers will, in 
turn, benefit both taxpayers and the NFIP. These goals can be achieved 
by making constructive changes to the NFIP that put the program on more 
sound financial footing through rate reforms, by putting mitigation 
reforms in place and by establishing an environment at the state and 
Federal levels that would encourage private sector involvement.
                               conclusion
    On behalf of Wright National Flood and PCI, thank you for the 
opportunity to present our views today. We look forward to working with 
you to protect consumers and improve the National Flood Insurance 
Program.

    Senator Landrieu. Thank you very much.
    We are going to have to find an easier name.
    Ms. Templeton-Jones. I agree.
    Senator Landrieu. That was a tough testimony. I think we 
are just going to call it the Menendez-Isakson bill. We are 
going to have to think of an easier name to get through that 
testimony.
    Ms. Smith.
STATEMENT OF DONNA SMITH, CHAIRMAN, NATIONAL 
            ASSOCIATION OF REALTORS FLOOD INSURANCE 
            TASKFORCE; BROKER IN CHARGE, BERKSHIRE 
            HATHAWAY HOME SERVICES, G. DAN JOYNER 
            REALTORS
    Ms. Smith. Thank you so much, Chairlady Landrieu, Ranking 
Member Coats, and members of the subcommittee. Thank you for 
holding the hearing on implementation of the Homeowners Flood 
Insurance Affordability Act. My name is Donna Smith, and I am 
proud to represent the views of 1 million realtors who practice 
in all areas of residential and commercial real estate.
    I am a broker in charge with Berkshire Hathaway Home 
Services, C. Dan Joiner Realtors in Greenville, South Carolina. 
I have been a realtor for more than 30 years and served in many 
positions from local and State president to regional vice 
president.
    Over the past several years, I have led the National 
Association of Realtors (NAR) Flood Insurance Task Force 
because there are few issues of greater importance to real 
estate than affordable flood insurance.
    The National Association of Realtors commends FEMA for its 
timely and effective implementation during the first 4 months 
of the Homeowners Flood Insurance Affordability Act.
    Last November, I believe our former NAR President, Moe 
Veissi, raised some serious concerns about the unintended 
consequences during the implementation of the Biggert-Waters 
law that froze real estate markets across the country. In his 
testimony, he shared the story of the Clearwaters.
    They were first-time homeowners from Hawaii. They had spent 
2 years and all of their life savings to find a modest home 
close to his work. They bought their dream home before they 
could be warned about the increase in the flood insurance, from 
$2,700 a year to $28,000 a year after the purchase. The 750-
percent increase put the Clearwaters underwater and facing 
foreclosure.
    Mr. Veissi also spoke about a South Carolina buyer who 
received six flood insurance rate quotes ranging from $10,000 
to $30,000 a year. According to FEMA, the true and accurate 
rate was $500--$500? Geez. And three of those incorrect quotes 
came from different agents from within the same company.
    It is just not right. It is just not right.
    Homeowners need accurate and timely information to make 
decisions. And they should not have to hire outside consultants 
in order to dispute faulty rate quotes.
    But that is exactly what they are being forced to do for 
true and accurate rates before Congress passed the most recent 
NFIP reforms.
    Confusing and inaccurate rates nearly paralyzed the housing 
market where flood insurance is required for a mortgage. 
Thankfully, Congress came together and found a bipartisan 
solution that we hope will resolve the confusion.
    The Homeowners Flood Insurance Affordability Act pushed the 
reset button. Within 1 month, FEMA rolled back the rates to 
2013 levels. By the second month, FEMA announced it would hold 
those rates constant for another year, and we are thankful.
    FEMA also announced that it will be issuing refunds to all 
those overcharged for flood insurance beginning October 1, and 
hopefully completed by the end of this year.
    For the first time, FEMA reached out and is talking with 
us. They are asking questions and they seem genuinely 
interested in our feedback. All of these decisions have helped 
to stabilize and calm real estate markets.
    The progress so far has been very encouraging, but we know 
there is still much more to be done.
    Now that the rates have been reset, FEMA needs to set up 
the office of the advocate to ensure accurate flood insurance 
rates going forward. Homeowners need an independent government 
advocate who has the experience and access to fully investigate 
any rate quotes that don't pass the smell test.

                           PREPARED STATEMENT

    NAR looks forward to keeping the dialogue open and working 
with you, the Congress, and FEMA to build on these positive and 
early efforts to implement these NFIP reforms.
    Thank you for this opportunity to testify, and I am happy 
to answer all of your questions.
    [The statement follows:]
                   Prepared Statement of Donna Smith
   national association of realtors flood insurance task force chair
                              introduction
    On behalf of its one million members involved in all aspects of 
commercial and residential real estate, thank you for inviting the 
National Association of Realtors (NAR) to testify regarding the 
implementation of recent reforms to the National Flood Insurance 
Program (NFIP).
    On March 21, 2014, President Obama signed into law the Homeowner 
Flood Insurance Affordability Act after bipartisan super-majorities 
approved the measure. Congress was responding to the scattershot 
implementation and unintended consequences of the preceding Flood 
Insurance Reform Act of 2012 (``Biggert-Waters''). To make informed 
decisions, property owners must have clear, concise, timely and 
accurate information about flood risk. Yet when implementing Biggert-
Waters, the Federal Emergency Management Agency (FEMA) was:
  --Not timely in making required changes to flood insurance rates 
        before thousands boughthomes or businesses; most new owners did 
        not find out about the rate increase until the renewal of their 
        insurance policies 1 year after purchase.
  --Not clear on what rate increases were appropriate, leaving most of 
        the details to the ``Write Your Own'' (WYO) Companies that 
        service the NFIP's policies and mistakes were made.
  --Not responsive to property owners who came forward with multiple, 
        conflicting rate quotes for a single property (there should be 
        only one each) or reported rates as high as $87,000 per year.
  --Not proactive in the outreach and education efforts to get ahead of 
        the confusion and uncertainty which were stalling property 
        sales in numerous real estate markets.
    Our main concern can be summed up in a word, accuracy. Accuracy of 
the information that is distributed to consumers and FEMA's industry 
partners. Accuracy of rates quoted to policy holders. Accuracy of maps 
and the mapping process. Because of flaws that we saw during Biggert-
Waters implementation, like the $87,000 rate quote, Realtors advocated 
for policies to assist in the distribution of accurate information.
    The Homeowners Flood Insurance Affordability Act resolved these 
issues. Sections 3-6 required FEMA to stop relying on WYOs and set all 
rates for older properties. These sections also restored grandfathering 
of rates and limited the increases going forward. Sections 7-31 made 
longer-term reforms to ensure the accuracy of the flood maps and 
insurance rates, among other things. We are especially proud that the 
Act included a new Office of the Advocate to assist consumers in their 
dealing with FEMA and the WYOs, as well as including refunds for those 
who were overcharged, the repeal of faulty, exorbitant rate increases, 
more oversight over the mapping process, and the ability for homeowners 
to be reimbursed their expenses to fight incorrectly mapped properties.
              overview evaluation of early implementation
    Four months after the bill's signing, FEMA has already implemented 
most of the measure's short-term rate provisions:
    1. Within 1 month, FEMA issued rate-relief guidelines directing 
WYOs to stop raising rates at the time of property sale and instead, 
use FEMA's October-2013 tables, so buyers will not pay more than the 
current owners at NFIP policy renewal.
    2. FEMA went further and applied this guidance broadly, so it 
included all current owners who bought a new policy or let one lapse, 
not just those who bought property after Biggert-Waters.
    3. One month later, FEMA announced it will hold the 2013 rates 
constant through 2015 and in some cases, reduce those rates.
    4. FEMA also provided guidance to WYOs to issue refunds this fall 
for any amount that property owners over paid in excess of the 2013 
rates.
    Taken together, these early decisions have helped to stabilize and 
calm real estate markets where flood insurance is required for a 
mortgage. While this may change as refunds are issued this fall, since 
May 1, 2014, NAR has not received major complaints about flood 
insurance.
    FEMA seems determined to get the law's implementation right, this 
time. The Agency reached out early and met with Realtors, who have 
their fingers on the pulse of property owners. FEMA's staff asked 
questions and seemed genuinely interested in the feedback on how to 
smooth the roll-out of rate relief and refunds for property owners, who 
have been reeling from the wide swings in insurance rates over the past 
few years.
    While there is still more work to do and a long way to go, the 
progress so far has been encouraging. NAR looks forward to keeping the 
dialogue open and working with the Committee, Congress and FEMA to 
build on these positive early efforts only 4 months into implementation 
of recent NFIP reforms.
                  progress report on specific reforms
    Since the new law took effect on March 21, 2014, FEMA has already 
implemented the immediate rate relief provisions, and is on track to 
issue refunds this fall. FEMA must still implement long-term reforms 
(which provide for more accurate flood rates and maps), but the 
progress so far has been positive. The following sections provide the 
status and make recommendations regarding several key provisions of the 
new law.
Section 3--Repeal of Certain Rate Increases
    Subsection (a) required FEMA to issue amended rates and refund any 
amount paid in excess of these rates. It also established an eight 
month implementation schedule to deliver the refunds to property owners 
required under the law.
    Subsection (b) provided interim rate relief by preventing an 
immediate jump to full-risk premiums at the time of property purchase. 
Instead, buyers were allowed to ``assume'' the existing insurance 
policies at the current rate paid by sellers.
    Status: Reported near completion.
  --Effective May 1, 2014, FEMA directed WYOs to stop raising rates at 
        time of sale and instead use the October-2013 rates for older 
        (pre-FIRM) properties.
  --FEMA went further and applied this broadly, so it not only included 
        buyers but also current owners who either a) bought a new flood 
        insurance policy or b) let their policy lapse after Biggert-
        Waters.
  --On May 30, 2014, FEMA announced it will hold 2013 rates constant 
        through 2015, and in some cases, reduce those rates.
  --On June 26, 2014, FEMA issued further guidance that WYOs are to 
        refund any amount of paid in excess of 2013 rates. Refunds are 
        to begin October 1 and be completed by December 31, 2014.
    Recommendation: NAR applauds FEMA for acting quickly and decisively 
to the implement the rate relief and refund provisions within the 
statutory deadlines. Taken together, these actions have stabilized and 
calmed real estate markets. While this may change as refunds are 
issued, since May 1, 2014, NAR has not received major complaints about 
flood insurance.
    One issue still outstanding is whether the refund guidance applies 
to all buyers or just those who bought a primary residence. Buyers of 
second homes or commercial properties see their rates increase each 
year on January 1, not October 31. According to FEMA, under Biggert-
Waters second-homes owners were not supposed to pay more than 25 
percent annual increases--even if they purchased the property. However, 
NAR documented examples in earlier testimony,\1\ where second home 
buyers paid well in excess of this.
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    \1\ NAR testimonies may be found at http://www.realtor.org/
floodinsurance
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    NAR believes that the refund provision applies to all buyers, 
including those who bought a second home or commercial property and 
paid more than 25 percent annual increases since October of 2013. FEMA 
should refund the difference between what non-primary home buyers 
actually paid and what they should have (including the 25 percent 
increases). We recommend that FEMA clarify this issue through official 
guidance, so there is no confusion among WYOs that these property 
owners arealso eligible for refunds.
Section 24--Flood Insurance Advocate
    Resetting and refunding rates back to October 2013 addresses only 
part of the problem. After gradual annual increases, property owners 
may still be facing excessive and inaccurate full-risk premiums. For 
this reason, provisions were added, including a new Office of the 
Advocate to ensure the longer-term accuracy of flood rates and maps.
    Because FEMA did not provide an easy-to-use consumer point of 
contact, many homeowners turned to NAR, through their Realtors, after 
FEMA did not help, and we simply were not equipped to evaluate the 
accuracy of these rate quotes. Most quotes were based on arcane submit-
to-rate procedures. None were transparent about the judgments and 
calculations used to generate their estimates.
    NAR did manage to locate outside consultants for hire who had the 
requisite expertise and background. However, these experts were limited 
in what they could do, unless the WYO fully cooperated. Without access 
to WYO or FEMA information, often they were forced to rely instead on 
information supplied by the homeowners, including the non-transparent 
rate quote. Some were able to partially fill-in data gaps by 
researching online tax records for instance, but without access, they 
could only raise questions and make educated assumptions about the 
basis of the rate estimates. Even if the consultants were able to 
provide compelling information, nothing in law required WYOs to correct 
rates and refund differences.
    Given these circumstances, what homeowners need is an independent 
government advocate who has the expertise and access to fully 
investigate suspect rate quotes. The Advocate should also have FEMA's 
full weight and authority to compel WYOs if they don't fully cooperate 
when rating errors are found.
    Status: In the early stage.
    Currently, FEMA is conceptualizing how to structure and fund the 
Advocate's office. We understand that FEMA is considering a call-center 
concept that builds on FEMA's existing infrastructure including the 
regional offices and possibly state floodplain managers.
    Recommendation: Respectfully, this call-center idea is NOT 
consistent with the provision's intent. If all FEMA had to do was 
supply a 1-800 number, there would have been no need for another law. A 
major part of the problem is that FEMA's regions and states are not 
equipped to investigate or correct faulty rate quotes, and NAR has 
documented several examples of this in our previous testimony.\2\
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    \2\ NAR testimonies may be found at http://www.realtor.org/
floodinsurance
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    We urge FEMA to reassess the call-center approach and consider 
something more like the Taxpayer Advocate Service. The Advocate must be 
independent, a flood insurance expert, manage a qualified staff, have 
access to any WYO and FEMA data, have resources to fully investigate, 
and be given authority to compel WYO cooperation.
Section 17--Flood Insurance Rate Map Certification
    Homeowners cannot make informed mitigation decisions without flood 
maps that are accurate and updated in a timely manner. Under this 
provision, FEMA must certify when the Technical Mapping Advisory 
Council has reviewed the maps and it has implemented a credible program 
based on the Council's recommendations.
    Status: In Progress. FEMA has established the Council with 20 
members and is currently determining the level of resources and 
expertise needed to evaluate the flood mapping program.
    Recommendation: There is no one more familiar with the flood 
mapping challenges homeowners face than REALTORS. NAR urges the 
Council to consult real estate practitioners as part of a full 
stakeholder process.
Section 18--Reimbursement for Successful Flood Map Appeals
    Due to budget constraints, FEMA is not able to map the flood risk 
on a property-by-property basis for more than 5.5 million in the NFIP. 
Instead, maps are issued at the community level, which means some 
properties technically fall within a ``high-risk'' flood zone but in 
fact, sit above base flood elevation and are low-risk. That is why 
there is an appeals process for property owners. However, to win an 
appeal, the owner must be able to spend out of pocket upfront to hire a 
state licensed surveyor who will drive out, measure the property's 
elevation, and provide the certification necessary for FEMA to consider 
an appeal. This can cost anywhere from several hundred to several 
thousands of dollars, according to FEMA.
    Status: Unclear.
    NAR's understanding is that FEMA must first go through a formal 
rulemaking process before it can begin reimbursing successful map 
appeals. There is a queue for regulations at the Department of Homeland 
Security and FEMA is only one of several agencies competing for limited 
rulemaking slots.
    FEMA's General Council has also interpreted this provision 
narrowly, so the agency would not have to reimburse except when a 
property owner appeals within the first 90 days of a proposed flood 
map. Any property owner who appeals outside of this 90-day window could 
not be reimbursed, should they win.
    Most property owners who contact NAR seem genuinely surprised when 
we inform them of this appeals process. They don't read the Federal 
Register or see the newspaper advertisements. Some have bought the 
property after the community adopted the map, and don't know why the 
previous owner didn't choose to appeal. If a property owner spends the 
money to go through the appeal's process and wins, they should be 
reimbursed.
    Recommendation: Homeowners should not be shut out of the flood map 
appeals process just because they can't afford to go out of pocket. 
While technically 42 USC 4104(f) may reference the formal 90-day review 
process, NAR believes there is a public policy basis fully consistent 
with congressional intent for FEMA to broaden its interpretation beyond 
the 90-day window. We urge FEMA to reconsider.
                               conclusion
    To date, the implementation of the Homeowners Flood Insurance 
Affordability Act has gone much more smoothly than implementation of 
Biggert-Waters. NAR is pleased that FEMA learned from its past 
experience and chose to conduct early outreach with involved 
stakeholders. We hope they will continue in this vein and continue to 
make implementation decisions that provide stability in real estate 
markets.
    While the early implementation of the law has been encouraging and 
positive, there is still more to do. FEMA has to set up an Advocate 
office and go through a rulemaking on other provisions before property 
owners can full benefit from the law's provisions.
    The Association looks forward to continuing to work with this 
committee in its oversight role to ensure that these provisions are 
fully implemented, consistent with congressional intent, so that home 
and small business owners continue to have access to affordable flood 
insurance.

    Senator Landrieu. Thank you very much. I do have many 
questions. I am not going to get them all in today, but I will 
submit quite a few for the record, and this record will remain 
open for 2 weeks.
    Let me begin with you, Mr. Berginnis. Tell me a little bit 
more about these floodplain managers, because I am having a 
hard time understanding who you represent, in the broadest 
sense. There are 16,000 members. There are 35 chapters. I got 
this from your Web page.
    Who appoints you? Some of the members are mayors, parish 
presidents. Kind of explain to us the floodplain managers. How 
you get designated? Are you self-designated? Are you appointed? 
How long do you serve? And what is your specific role in this 
and then your sort of general role?
    Mr. Berginnis. Okay, first, membership in the organization, 
being in the floodplain managers, you can be from government, 
private sector, even interested citizens, in terms of the 
mission of reducing flood losses and protecting floodplains.
    But floodplain managers, and I think to your question, 
where most floodplain managers come from is that in the NFIP, 
one of the requirements is that a community designates a 
position that is a floodplain manager. And we don't have that 
many people who are full-time floodplain managers in the 
country that that is all they do. It is usually another facet 
that is assigned.
    So in some of the communities I worked with in Ohio, a 
floodplain manager could be the city engineer. It could be a 
planning director.
    Senator Landrieu. So it is a Federal Government requirement 
to have a floodplain manager in each community. And those 
communities are every county or every State, both State and 
county?
    Mr. Berginnis. It is usually whatever the State recognizes 
as having land-use authority. So in Louisiana, it could be a 
parish. In Ohio, it was counties, villages, and cities.
    But then you have State-level floodplain managers in the 
State NFIP coordinating offices.
    Senator Landrieu. And the reason I ask this is because I 
was actually shocked when the floodplain managers opposed our 
efforts to reform Biggert-Waters. So I am wondering who you are 
representing, because realtors, the bankers, the homebuilders, 
the neighborhoods, the people all knew that the reform was 
necessary, but the floodplain managers came out against the 
bill, so I am having a hard time understanding what you are 
trying to manage.
    Mr. Berginnis. Sure. Understand that we absolutely 
supported the rollback of the risk rates. The aspects of the 
bill that were the worst, we did support those.
    We had in previous testimony made about 20 recommendations 
about how Biggert-Waters needed to be changed, and the 
Homeowners Flood Insurance Affordability Act contained several 
of those.
    But it also contained some provisions that were not quite 
good. And one of the things that it really lacked was 
implementation.
    Senator Landrieu. Are you talking about Biggert-Waters or 
are you talking about the Menendez bill?
    Mr. Berginnis. The Menendez bill.
    Senator Landrieu. Okay. So tell me what you----
    Mr. Berginnis. Sure. One of the key things that it lacked, 
and this is what we elaborated on in our testimony today, is 
that if the goal is to transition to something more actuarially 
sound that most people agree with, you can't do it by changing 
rates.
    Senator Landrieu. The goal was not to move to something 
more actuarially sound. The goal of the Menendez bill was to 
have a program that people could afford, a very big difference 
in goals.
    Mr. Berginnis. I am sorry. Yes. I was speaking previously 
in terms of we all recognize that the NFIP has a sustainability 
issue going forward. I think Administrator Fugate talked about 
that, and it is still an ongoing issue.
    The thing that the Homeowners Flood Insurance Affordability 
Act did not have, though, was some really strong mitigation 
provisions to help those people who are still going to face the 
affordability gap even with the much better measures that were 
passed in that bill, such as increasing the exposure of the 
flood mitigation assistance program, reforming the increased 
cost of compliance mitigation portion of a flood policy. Those 
are bridge type activities that property owners who can't 
afford the insurance can undertake and do mitigation, and at 
the end of the day, their property is more resilient, their 
rates are lower, and they then are not as impacted nearly as 
much.
    Senator Landrieu. Let me ask this, Ms. Smith. Do you or the 
realtors--I am very happy to hear that FEMA is now working with 
you. In my view, it shouldn't require an act of Congress to get 
them to do something that would be common sense, to work with 
realtors and bankers and people who are actually on the ground 
and know their communities pretty well. But I am glad they are 
doing that now.
    What would you say about the realtors' relationship with 
floodplain managers? Do you all work with that association? Do 
you know anything about them? Have they ever reached out to you 
all?
    Ms. Smith. Thank you for that question, Senator. No, I do 
not know anything about that. To my knowledge, they have not.
    I think our biggest thought process for the consumer, we 
believe there has to be an advocate counsel set up, a staff. 
The consumer has to have someone to go to. They come to their 
realtor first, usually. They call their insurance agent. They 
don't know anything about it. They call their realtor. And 
obviously, it is our fault if it is good or bad. We like for it 
to be good.
    But we don't know anything about it. We are really not in 
the insurance business.
    We need a mechanism, and that advocate would be the person, 
that office that we could go to, they could go to and say, ``We 
have this rate, and it seems out of line. What do we do? Where 
do we go? Help us.''
    Senator Landrieu. Yes, I agree with that.
    Ms. Smith. I think that is huge for the success.
    Senator Landrieu. I agree with that.
    Let me turn it to Senator Coats.
    Senator Coats. Once again, Madam Chair, I apologize that I 
had to run out.
    I would like to get your reaction to the question I asked 
Administrator Fugate, and that is a potential solution that 
addresses affordability and the need to spread the risk through 
a broad coverage approach. The whole idea of community 
involvement and their program that they call the whole of 
community, to increase participation in the NFIP.
    What is your take on FEMA's approach, on what they are 
doing? What are you doing to promote community involvement?
    It seems to me that is one of the key issues that, if 
addressed successfully, could result in broader participation 
and lower premiums for everyone.
    Ms. Smith. Senator, I would be happy to answer first. Thank 
you for the question.
    Yes, we do believe that advocate program would be a key in 
that. We also partnered with FEMA, and we have customized some 
brochures that we are giving out to everybody with information 
on that.
    But accuracy is the key. There is not accurate information 
out there. There is not accurate mapping. Nothing is accurate.
    People cannot make decisions if they don't have accurate 
information. I can't stress accuracy and timeliness enough in 
this presentation to you.
    Senator Coats. Which is what we are trying to do with the 
program, and getting more accurate information to make 
decisions is important.
    But it seems to me that the realtor plays a very critical 
role because you have a client who is turning to you with a 
number of questions, ``What should I have? What shouldn't I 
have?'' Now, it is one thing to be conscious, of course, of 
what the purchaser has to pay for the coverage, but it is 
another thing to, as a realtor, say, ``Well, you really may 
want to consider this. It is within a reasonable price range, 
and we are working to spread the risk even further,'' as 
opposed to, ``Well, don't worry. You are not in a floodplain, 
so you don't need the insurance.''
    Director Fugate addressed that particular issue, but it 
would be very tempting for a realtor to say don't worry. I have 
sold homes too. The mortgage company calls, ``Are you in the 
floodplain?'' ``No.'' They don't have to worry about flood 
insurance.
    So it seems to me there is somewhere in between having it 
or not having it, but basically a narrative that says everyone 
faces some risk and insurance could offer some assurance. 
People say we are in a 100-year floodplain, so I don't have to 
worry for 100 years. But the flooding could happen 2 years in a 
row.
    So it seems to me the association of realtors has some 
responsibility, or it would be a benefit if a realtor were to 
say, ``Well, you ought to consider a middle ground. You are 
fortunate. You are not in the direct floodplain, but you never 
know. And the climate is changing in ways that some areas are 
getting more rain than they used to.'' I think this has been 
going on for eons, but nevertheless, we have to be conscious 
that you just can't rely on the fact that if you are outside 
that flood line, you are never going to have a problem.
    Ms. Smith. I agree, Senator. I think what we would have to 
do, that would be an educational process, and we would have to 
be educated and educate all of our members, so that they in 
turn could educate their clients.
    As realtors, what we do, we don't really sell property. We 
counsel. We give information, good, accurate information, so 
buyers can make good decisions about their life.
    Senator Coats. I wonder if the other two would like to 
respond to that?
    Ms. Templeton-Jones. Thank you, Senator Coats. Absolutely, 
education is key, because this is a very complex product. And 
traditionally, what the insured wants to say is, ``Oh, I live 
in low-to-moderate-risk. I am not required. I don't need this 
policy.''
    But I would like to bring to your attention the one concern 
that I have with BW-14, because that is what is easiest for me 
to call it, is there was a provision in there for secondary 
properties and also commercial properties to have a $250 fee 
added to it. And this could also be on your low-to-moderate-
risk policies.
    These low-to-moderate-risk policies, as you mentioned, 
spread risk. These people that are in the low-to-moderate-risk 
areas, they are not required to buy flood insurance. They 
realize they are at risk, so they do the prudent thing and 
purchase the policy. Their premium may be as little as $300, 
$400, $500. Now we are going to tack on a $250 fee.
    Is that going to push this low-to-moderate-risk individual 
outside of the program, which could then impact the program as 
a whole?
    Mr. Berginnis. And, Senator, we also share the concern that 
Patty raised. We have been doing webinars monthly with our 
members, as well as any others, to educate individuals on the 
reform act. And in the webinars, one of the things that we do 
is give an example where on these low-risk policies, when you 
include the fee, you could have rates increasing 60 percent, 70 
percent, when you are also inclusive of that fee.
    But also to your question on how we change the mindset, I 
guess kind of a rhetorical question, would the folks in this 
room support flood maps coming out that show the entire 
community in a flood zone? We talk about this on our webinars: 
Every place has a level of flood risk. It is just a matter of 
how much risk you have.
    You have areas of lower risk, areas of medium risk, and 
areas of high risk. And I think Administrator Fugate talked 
about something that we need to think about, which is our 
terminology. Those highest risk areas are the areas where you 
have the mandatory flood insurance requirements. Call it a 
mandatory purchase zone.
    But the way our maps say it now, you have Special Flood 
Hazard Areas, and then you have everything outside Special 
Flood Hazard Areas, and that communicates the wrong message.
    Senator Coats. So you would recommend something like 
different shading. When you look on the Weather Channel, the 
worst weather is bright red, and the next one is pink, and the 
next one is blue, and then green, and so forth.
    Mr. Berginnis. Right. And have the entire community shaded, 
because even in inner-city Chicago, where you don't have creeks 
and rivers, you have flood risk in basements. In the areas of 
Colorado that have experienced a lot of mountain flooding, 
areas that were far away from floodplains, homes got wiped out.
    It is because you have flood risk in almost every location, 
and we need to start communicating that message with our maps.
    Senator Landrieu. So what you are saying, not to interrupt, 
but this is a very important point of this hearing: floodplains 
are different than flood risk. You can be outside of a 
floodplain and flood.
    That is interesting for those of us who are not scientists, 
on the definition of a floodplain, as opposed to a place that 
floods.
    But I think this is the core of the issue, and getting back 
to what Ms. Smith said, the accuracy cannot be overstated. 
People have to know, so they can make decisions. And they have 
to have available data to make those decisions quickly. ``Do I 
want this house and pay this price? Do I want this house and 
elevate my property? Or do I want this house where I can pay 
less?'' They have 24 to 48 hours to make the decision. They 
have a week to accept the job or not. This is not something 
that can be months and months and months.
    Anyway, thank you, Senator Coats.
    Senator Cochran.
    Senator Cochran. Madam Chair, let me thank you for 
convening the hearing. I think what I am left with is a lot 
more questions than I had before I came in. And I think that is 
good. I am glad I came, because I wouldn't have known that, 
that there are so many uncertainties and challenges that lie 
ahead in having a federally supported or subsidized, however 
you want to label it, homeowner protection plan or law, and 
include residential homes with other distinctions that may be 
worthy of more careful consideration than others.
    But there are a lot more questions than answers. That is 
what I am learning, and that we should be very cautious as we 
move ahead in trying to develop Federal legislation that meets 
the expectations and realities that lie ahead.
    Senator Landrieu. Thank you, Senator. An excellent point. I 
actually have more questions myself. This has really prompted a 
lot of different, new thinking.
    I want to have at least two more questions for the record, 
and then I am going to submit many others.
    But, Chad, if I could ask you, what steps are necessary for 
floodplain managers to have confidence that flood maps are 
complete and accurate? And if you could give, each of you, a 
recommendation to FEMA, what could they do to get the best 
maps, the most accurate maps, not just the money that we have 
given them, which your recommendation is $400 million.
    I want to get this clear. Your recommendation is $400 
million. We have in the bill only $221 million, but I did put, 
as the chair of this subcommittee, $15.6 million above the 
President's request to try to move us down the line.
    But I am very interested in hearing from FEMA that they 
might be able to do this job more efficiently, not requiring 
the $400 million that you have recommended.
    So my question is what would each of you, if you could give 
one suggestion to FEMA on this mapping, what would it be? If 
you want to add a second, go right ahead.
    Mr. Berginnis. Okay, maybe I will add a second. Thank you, 
Senator.
    The first would be good topography. And we were very 
encouraged, and I think it was mentioned earlier in the hearing 
by the administrator, that this 3D Elevation Program (3DEP) 
initiative, where FEMA is working with USGS in improving 
topography, is critical. You can engineer the best flood layer 
in terms of the hydrology and rain and all that stuff, but if 
you don't have good topography to put that on, it doesn't make 
sense.
    And then the second thing would be as much engagement with 
the communities and States as possible. The CTP program where 
capable States and communities are doing the mapping, that gets 
buy-in.
    I had a commissioner from a county in California talk to me 
this last spring. They are a CTP and his county engineer was 
there. He was telling me about their map update process. They 
identified all these new flood hazard areas, these new alluvial 
fans, and somebody went to the commissioner and said, ``By 
gosh, I am upset. My house is now on the floodplain.'' And the 
commissioner responded, ``We are sorry that is the case. We did 
the mapping and that is correct.'' That is the buy-in we need 
to strive for.
    Thank you.
    Senator Landrieu. Okay, thank you.
    Ms. Templeton-Jones.
    Ms. Templeton-Jones. Absolutely. I agree this morning with 
Director Fugate. We have to get better maps, and we have to do 
so with newer technology. There is technology out there. Our 
company is always researching, because flood is our life. We 
write excess flood, so it is above and beyond NFIP, so we are 
always looking because we are at risk on that.
    I truly believe there is technology out there much better 
than what we are utilizing.
    Senator Landrieu. What does your company use? Because that 
is a very good point. I want to remind everybody that the flood 
insurance program only covers up to $250,000. That is the max 
under the law. There are many homes that are valued well in 
excess of $250,000. So a company like yours would write the 
difference between, let's say, $250,000 and $650,000.
    So what data do you use to write that risk that is 
available on the private market?
    Ms. Templeton-Jones. It is challenging. There is not much 
more out there than that. However, in our research, I know 
director Fugate mentioned about LIDAR. Talking about LIDAR, 
that the plane flies over and they shoot. There are communities 
in North Carolina. North Carolina I just recently listened to. 
They actually have mobile LIDAR, so it is much more pinpointed.
    And when that happens, because the State is doing it, you 
get the buy-in of the communities.
    But right now, for our own excess flood, we are pretty 
limited. We look at all the resources. We actually go to a lot 
of the States, because sometimes the States have better 
information as far as looking at SLOSH models. SLOSH models 
means storm surge, where that storm surge goes, and items like 
that.
    But I think there is technology out there that FEMA needs 
to work to embrace.
    Senator Landrieu. So better technology, off-the-shelf 
technology, and working more closely with the local communities 
are two of your recommendations.
    Ms. Templeton-Jones. Absolutely.
    Senator Landrieu. Ms. Smith, anything you want to add?
    Ms. Smith. Yes, ma'am. The appeals process. I think the 
appeals process is crucial.
    Right now, the consumer going though that appeals process 
is lost. It takes a long time. They need help. The advocate 
department would help them do that. But the appeals process is 
huge, especially when we have such inaccurate information.
    And I too agree. In today's market, with the technology we 
have--and I don't know how we do it. It is out of my realm of 
expertise. I can't help but believe there is technology out 
there to have more accurate maps.
    Senator Landrieu. When you think about Google Earth, and 
you think about the ability of a camera to zoom from a 
satellite literally into a person's kitchen and see what they 
are cooking for dinner, it is very hard for me to understand 
how we don't have more accurate technology applied to this.
    And I am going to be pressing FEMA very hard on this 
technology issue. And I am going to ask FEMA in writing what 
are you doing for requests for proposals to private new 
technology companies that can solve this problem? Part of it is 
management, but part of it is just lack of the data that we 
need to do this program correctly.
    Let me ask a question about the fee. I know that the House 
leadership required an offset for this bill. The bill that the 
Senate passed was not offset. The Senators did not believe that 
the bill needed to be offset. We thought this was an emergency 
and we voted that way.
    The House required this offset. So what the House did was 
put a $250 fee added to the policy until this program could be 
worked out, which for a policy that was $5,000 a year, it is 
minor. But you just said the problem is for the low and 
moderate, where they are only paying $500. The fee itself is 
now almost a 50-percent increase.
    Ms. Templeton-Jones. That is correct. And those are the 
policies that you want in the program.
    Senator Landrieu. Correct. And this fee is going to drive 
them out.
    Ms. Templeton-Jones. And what is really scary, on top of it 
all, just recently, I am sure you may have heard about the 
flooding event in the panhandle of Florida, where over 20 
inches of rain fell in less than 24 hours. We had quite a few 
claims coming out of that. Seventy percent of the claims that 
we adjusted were low-to-moderate-risk.
    Would these people have not been in the program if they 
felt they weren't in danger? And this was from rain. It was not 
from storm surge. It was strictly rain. Where it rains, it can 
flood anywhere.
    Senator Landrieu. Thank you.
    So for the record, whether you are in a floodplain, a 
river, a coast, or anyplace where it rains. I mean, except for 
extreme drought, it rains everywhere on a fairly regular basis.
    So this program, I think people have to get a reset button 
on this program. It is not a coastal issue. It is not only a 
coastal issue. It is an interior issue. It is a national issue. 
It is an economic issue. And wherever it rains, it can flood.
    The fee issue, that is important. I think we have to look 
at that.
    The other question is, in Louisiana and Mississippi, 
particularly, we have many homes that are two-story homes. The 
first story being a kind of shell story, because we know we 
live in lowland. We have been living there for 300 years. This 
is not new to us, like it is for some people, excuse me, who 
recently moved to Florida to retire. We have been living there 
for 300 years.
    So when the French and Spanish built this way--you can see 
even in the French Quarter it is like this--they built up a few 
feet, but there is nothing there, not like a traditional 
basement where people live. It is just like a storage area. And 
then you have your living floor above the floodplain.
    Under FEMA's definition, and this is more for you, Mr. 
Miller, but you are not on the panel, but you all understand, 
and maybe the realtors, does a person have to have coverage for 
the first floor, even if it is an unlivable floor? Are they 
getting charged? Maybe, Patricia, you might know the answer to 
this, because I think the answer is yes, even though they are 
not living on that floor, they are being penalized in some way, 
if they don't have insurance for that floor. Do you see what I 
am saying?
    Ms. Templeton-Jones. Yes, they are being charged. The rate 
starts there. However, from my understanding, the reason is 
because if water comes in, it could affect the stability of 
that structure. So it is rated on the lowest level of that 
structure.
    Of course, the higher up you go, the better off. But again, 
but if you are above the base flood elevation (BFE), your rates 
will always be better. So even if your lower level----
    Senator Landrieu. Even if the lower level is underneath the 
base flood.
    Ms. Templeton-Jones. I grew up in New Orleans. I 
understand. It is almost like a crawlspace where you have 
little decorative flow-throughs.
    Senator Landrieu. Yes.
    Ms. Templeton-Jones. Those ratings are better than what 
would be a slab on grade, if that property was absolutely on 
the ground. You are getting some credit for having it raised.
    But because you still have your pillars and your post that 
could be impacted during a flooding event--I am not the best 
claims person--but that could be impacted during a flooding 
event, it could cause it to shift, which then water may never 
even get into the structure, but you could have a damaged 
structure. That is my understanding.
    Senator Landrieu. Ms. Smith first, and then Chad. And then 
we are going to wrap up.
    Ms. Smith. I believe that in the new bill, there is a 
provision for basements, and if you waterproof the basement, I 
think it has to go through rulemaking with FEMA. I think you 
can get a reduction. That basement level is not having to be 
insured. But that has not been implemented yet.
    Senator Landrieu. Thank you for reminding me of that. And 
that was really a North Dakota and New Jersey provision about 
the basements. But it affects lots of people.
    I think, Mr. Miller, we really have to get this straight 
about these lower levels that are not living spaces. They are 
storage spaces. We boil crabs and crawfish on our ground 
floors, and we live upstairs. And we want to make sure that the 
rates that people are paying reflect the fact that they aren't 
living at the flood level. They are living above it on the 
second floor, but actually have the use of a first floor that 
might be a garage, could be a basement, could just be an open-
air space where people sit on swings, et cetera.
    A lot of that is in South Mississippi. Senator Cochran 
knows this. It is just the way the architecture is.
    And we have to accommodate for that in the coastal areas. A 
lot of the architecture is like this in Florida, Alabama, 
Mississippi, and Louisiana, in particular.
    All right, last closing remarks. Anything you want to get 
on the record that is not, for the next minute? And then we are 
going to close up.
    Mr. Berginnis. Again, we just want to thank you for the 
leadership and especially we know you have worked hard in terms 
of obtaining resources for flood mapping, and we would argue 
and hope that the administration, being FEMA and DHS, would 
prioritize flood mapping among all the things that they have to 
do, because there is an awful big budget. And while $400 
million a year is a lot, it is the threat that Americans deal 
with every single day among all the threats they work with. 
Thank you.
    Ms. Templeton-Jones. Thank you, Senator Landrieu. I like to 
say again, thank you for allowing me to be on this panel. My 
biggest challenge with this is the complexity of this whole 
program.
    Over the years, when I first started in this industry. 20 
years ago, I could walk into an agent's office with this piece 
of paper front and back and show them how to write a flood 
policy. I was just recently in an agency's office. I spent an 
hour there. I still couldn't get all the answers. I had to go 
back to my office and spend another 2 hours.
    So I would hope that we could find a way to simplify this 
program.
    Senator Landrieu. Maybe we should fire all the lawyers. 
That might help. I don't think that will go very far. And since 
I am married to one, I am going to get into a lot of trouble, 
but we have to think of a way to simplify it.
    Ms. Smith?
    Ms. Smith. Thank you. And we do want to thank you. Without 
your leadership, I am not sure what would have happened. So we 
are indebted to you.
    But I also want to share with you. I apologize for not 
bringing our printed materials, where we have been educating 
our members and giving them to consumers, and we will make sure 
you get that, and your subcommittee.
    Senator Landrieu. Please do that, and submit that to the 
record. We have this document that is submitted to the record.

                     ADDITIONAL COMMITTEE QUESTIONS

    We are going to have many questions. Senator Cochran has 
some additional questions. I will, and some of the other 
members.
    [The following questions were not asked at the hearing, but 
were submitted to the witnesses subsequent to the hearing:]
                  Questions Submitted to Craig Fugate
            Questions Submitted by Senator Mary L. Landrieu
                         fema reform task force
    Question. In 2010, FEMA created the NFIP Reform Working Group to 
address the concerns of the broad coalition of stakeholders that were 
engaged in an active debate about the future of the National Flood 
Insurance Program.
  --Has FEMA established a task force to research and review different 
        policy alternatives that can be considered during the 2017 
        debate about reauthorization of the National Flood Insurance 
        Program?
  --If so, who is on the task force and how regularly do they meet?
    Answer. FEMA's first priority, as it relates to the National Flood 
Insurance Program (NFIP), continues to be the implementation of the 
Biggert-Waters Flood Insurance Reform Act of 2012 (Title II, Subtitle A 
of Division F of ``MAP-21'' (Public Law No. 112-141)), and the 
Homeowner Flood Insurance Affordability Act of 2014 (Public Law No. 
113-89). In 2012, a team was established to support this effort. Since 
then, at a minimum, this team has met on a weekly basis to manage the 
implementation process and to inform the decisions of FEMA leadership. 
Membership comprises of the team both the divisions of the Federal 
Insurance and Mitigation Administration and FEMA Offices, including 
both External Affairs and Office of Chief Counsel representation.
    FEMA looks forward to informing the important debate that will take 
place during the 2017 reauthorization of the NFIP. FEMA also looks 
forward to the results of the many reports and studies called for under 
the two Acts; specifically, we look forward to reviewing the National 
Academy of Sciences' report on affordability and the reports assigned 
to the newly established Technical Mapping Advisory Council. The 
National Academy of Sciences' report will inform FEMA's affordability 
framework, which will address affordability options for the program, as 
required by the Homeowner Flood Insurance Affordability Act. As we 
continue to make progress implementing the laws, we will be in a better 
position to develop a more defined strategy for informing that process 
and will provide updates with your office as we progress.
                   citizen communication and outreach
    Question. There is an old English saying--``God created the world, 
but the Dutch created Holland''--that speaks to their strong national 
awareness of their exposure to flooding. They have 3,000 polders, or 
levee systems, and every citizen can tell which polder they live in. 
Similarly, in South Louisiana, my constituents know their levee 
district and routinely tax themselves to support its operation, but we 
need to make this a national priority.
  --How is FEMA working with county officials, bankers, realtors, 
        insurance agents and other key partners to educate homeowners 
        and businesses about their real exposure to flooding?
    Answer. In July, FEMA released its 2014-2018 Strategic Plan that 
includes five strategic priorities, one of which is to ``Enable 
Disaster Risk Reduction Nationally.'' FEMA recognizes the Nation faces 
increasing disaster risk in the near and long term due to multiple 
interacting factors. Reducing loss of life, injuries, and disaster 
costs will require concerted, risk-informed action by individuals, 
businesses, and communities, as well as a range of state, tribal, 
territorial, and Federal government agencies. The 2014-2018 Strategic 
Plan outlines FEMA's commitment to support local stakeholders in 
reducing risk through the provision of credible and actionable data. 
For example, the Agency will work to improve risk education nationwide, 
so more people recognize the value of this information and know how to 
use the tools and data effectively. This will be accomplished by 
identifying, expanding, and promoting professional training, technical 
assistance, and peer-support networks at multiple levels to help 
community members understand risk concepts and make risk-informed 
decisions.
    In addition, as part of our ongoing efforts within FEMA's Federal 
Insurance and Mitigation Administration (FIMA) and the National Flood 
Insurance Program (NFIP), FEMA has engaged numerous professional 
organizations and associations. Engagements with the Association of 
State Floodplain Managers (ASFPM), the National Association of Flood 
and Stormwater Management Agencies (NAFSMA), the National Association 
of Counties (NaCo), as well as numerous insurance associations, the 
National Association of Realtors (NAR), and the American Bankers 
Association (ABA) continue as changes to our programs are implemented.
    We have briefed all of these organizations on flood insurance 
changes and impacts, our efforts to implement flood insurance reform 
legislation, and also to discuss flood risk and the tools we have 
available to help them communicate with their clients about flood risk 
and insurance. They have shared their concerns and ideas, and we 
continue to work with them to address their questions and provide tools 
and other information to help them communicate with their stakeholders. 
The Flood Insurance Reform webpage on FEMA's website (www.fema.gov/
flood-insurance-reform) includes specific information and resources 
designed for property owners, insurance agents, real estate 
professionals, and community officials. We will continue to create and 
add resources to this site.
    FEMA, through its Risk Mapping, Assessment, and Planning (Risk MAP) 
program, releases new flood maps and data as appropriate, giving 
communities across America access to helpful, authoritative data that 
they can use to make decisions about flood risk. The Risk MAP program 
assists communities nationwide to assess flood risks and encourages 
mitigation planning and actions to avoid or minimize damage in the face 
of future disasters. Through more precise flood maps, risk assessment 
tools, and outreach support, Risk MAP strengthens local communities' 
ability to make informed decisions about reducing risk. A key element 
of Risk MAP is engaging local officials and other community leaders 
throughout the process, to discuss the community's flood risk and 
identify mitigation strategies and actions to reduce that risk. 
Throughout the flood mapping process, FEMA and community leaders host 
events to inform residents of their community's risk to flooding.
    Question. What can we do in the United States to drive information 
and better decisionmaking responsibility to the local level where 
citizens can better access it?
    Answer. Decisions to mitigate or reduce risk is best made at the 
local community and individual levels. FEMA's Risk MAP program brings 
technically sound, scientific data about a community's flood risk and 
FEMA works with community leaders to have them help communicate the 
risk to their citizens and neighbors. Community leaders include elected 
officials, emergency managers and floodplain managers, but also other 
trusted and influential members of the community, such as the school 
superintendent, fire and police chiefs, and business leaders.
    Effective risk communication messages must be rooted in sound 
science, but also reflect the social and economic factors and impacts 
that are important to the community, today and in the future. Every 
community is unique and effective communications methods and tools are 
dependent upon the community's history and experiences, preferences, 
and their capabilities. FEMA also recognizes that accessibility is 
critical to communicating effectively, and works to ensure that persons 
with limited English proficiency and persons with disabilities can 
meaningfully access and engage in the communication process.
    Cooperating Technical Partners (CTPs) are one of the ways that Risk 
MAP helps to provide information to drive better decisionmaking at the 
local level. CTPs can include participating NFIP communities, regional, 
state and local agencies, tribes, and universities, who have the 
interest and capability to become more active participants in the flood 
hazard mapping program. Effective CTPs, because they are part of the 
community, can be most successful in communicating risk and driving 
local decisionmaking.
    Question. Is the Cooperating Technical Partners Program--which 
allows states and communities to assume ownership over certain elements 
of the mapping process--an effective model for building this capacity 
at the local level and is there sufficient funding to execute it 
efficiently and effectively?
    Answer. Yes, the CTP program has proven to be an effective model 
for building the capacity of willing and capable states, communities, 
and other eligible entities as active participants in the flood hazard 
mapping program. Because they are part of the whole community, 
effective CTPs can be most successful in communicating risk and driving 
local decisionmaking. As with any program that leverages partnerships 
with a diverse set of stakeholders, the effectiveness of individual 
CTPs will vary. Some CTPs have stronger capabilities and greater 
capacity to consistently perform at a high level, while others may 
choose to participate to a lesser degree. To remain an eligible 
participant in the CTP Program, CTPs must continue to demonstrate their 
value and effectiveness as partners and stakeholders in the flood 
hazard mapping program. FEMA has been and will continue to remain 
committed to utilizing the funding provided for flood mapping to 
maximize the efficiency and effectiveness of the CTP program through 
these partnerships and will continue to welcome new eligible CTPs.
                                 ______
                                 
               Questions Submitted by Senator Jon Tester
    Question. Military communities are concerned with the 
implementation of the new National Flood Insurance Program (NFIP) rate 
increases for vacation and second homes. Specifically, the occupancy 
requirements make it difficult for some active duty service members who 
have purchased a home while serving in one military base, and then they 
are ordered to move to another military base, to prove that the home 
they purchased is a primary residence. Depending on how long it has 
been since the service member was stationed at the location where the 
home was purchased, the service member may no longer have any of the 
documents FEMA requires to prove occupancy at that address. Are you 
aware of this issue? Is FEMA working with the Department of Defense to 
address it?
    Answer. Yes. FEMA is reviewing the current procedure and is 
examining what other options are available to policy holders to prove 
that the covered property is the insured's primary residence. 
Specifically, FEMA is considering allowing policy holders to use a 
signed statement that the insured property is their primary residence.
    No. FEMA believes that the option mentioned above will be 
sufficient to resolve this issue. FEMA would be willing to work with 
the Department of Defense if we are unable to resolve the issue through 
internal policy-making.
    Question. As you are aware, under Section 100234 of the Biggert-
Waters Flood Insurance Reform and Modernization Act (Public Law 112-
141), FEMA mandated that insurers state all conditions, exclusions, and 
other limitations pertaining to coverage under the subject policy, 
regardless of the underlying insurance product, in font size twice the 
text of the body of the policy. During the hearing, you had mentioned 
that you are ``working towards'' allowing customers to self-determine 
the delivery options when receiving their policy documents. You also 
mentioned that you were finalizing the administrative tools to allow 
you and Write-Your-Own companies to permit electronic delivery of the 
documents. What is your timeline to complete this finalization? What 
technological barriers, if any, have you encountered to allow customers 
the option of electronic delivery of their policy documents?
    Answer. FEMA is working with the Write-Your-Own (WYO) companies to 
ensure that policyholders have options to self-determine if they want 
paper or electronic delivery of their information from their company. 
It is important that a procedure is in place for self-determination 
documents in the future and there is an understanding of what will be 
available. To do this, FEMA will be consulting with the WYO companies 
as required by HFIAA. FEMA anticipates that this procedure will be in 
place for December processing.
    FEMA has not discovered any barriers for electronic delivery and 
the technology will only get better in the future. FEMA does want to 
ensure that that those policyholders without technology access are able 
to receive their policy documents.
    Question. How many Tribal governments are currently utilizing the 
National Flood Insurance Program? During your outreach sessions with 
Tribal leaders, are you receiving valuable feedback about the program? 
What are the barriers you have experienced when engaging with Tribes, 
specifically as they relate to the National Flood Insurance Program?
    Answer. As of August 12, 2014, there are 42 Tribal governments 
participating in the National Flood Insurance Program, with a total of 
455 flood insurance policies. Three tribes represent more than 70 
percent of the total policies (the Agua Caliente Band of Cahuilla, 
Lummi Indian Reservation, and the Eastern Band of the Cherokee 
Indians).
    Yes, FEMA receives valuable feedback about the Program from Tribal 
leaders during open discussions that occur during outreach engagements 
including:
  --Tribes receive technical assistance in the preparation of multi-
        hazard mitigation plans, in which they discuss flooding as 
        hazard and mitigation opportunities.
  --Tribal Leaders, Tribal emergency managers, and other employees of 
        Indian tribal governments attend emergency management and 
        mitigation courses at FEMA's Emergency Management Institute, 
        where the programmatic requirements of the National Flood 
        Insurance Program are discussed.
  --During the early development of a local flood risk map, FEMA 
        conducts coordination and consultation with Indian tribal 
        governments. At this time, FEMA also outlines the requirements 
        to join the National Flood Insurance Program.
  --FEMA Regional offices meet with tribal governments regularly as a 
        part of their outreach and education strategies to provide 
        information regarding all FEMA programs.
    Indian tribal governments may lack the local resources and 
administrative capacity needed to administer the land use provisions of 
the National Flood Insurance Program. These provisions require 
participating communities to implement a permitting process for all 
development within the Indian tribal government's jurisdiction and 
additional building requirements for new and existing structures that 
reside in a special flood hazard area.
    An additional barrier is the unique Tribal land holdings that make 
implementation of a land use ordinance difficult. For example, an 
Indian tribal government may not have contiguous boundaries, wherein, 
the tribal land holdings may cross county and state borders. As a 
result, the uniform enforcement of floodplain management provisions can 
be a challenge.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran
    Question. Administrator Fugate, FEMA has suggested that it plans to 
transition to a modern risk-based analysis that uses 21st century 
computational and mapping techniques to more precisely determine risk 
in areas protected by flood control structures, how are processes like 
the Levee Analysis and Mapping Procedure (LAMP) changing flood risk 
assessments for property owners and impacting insurance rates? When can 
we expect FEMA to fully implement these modern risk calculation 
methodologies? How much will it cost?
    Answer. FEMA engaged the National Academy of Sciences to examine 
the manner in which levees are addressed in the National Flood 
Insurance Program (NFIP) and to identify actions with the potential to 
improve program efficiency and effectiveness. In the National Academy 
of Sciences' subsequent report (March 2013), it was recommended that 
FEMA transition to a modern risk-based approach for classifying the 
hazards in areas landward of levee systems. FEMA is considering this 
recommendation and is in the process of identifying what changes to the 
program and processes would be required to produce risk-based studies. 
Once FEMA considers all options, the associated costs, and programmatic 
changes, the NFIP will move toward implementing the best approach.
    The Levee Analysis and Mapping Procedures provide FEMA with an 
updated approach for mapping non-accredited levees. The first studies 
applying this updated analysis and mapping approach are underway now, 
but no flood hazard maps resulting from these studies have become 
effective at this time. These initial projects resulted in great 
opportunities for collaboration between FEMA and local stakeholders. 
Hallmarks of the updated approach include community coordination 
through Local Levee Partnership Teams, the flexibility of fitting 
mapping actions to the availability of data and the local expertise, 
and an increased ability to communicate the level of risk landward of 
levees to residents.
    Updated flood hazard maps based on studies applying the updated 
levee analysis and mapping approach are still in development; and no 
residents' rates have changed yet. Once the updated hazard maps are 
released, residents' rates will be based on the flood hazards for their 
property. While no flood zones were changed or created through the 
development of the levee analysis and mapping procedures, the flood 
hazard reduction of non-accredited levee systems will be reflected by 
the designation of Flood Zone D in some areas. Flood Zone D areas are 
not Special Flood Hazard Areas (SFHAs) and are not subject to the 
Federal requirement to carry flood insurance and may have lower flood 
insurance rates than high risk flood zones. The information developed 
through the levee analysis and mapping approach will help residents to 
better understand that living with levees is a shared responsibility 
and be aware of the residual flood risk to themselves, their families, 
and their communities.
    FEMA expects the Technical Mapping Advisory Council (TMAC) to 
provide additional guidance regarding the implementation of a modern 
risk-based approach. This will include leveraging existing information 
and activities at the Federal, State, local, and private levels to 
better communicate the level of risk landward of levees. Once TMAC 
provides FEMA with their recommendations, and FEMA has the opportunity 
to consider those recommendations, the timing and cost of 
implementation will be determined. Due to the planned level of 
engagement with stakeholders, the potential for regulatory change, and 
the need to develop and disseminate outreach materials associated with 
the development of a risk-based approach, an estimated timeframe of at 
least 7 to 10 years to develop and implement will be needed.
    The additional costs associated with a risk-based approach are 
unclear without input from the TMAC and stakeholder engagement. FEMA is 
committed to considering additional costs when weighing risk-based 
approach options and will ensure the chosen approach is financially 
responsible and leverages existing information to manage costs.
    Question. Administrator Fugate, FEMA's Map Modernization efforts 
have illustrated the importance of cooperation among stakeholders in 
identifying risk and developing flood maps that are recognized and 
accepted by communities. Please describe how you are engaging academia, 
the private sector, states and local communities to devise reliable 
flood maps that citizens believe are credible.
    Answer. FEMA's Risk MAP program works closely with state and local 
leaders throughout the flood mapping process. When FEMA identifies an 
area that may need to be mapped or re-mapped, FEMA conducts a discovery 
process. During the discovery process, FEMA works with state and local 
leaders to collect current and historic flood data, and as part of the 
process, FEMA holds a meeting with the community to review the analysis 
of the data, identifies and addresses concerns, and informs residents 
about the status of the project. If the data and research support the 
need for a flood map project, FEMA develops a project plan as well as 
other resources, including a Discovery Report, to keep stakeholders 
engaged and informed. FEMA holds a kick-off meeting to mark the start 
of the risk identification and assessment for the project area.
    During the study process, FEMA meets with state and local leaders 
to validate the mapping data and supporting research. FEMA also holds 
community meetings to inform residents and businesses about the 
community's current risk of flooding and discuss mitigation plans and 
actions. When preliminary maps are ready, stakeholders are notified and 
community meetings are held to review the preliminary map with the 
local officials and the public. FEMA makes the preliminary maps 
available online for the public to access.
    Stakeholders may submit appeals and/or comments on the preliminary 
map. The appeals and comments are reviewed, and as appropriate, maps 
may be updated. If needed, an independent, Scientific Review Panel 
(SRP) may be called upon to review appeals. The SRP includes academics 
with expertise in various areas such as flood mapping, for more 
information go to www.floodsrp.org.
    Once the appeal and comment period is over and any appeals and 
comments are addressed, as appropriate, FEMA issues a Letter of Final 
Determination, which starts a six-month adoption and compliance period 
for the community. During this time, the community adopts adequate 
floodplain management ordinances based on the new map.
    In accordance with recent flood insurance reform legislation, FEMA 
provides Congress with a monthly update of flood mapping activities. 
The monthly updates include information on the issuance of preliminary 
and revised preliminary flood maps, the initiation of appeal periods, 
and the issuance of Letters of Final Determination and effective maps. 
FEMA began providing monthly updates in June 2014 to all Congressional 
offices, and also posts the monthly updates on FEMA's website (http://
www.fema.gov/risk-mapping-assessment-planning) for the public to 
access.
    One of the mechanisms that Risk MAP uses to build credibility for 
FEMA flood maps is through our Cooperating Technical Partners (CTP). 
CTPs can include participating NFIP communities, regional, state and 
local agencies, Indian tribal governments, and universities, who have 
the interest and capability to become more active participants in the 
flood hazard mapping program. Effective CTPs, because they are part of 
the community, can be most successful in building credibility, 
communicating risk, and driving local decisionmaking.
    Lastly, academia plays a significant role in shaping our standards 
and future policies. Recently, FEMA has contracted with the National 
Academies of Sciences, whose members include renowned experts from 
academia, to look at FEMA's standards and policies around mapping 
behind levees.
    Question. Administrator Fugate, I think we agree that a key to the 
long-term sustainability of the National Flood Insurance Program will 
be to increase participation in the program by home owners in low to 
moderate flood risk zones. There is some concern that the complexity of 
the program will confuse most homeowners and discourage people from 
purchasing the insurance. How is FEMA planning to educate the public 
and what forms of outreach is the Administration using to keep their 
literature as simple and accessible as possible?
    Answer. The National Flood Insurance Program (NFIP) has a decade-
long public education campaign--FloodSmart--which seeks to explain to 
the public the benefits of protecting yourself financially from flood 
damage. FloodSmart is a multi-faceted campaign that includes paid 
advertising through a variety of media (television, radio, print, 
billboards and Internet) as well as direct mail, advanced web tools for 
determining flood risk and policy information at http://
www.FloodSmart.gov, public service announcements, earned media through 
public relations and other activities designed specifically to reach 
the general public. FloodSmart provides extensive resources in the 
aftermath of disasters to assist those impacted by the disaster to file 
their insurance claims. Flood Smart also reaches those individuals in 
areas nearby, but not directly impacted by the disaster, to educate 
them about flood risk and protection when it is on their minds.
    The FloodSmart program has intentionally mixed its investments in 
paid media outreach in communities with a high propensity to purchase 
(usually those at elevated risk of flooding) along with communities 
where overall flood probability may be lower, but flood consequences 
will be high when waters do rise. Unfortunately, FEMA has found that 
recent flood history or without floods making headlines elsewhere, 
interest in flood insurance coverage is generally low. The NFIP, 
however, is seeing an uptick in interest in flood insurance as the 
economy rebounds, and families have extra funds available
    All FloodSmart materials directed to the public go through a 
rigorous six-step review process to ensure they are accurate and easy 
to read. Likewise, many materials are available in Spanish and other 
languages and are 508 compliant to ensure effective communication for 
persons with disabilities.
    Question. Administrator Fugate, hazard mitigation grants are 
imperative to protecting home owners from damage caused by floods. 
These grants lessen the effect of flood waters by elevating homes, 
reconstructing safer structures and installing individual mitigation 
measures. To ensure that rural and less populated communities are 
fairly represented in the grant selection process, how is FEMA 
prioritizing applications so smaller communities can compete for hazard 
mitigation grants?
    Answer. FEMA has three Mitigation Grant programs available: the 
Hazard Mitigation Grant Program (HMGP), the Pre-Disaster Mitigation 
program (PDM), and the Flood Mitigation Assistance Program (FMA).
    The Hazard Mitigation Grant Program is authorized by Section 404 of 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act, to 
ensure that the opportunity to take critical mitigation measures to 
reduce the risk of loss of life and property from future disasters is 
not lost during the reconstruction process following a disaster. HMGP 
is available, when authorized under a Presidential major disaster 
declaration, in the areas of the State requested by the governor. A 
governor may request that HMGP funding be available throughout the 
State or only in specific jurisdictions. Indian Tribal governments may 
also submit a request for a major disaster declaration within their 
impacted area. The amount of funding available is based on the total 
amount of disaster assistance. Applicants (States, Territories, 
District of Columbia and Indian Tribal Governments) set priorities for 
funding under the HMGP program and projects must be consistent with 
State and local mitigation plans.
    The Pre-Disaster Mitigation program is authorized by Section 203 of 
the Robert T. Stafford Act and is designed to implement a sustained 
pre-disaster natural hazard mitigation program to reduce overall risk 
to the population and structures from future hazard events, while also 
reducing reliance on Federal funding in future disasters. For the PDM 
program, funding is distributed on a competitive basis per Section 
203(f)(1) of the Stafford Act after meeting the statutory allocation 
for states in Section 203(f)(2) of the Stafford Act: not less than the 
lesser of $575,000 or 1 percent of the total funds appropriated for the 
fiscal year. In fiscal year 14 $63 million was made available for PDM 
grant funding. Under Section 203(h)(2), of the Stafford Act, FEMA 
offers an increased Federal cost share of up to 90 percent (rather than 
the standard 75 percent to implement eligible approved activities under 
the PDM program in small impoverished communities. A small impoverished 
community is a community of 3,000 or fewer individuals that is 
economically disadvantaged, with residents having an average per capita 
annual income not exceeding 80 percent of the national per capita 
income; a local unemployment rate that exceeds by 1 percentage point or 
more the most recently reported average yearly national unemployment 
rate; and other factors as determined by the state in which the 
community is located.
    The Flood Mitigation Assistance program is authorized by Section 
1366 of the National Flood Insurance Act of 1968 with the goal of 
reducing or eliminating claims under the National Flood Insurance 
Program (NFIP). To be eligible to apply for the Flood Mitigation 
Assistance program, all applicants must be participating in the NFIP. 
Any organization that has the authority to adopt and enforce floodplain 
management ordinances for the area under its jurisdiction can 
participate in the NFIP, whether large or small. A community may be an 
incorporated city, town, township, borough, or village, or an 
unincorporated area of a county or parish.
    Question. Administrator Fugate, I understand that private insurance 
companies have entered the flood insurance market place and are now 
competing with the U.S. government to sell policies to homeowners and I 
view this as a positive trend. What is being done to encourage this 
increase in privatization? Do you foresee greater flexibility in 
deductibles, coverage amounts or other policy terms with the increase 
in competition?
    Answer. FEMA has long encouraged that homeowners at flood risk 
protect themselves financially through the purchase of flood insurance 
whether through the NFIP or private policies. In areas where 
communities choose not to participate in the NFIP, FEMA often can make 
recommendations for private insurance options. FEMA has worked with 
private insurers by providing model insurance policies so private 
enterprise can learn what the NFIP covers, exclusions, rating 
procedures, rules and so on. FEMA also meets quarterly with Federal 
regulators that oversee banking and loan institutions to explain the 
NFIP policies and procedures so that they can determine whether private 
insurance policies meet the provisions of the Flood Disaster Protection 
Act of 1973 which created the Mandatory Flood insurance Purchase 
Requirement, and the National Flood Insurance Reform Act of 1994, which 
those lending regulators enforce.
    In April 2015, the NFIP will introduce deductibles up to $10,000, 
per Section 12 of the Homeowner Flood Insurance Affordability Act of 
2014.
    Coverage amounts are set by Federal law and are currently capped at 
$250,000 for residential buildings with one to four units, and $100,000 
for contents coverage. For residential structures of five or more 
units, the coverage amount is capped at $500,000. For non-residential/
business coverage, the cap is $500,000 for buildings and $500,000 for 
contents. Those ceilings were established on March 1, 1995.
    The NFIP is also working with its Write-Your-Own (WYO) partners to 
develop an installment payment plan, per Section 11 of the Homeowner 
Flood Insurance Affordability Act of 2014. Installment plans must be 
implemented via rulemaking and this process could take several years.
                                 ______
                                 
                 Questions Submitted to Chad Berginnis
            Questions Submitted by Senator Mary L. Landrieu
                   increasing community participation
    Question. Mr. Berginnis, you testified that Cooperating Technical 
Partnerships are an important component of flood mapping that allows 
States and communities to assume ownership over certain elements of the 
mapping process--although FEMA support for the this program has been 
uneven. Similarly, the Community Rating System increases community 
participation in flood programs by reducing insurance premiums for 
active communities--but only 69 percent of flood insurance policies are 
in CRS communities at varying levels of activity.
  --How can participation in such partnerships and community programs 
        be increased?
    Answer. On utilization of Cooperating Technical Partnerships 
(CTPs), FEMA should be encouraged to promote development of new CTP 
relationships because the assumption of ownership of all, most or some 
of the mapping can dramatically increase confidence in the maps and 
state and local ``buy in'' to utilize the maps for effective flood loss 
reduction. CTPs can and should include partial partnerships for aspects 
of mapping that the particular state or locality is equipped to handle. 
Local confidence and ``buy in'' can avoid much of the controversy that 
often accompanies the release of new map products and their adoption by 
the community. In the past few years, however, it seemed that the CTP 
program languished at least at FEMA Headquarters and in some FEMA 
Regions (we do note that in other regions such as FEMA Region IV, it 
has flourished due to Regional priority of the program). Still, FIMA 
Administrator Miller has recently affirmed his support of the CTP 
program. In order for the CTP program to flourish, it is important that 
FEMA support the program by adequately resourcing coordination, 
outreach and capacity building efforts. Appropriate metrics to measure 
successful CTPs need to be developed (CTPs are not just mapping 
contractors; there is a widely acknowledged benefit of states/
communities undertaking mapping and the correlation with map accuracy 
and community acceptance of flood maps and data.
    The Community Rating System can be an effective tool for reducing 
flood losses through mitigation and education activities and is a 
mechanism for reduction of flood insurance premiums. FEMA has noted 
increased interest in community CRS participation since implementation 
of flood reform legislation leading to increased premiums for many 
policy-holders. FEMA, Senators and Representatives and ASFPM can all 
help to increase participation through educational information about 
CRS and its benefits to communities and policy holders.
                              partnerships
    Question. Mr. Berginnis, do Floodplain Mangers work with other 
organizations on floodplain mapping and insurance issues? How regularly 
and what are some specific outcomes?
    Answer. Very definitely. We have frequent interaction with many 
other organizations, some very regularly and others as issues arise.
    We are active participants in a number of coalitions of 
organizations having interest in floodplain management, flood risk 
mapping and flood insurance. Examples include the Flood Map Coalition, 
the Stafford Coalition, the USGS Coalition, the Congressional Hazards 
Caucus Alliance and the Natural Floodplain Functions Alliance. The 
Flood Map Coalition has been instrumental in promoting a national 
commitment to improved flood maps. Since about 2002 the group met 
frequently and, in the absence of a Technical Map Advisory Council, 
FEMA considered the group to be a significant mapping stakeholder group 
and provided us with briefings at approximately 2-3 month intervals. 
During the past year, the meetings have been less frequent as FEMA 
worked to establish the TMAC pursuant to flood reform legislation. The 
coalition includes (among others) ASFPM, the National Association of 
Realtors, the National Association of Flood and Stormwater Management 
Agencies, the National League of Cities, the National Association of 
Counties, the National Emergency Management Association, the National 
Congress of Surveyors and Mappers, the National Lenders Insurance 
Council and the National Association of Home Builders. The Stafford 
Coalition meets several times a year and more frequently if issues of 
mutual interest emerge. We often receive briefings on pending 
legislative or budget issues from Congressional staff and discuss 
issues of particular focus for various member groups. The Stafford 
Coalition includes (among others) ASFPM, the National Emergency 
Management Association (state directors of emergency management), 
International Association of Emergency Managers (local emergency 
management officials), National Association of Counties, National 
Association of Development Organizations, National League of Cities, US 
Conference of Mayors, the Red Cross, National Association of Home 
Builders, National Association of Realtors, National Association of 
Flood and Stormwater Management Agencies, National Association of Rural 
Electric Cooperatives, National Wildlife Federation, American Rivers, 
and the Nature Conservancy.
    When ASFPM leaders and policy committee co-chairs are in DC, we 
schedule meetings with groups such as the Property and Casualty 
Insurers Association of America (PCIAA), the Professional Insurance 
Agents of America, Independent Insurance Agents of America, Reinsurance 
Association of America,, National Association of Mutual Insurance 
Companies, American Society of Civil Engineers, Coastal States 
Organization, Association of State Wetland Managers, American Farmland 
Trust, American Planning Association and others.
    Representatives of many of our coalition partners and other 
organizations attend the ASFPM Annual Conference which has become the 
primary national conference for floodplain management issues. 
Representatives of ASFPM often attend the conferences of partner 
organizations and are frequently asked to be speakers or panelists. 
Representatives of ASFPM participate in meetings of the National 
Institute for Building and Home Safety's Flood Committee and the Flood 
Insurance Producers National Council. ASFPM and the National 
Association of Flood and Stormwater Management Agencies (NAFSMA) meet 
three times a year with FEMA mapping staff in ``Operating Partners'' 
meetings.
    Finally, ASFPM has been coordinating with the National Association 
of Realtors for at least two decades, primarily at the national level 
but ASFPM members and chapters often coordinate with their state 
Realtor organizations and Chapters. ASFPM partnerships are based on the 
conviction that reduction of flood losses in the nation requires mutual 
education and exchange of concerns, issues and ideas with other 
professionals and officials.
            Questions Submitted to Patricia Templeton-Jones
               Questions Submitted by Senator Jon Tester
    Question. Under Section 100234 of the Biggert-Waters Flood 
Insurance Reform and Modernization Act (Public Law 112-141), FEMA 
mandated that insurers state all conditions, exclusions, and other 
limitations pertaining to coverage under the subject policy, regardless 
of the underlying insurance product, in font size twice the text of the 
body of the policy. If FEMA required that all policies be mailed to 
customers according to the requirements set by Biggert-Waters, what 
would be the estimated printing and postage costs to be incurred by 
Write-Your-Own companies? Do you feel that Write-Your-Own companies are 
currently prepared, administratively, to offer the option of electronic 
policy delivery to customers?
    If FEMA required that all policies be mailed to customers according 
to the requirements set by Biggert-Waters, what would be the estimated 
printing and postage costs to be incurred by Write-Your-Own companies?
    Answer. Senator Tester, thank you for your interest and follow-up 
on this important issue that PCI believes can be addressed by offering 
consumers information on how to get the actual policy if they would 
like a copy. In response to your question from the July 23rd hearing, 
with information provided by FEMA and NFIP, preliminary estimates 
provided indicate that the first year mailing costs alone will be about 
$12.6 million for the mailing of policies to all policyholders. This 
does not include programming the systems to send the policy or the 
printing costs themselves. Furthermore, the ongoing, additional cost of 
compliance is estimated to be $1.3 million, annually. Apart from the 
cost data provided by FEMA and included here, PCI does not maintain 
specific cost data for all WYOs and believes FEMA or the NFIP to be the 
Subcommittee's best source for this data.
    Question. Do you feel that Write-Your-Own companies are currently 
prepared, administratively, to offer the option of electronic policy 
delivery to customers?
    Answer. Yes, for many years, insurers throughout the United States, 
including WYO insurers, have offered and are currently, 
administratively prepared to offer the option of electronic policy 
delivery to policyholders with a variety of both personal and 
commercial insurance coverage. In fact, many states have adopted or are 
considering adopting legislation specifically allowing consumers to 
access insurance policy and other documents either online or through 
electronic delivery from their insurer. For additional information 
regarding state laws developments on electronic delivery of insurance 
policies, please see, http://www.pciaa.net/web/sitehome.nsf/lcpublic/
1015?Opendocument.
                                 ______
                                 
                   Question Submitted to Donna Smith
             Question Submitted by Senator Mary L. Landrieu
    Question. Please submit for the record your flood risk education 
materials.
    Answer. Each year, hundreds of consumers contact the National 
Association of Realtors (NAR) as a leading resource for information 
about flood insurance and flood risk. We often directly encourage 
property owners to consider buying flood insurance--even where not 
federally required for a mortgage.
    NAR's landing page (Realtor.org/floodinsurance) includes an 
extensive ``tool kit'' of fact sheets, briefs and brochures like this 
one, directed to our members:
    ``Flood Protection Without a Requirement --What you should know:
  --``Outside a Special Flood Hazard Area, your customers may not be 
        required to purchase flood insurance, but they should still 
        consider it.
  --``Approximately 25 percent of flood insurance claims come from low- 
        to moderate-flood risk areas.
  --``It doesn't have to rain or storm to cause flooding. A flood is 
        defined as an inundation of two or more properties (one of 
        which is yours) or two or more acres of normally dry land. 
        Floods can result from, but are not limited to, overflow of 
        inland or tidal waters, runoff of surface waters, mudflow, or 
        even backed-up storm drainage systems.
  --``If a property is located in a low- to moderate-flood risk area, 
        your customers may be eligible for a low-cost Preferred Risk 
        Policy.''
    Source: Realtor.org (http://www.ksefocus.com/billdatabase/
clientfiles/172/8/1265.pdf )
    During the hearing, it was suggested that some real estate 
professionals might discourage clients from considering flood insurance 
outside of the flood plain. We're not aware of any. Doing so or 
knowingly concealing or failing to disclose that property is in a flood 
hazard area or subject to the risk of flooding outside this area is 
contrary to:
  --The Realtors Code of Ethics (e.g., ``Realtors shall avoid 
        exaggeration, misrepresentation, or concealment of pertinent 
        facts relating to the property or the transaction''). It is 
        strict adherence to a higher code that separates Realtors from 
        other real estate professionals.
  --State Property Condition Disclosure Laws. NAR encourages Realtors 
        to disclose known flood risks and consider buying insurance 
        even where not required--just to provide an extra margin of 
        safety, particularly where the risk of litigation is involved.
    Nevertheless, we would certainly be open and interested in working 
with Congress to strengthen any information, education and training we 
provide our members or the public in general. We look forward to 
continuing to work with you and other members of the Committee on such 
a critically important topic as flood insurance.
                                 ______
                                 
               Question Submitted by Senator Thad Cochran
    Question. Ms. Smith, it is encouraging to hear that you supported 
enactment of the Homeowners Flood Insurance Affordability Act and have 
been pleased with the FEMA's progress toward full implementation. As a 
real-estate professional, can you illustrate the effects that this law 
has had on the housing market since it was enacted? How do you foresee 
the future of the market as the remaining provisions of the law take 
effect?
    Answer. Perhaps most illustrative, we haven't been contacted more 
than a dozen times about flood insurance since May 1, 2014, when FEMA 
implemented key provisions, and those were mostly questions.
    This compared to the month before (between bill signing and May 1) 
when hundreds contacted NAR about real estate transactions not being 
completed and citing flood insurance as primary cause. Here's the 
reason given by insurance companies, according to the home owner:
  --``They had no clue [that the Biggert-Waters law had been 
        amended].''
  --``Biggert Waters!'' [Note: the new law repealed the provision being 
        invoked by this insurer.]
  --``FEMA had yet to issue revised rate tables or guidelines.''
  --``Buyers were told Federal regulations increased the flood 
        insurance rate. Sellers then hired an engineer to determine 
        that the house was not impacted by flooding, but the insurance 
        carrier wouldn't change the fee.''
  --``They said this was not negotiable. And they were not willing to 
        change it.''
  --``Just not something that was done.''
  --``Said they could not transfer until after June 1.'' [Note: the new 
        law was implemented on May 1.]
  --``The bank financing the loan would not accept the old rate.''
  --``Flood insurance is not transferable.''
  --``No elevation certificate.'' [Note: the new law repealed this 
        provision.]
  --``FEMA said that grandfathering of rates was no longer available'' 
        [note: the grandfathering provision of Biggert Waters (Sec. 
        207) never took effect.]
  --``This was not an option. It subsequently failed to close--
        exclusively because of this issue.''
  --``The new law had not yet been passed.'' [Note: this was AFTER bill 
        signing.]
  --``Said they had to follow FEMA's rules.''
  --``We keep getting different answers''
    The National Association of Realtors is working to obtain home 
sales data to add to the anecdotes and provide a fuller picture of the 
new law's impacts. We believe that, as additional provisions are 
implemented--particularly the Flood Insurance Advocate who would be 
best positioned to investigate these homeowner complaints, there will 
be more stability and less confusion across real estate markets.

                         CONCLUSION OF HEARING

    Senator Landrieu. But I am committed, as you all know, as a 
subcommittee chair of the committee that funds the flood maps, 
to continue to hold these hearings regularly in hopes that we 
can have accurate flood maps prior to 2017 when this program 
has to be reauthorized by the Committee on Banking so that they 
can do their job well and get a program that works as we want 
to for everyone, the taxpayer, the homeowner, the 
neighborhoods, et cetera. But we have a lot of work to do.
    The meeting is adjourned. Thank you.
    [Whereupon, at 4:10 p.m., Wednesday, July 23, the hearing 
was concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]

 
              MATERIAL SUBMITTED SUBSEQUENT TO THE HEARING

    [Clerk's Note. The following outside witness testimony was 
received subsequent to the hearing for inclusion in the 
record.]
              Prepared Statement of Senator Johnny Isakson
    Chairwoman Mary Landrieu and Ranking Member Dan Coats, I appreciate 
the opportunity to submit a statement for the official hearing record 
regarding the new, bipartisan flood insurance law enacted this year. 
Thank you for holding this hearing with a two-fold purpose--to examine 
the Federal Emergency Management Agency's (FEMA) ongoing work to update 
the accuracy of flood maps and to provide the necessary funding for 
this work that is expected to be completed by 2017. Clear and accurate 
flood maps are a key factor used in determining the appropriate flood 
insurance rate for a specific property. In the short 5 months since 
enactment of the new law, my understanding is that FEMA's work in 
updating the flood maps is progressing in a timely manner. I commend 
FEMA for its work thus far and hope it is successful in completing this 
project on schedule.
    The new flood insurance law provided immediate relief for 
homeowners from sudden, sharp and unaffordable increases in flood 
insurance premiums resulting from the Biggert-Waters Flood Insurance 
Reform law of 2012. This law had the unintended consequence of causing 
the value of homes for sale in coastal and flood-prone areas to drop 
precipitously as premiums escalated. The new law delays such punitive 
rate increases by requiring FEMA to conduct a comprehensive 
affordability study about their potential impact. Additionally, FEMA 
must complete re-mapping flood areas in the United States using the 
latest technology available as accurate and updated flood maps are a 
critical factor in determining future flood insurance rates.
    I was pleased to work closely with my good friend Senator Bob 
Menendez to co-author the Senate flood insurance legislation along with 
the chairwoman of this Subcommittee, Senator Mary Landrieu. Without 
this reform, many homeowners in coastal and flood plain areas in 
Georgia and elsewhere would still be experiencing unaffordable flood 
insurance premiums. Additionally, the new law requires FEMA to complete 
an affordability study to ensure that flood insurance is affordable for 
homeowners.
    The new law already is having a positive impact. Prior to enactment 
of this year's law, I heard directly from many constituents attending 
town hall meetings in my state about the unintended, punitive 
consequences of the 2012 law. Many Georgians feared losing their homes 
from not being able to pay insurance premiums, while others feared they 
would not be able to sell their homes or would incur a significant loss 
on the sale of their homes as a result of unreasonable premiums. Since 
early May of this year, I have not been hearing these complaints from 
my constituents. I am encouraged that the new flood insurance law is 
working and having the intended impact of keeping people in their 
homes.
    I am pleased to highlight the strong, bipartisan history of this 
new flood insurance law. The original bill, S. 1610, titled the 
``Homeowner Flood Insurance Affordability Act of 2013,'' was introduced 
October 29, 2013, by Senator Menendez and me and cosponsored by more 
than a quarter of the members of the U.S. Senate. Prior to the 
introduction of S. 1610, a bipartisan letter signed by 24 senators to 
Senate Majority Leader Harry Reid and Republican Leader Mitch McConnell 
was sent October 10, 2013, flagging the issue of sharp increases in 
flood insurance premiums due to the 2012 flood insurance law. I hope 
this spirit of bipartisanship will prove to be a catalyst for enactment 
of future bipartisan legislation.
    Section 24 of the new law establishes a National Flood Insurance 
Advocate. I called for this important resource for homeowners seeking 
to continue flood insurance coverage and for prospective homebuyers 
seeking to obtain flood insurance in response to what I was hearing 
from constituents. Since the 2012 law became effective, my constituents 
reported that they were receiving a wide range of rate quotes, some of 
which were inaccurate, for flood insurance. The new law is clear about 
the role of the Flood Insurance Advocate, which is `` . . . to advocate 
for the fair treatment of policy holders under the National Flood 
Insurance Program and property owners in the mapping of flood hazards, 
the identification of risks from flood, and the implementation of 
measures to minimize the risk of flood.'' Thus, the Flood Insurance 
Advocate's office should help homeowners with questions, concerns, and 
possible inaccuracies about their flood insurance premiums as well as 
prospective homebuyers. Also, the Advocate's office should assist 
policyholders with claims, help them to understand the procedural 
requirements for a possible appeal, and should act independently from 
FEMA in this role.
    In conclusion, I am grateful to Chairwoman Landrieu and Ranking 
Member Coats for taking the initiative to hold this hearing on the 
status of a key component for successful implementation of the new 
law--clear and accurate flood risk information. I remain committed to 
ensuring the National Flood Insurance Program (NFIP) helps homeowners 
obtain the flood insurance they need. I hope FEMA will keep Congress 
apprised of their progress on the ongoing flood re-mapping process and 
the flood insurance affordability study until both of these tasks are 
completed as required by the new law.
                                 ______
                                 
           Prepared Statement of Independent Insurance Agent
    The Big ``I'' is the nation's oldest and largest trade association 
of independent insurance agents and brokers, and we represent a 
nationwide network of more than a quarter of a million agents, brokers, 
and employees. IIABA represents independent insurance agents and 
brokers who present consumers with a choice of policy options from a 
variety of different insurance companies. These small, medium, and 
large businesses offer all lines of insurance--property/casualty, life, 
health, employee benefit plans, and retirement products. In fact, our 
members sell 80 percent of the commercial property/casualty market and 
a sizeable portion of the homeowners' market. It is from this unique 
vantage point that we understand the capabilities and challenges of the 
insurance market when it comes to insuring against flood risks.
                               background
    The Big ``I'' believes that the NFIP provides a vital service to 
people and places that have been hit by a natural disaster. The private 
insurance industry has been, and continues to be, largely unable to 
underwrite flood insurance because of the catastrophic nature of these 
losses. Therefore, the NFIP is virtually the only way for people to 
protect against the loss of their home or business due to flood damage. 
Prior to the introduction of the program in 1968, the Federal 
Government spent increasing sums of money on disaster assistance to 
flood victims. Since then, the NFIP has saved disaster assistance money 
and provided a more reliable system of payments for people whose 
properties have suffered flood damage. It is also important to note 
that for almost two decades, up until the 2005 hurricane season, no 
taxpayer money had been used to support the NFIP; rather, the NFIP was 
able to support itself using the funds from the premiums it collected 
every year.
    Under the NFIP, independent agents play a vital role in the 
delivery of the product through the Write Your Own (WYO) system. 
Independent agents serve as the sales force of the NFIP and the 
conduits between the NFIP, the WYO companies, and consumers. This 
relationship provides independent agents with a unique perspective on 
the issues surrounding flood insurance, yet also makes the role of the 
insurance agent in the delivery process of flood insurance quite 
complex. Agents must possess a high degree of training and expertise, 
which requires updating their continuing education credits through 
flood conferences and seminars. This is done regularly and involves 
traveling to different regions of the country, costing personal time 
and money. Every agent assumes these responsibilities voluntarily and 
does so as part of being a professional representative of the NFIP.
    Despite our strong support of the NFIP, we also recognize that the 
program is far from perfect, which was made all the more clear by the 
devastating 2005 hurricane season as well as Superstorm Sandy. The 
current $24 billion dollar debt, incurred from both 2005 and Sandy, 
reveals some of the deficiencies of the program. While the Big ``I'' is 
confident that the NFIP will eventually recover, it was important that 
Congress shore up the NFIP's financial foundation by enacting needed 
reforms to ensure the long-term sustainability of the program.
    For these reasons, the Big ``I'' supported the ``Flood Insurance 
Reform Act of 2012,'' also known as ``Biggert-Waters.'' Biggert-Waters 
included many important provisions that were critical to the NFIP. 
Chief among them was a long-term extension of the program, until 2017. 
Additionally, the law included important pieces meant to strengthen the 
financial footing of the program. These included increasing the 
``elasticity band'' of annual rate increase from 10 percent to 20 
percent, the phase-out of subsidies for commercial properties, vacation 
homes, and severe repetitive loss properties, and greater flexibility 
for FEMA to utilize private reinsurance for the NFIP.
    However, despite the good intentions of the legislation and its 
authors, the Big ``I'' had serious concerns with two specific 
provisions of Biggert-Waters that quickly caused major problems across 
the country as the law was implemented. These provisions were the 
elimination of ``grandfathering'' in the NFIP and the immediate 
elimination of subsidies for properties that were bought and sold. The 
Big ``I'' strongly advocated for Congress to revisit these provisions, 
and in fact ``fixing'' Biggert-Waters quickly became our top priority. 
Congress also recognized the problems caused by these provisions and 
quickly acted. This March, less than 2 years after passage of Biggert-
Waters, Congress overwhelmingly passed the Homeowners Flood Insurance 
Affordability Act (HFIAA). The Big I strongly supported HFIAA and looks 
forward to working with FEMA and Congress to assure the accurate 
implementation of these two significant pieces of legislation.
   implementation of the homeowners flood insurance affordability act
    In stark contrast to the uncertainty and confusion during the 
initial implementation of Biggert-Waters, we are happy to report to the 
Committee that, to date, the roll-out of HFIAA has gone rather 
smoothly. FEMA and specifically NFIP staff have been working 
cooperatively with the WYOs and the agent/broker community throughout 
planning and implementation of HFIAA. Grandfathering within the NFIP 
(Sec. 207 of Biggert-Waters) was immediately restored (in fact Sec. 207 
of Biggert-Waters was never implemented). Additionally, FEMA quickly 
announced that the ``triggers'' associated with an immediate loss of 
subsidy would be suspended and that properties affected by such 
``trigger'' be rated according to October 2012 rate charts.
    NFIP staff have organized regular conferences calls and live 
interaction with the WYOs and their vendors to discuss the detailed 
mechanics necessary for the roll-out of the changes required by the 
HFIAA. NFIP staff also considered and often implemented much of the 
technical advice provided during these calls. This engagement by NFIP 
is likely due to both a desire to avoid some of the mistakes associated 
with implementation of Biggert-Waters as well as a provision included 
in HFIAA requiring the NFIP to communicate regularly throughout the 
HFIAA implementation process. The cooperation and communication has 
allowed the NFIP and the WYOs to move forward with HFIAA implementation 
more quickly and more accurately than under Biggert-Waters.
    Of course, not everything is perfect regarding implementation, and 
there will undoubtedly be challenges going forward. In particular, the 
Big ``I'' would like ask that the NFIP provide more direct and specific 
guidance to agents and brokers who are ``on the front lines'' in 
dealing with consumers during the implementation of HFIAA. For example, 
the NFIP on June 26th issued a bulletin to WYOs detailing their process 
for issuing refunds provided by HFIAA. The NFIP should be commended for 
quickly implementing the one-time refunds for property owners that 
overpaid on premiums due to Biggert-Waters. Although the numbers of 
consumers who had overpaid are not overwhelming, the overpayment of 
premiums caused real economic hardship for some consumers and they are 
eagerly awaiting their premium refund.
    Shortly after the issuance of the June 26th WYO bulletin, the NFIP 
distributed a more simple and generic ``one-page'' glossy document for 
consumers in order to educate them on which consumers are, and are not, 
eligible for a refund. Again, the NFIP should be commended for 
releasing information directly to the consumer. Unfortunately, the NFIP 
has not yet issued any sort of bulletin, document, or guidance 
specifically to agents and brokers on the detailed process of these 
refunds. It would be immensely useful for the agent and broker 
community to have guidance created by the NFIP on which consumers are 
eligible for a refund, how the refund will be disbursed, and the 
possible timing of such refunds. It would be even more useful if this 
guidance was tailored to agents and brokers as its audience. As it 
stands now, agents and brokers are left to translate the complex WYO 
bulletin (which covers things such as underwriting, which agents/
brokers are not involved in) or to rely on the more generic one- pager. 
This could pose a significant challenge for agents and brokers, 
especially since in the consumer-focused ``one-pager'' the NFIP 
specifically tells consumers that if they have any questions regarding 
refunds they should ``contact their insurance agent.'' Unfortunately as 
it stands now if a consumer were to pose a refund question to an agent, 
that agent has no special guidance or additional information to turn to 
in order to help the consumer.
    The one-time refunds will begin on October 1, 2014--much sooner 
than is required in HFIAA. Although HFIAA requires the NFIP to issue 
refunds directly, the WYOs have agreed to process refunds on the NFIP's 
behalf and have indicated that they hope to complete the process by the 
end of 2014. We do anticipate that WYOs will distribute their own 
guidance on refunds to their agent distribution force once they develop 
such guidance, but we feel it would be beneficial to have some guidance 
from the NFIP itself as soon as possible in order to help with 
questions from consumers.
    HFIAA also established the office of the Flood Insurance Advocate. 
The Big ``I'' supports the creation of this new Advocate as we believe 
it will be helpful to have a central location for consumers and others 
to ask questions about the NFIP. We understand that the NFIP has 
established the goal of filling that position by the end of this year 
and hope the NFIP will be able to find candidates with both an 
understanding of mapping and flood insurance, as both will be needed 
for the Flood Advocate to best serve policyholders and the program. We 
also encourage the Advocate to be housed directly in FEMA, as opposed 
to another government agency such as the Department of the Treasury, so 
as to genuinely understand the intricacies of the NFIP.
                               conclusion
    On behalf of the Independent Insurance Agents and Brokers of 
America, we thank you for the opportunity to present our views today. 
We look forward to working with you to protect consumers and improve 
the NFIP.

                                   [all]