[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                        PREPARING FOR THE STORM:
                        REAUTHORIZATION OF THE
                    NATIONAL FLOOD INSURANCE PROGRAM

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 13, 2019

                               __________

       Printed for the use of the Committee on Financial Services

                            Serial No. 116-8
                            
                            
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             PETER T. KING, New York
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANN WAGNER, Missouri
BILL FOSTER, Illinois                ANDY BARR, Kentucky
JOYCE BEATTY, Ohio                   SCOTT TIPTON, Colorado
DENNY HECK, Washington               ROGER WILLIAMS, Texas
JUAN VARGAS, California              FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey          TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
AL LAWSON, Florida                   BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam            ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan              WARREN DAVIDSON, Ohio
KATIE PORTER, California             TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah                    JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York   BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia            LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts      DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    March 13, 2019...............................................     1
Appendix:
    March 13, 2019...............................................    67

                               WITNESSES
                       Wednesday, March 13, 2019

PANEL ONE:

Duffy, Hon. Sean P., a Representative in Congress from the State 
  of Wisconsin...................................................     4
Graves, Hon. Garret, a Representative in Congress from the State 
  of Louisiana...................................................     5
Luetkemeyer, Hon. Blaine, a Representative in Congress from the 
  State of Missouri..............................................     9
Pallone, Hon. Frank Jr., a Representative in Congress from the 
  State of New Jersey............................................     7
Pascrell, Hon. Bill, Jr., a Representative in Congress from the 
  State of New Jersey............................................    10
Scalise, Hon. Steve, a Representative in Congress from the State 
  of Louisiana...................................................    12

PANEL TWO:

Guzman, Mabel, Broker, @properties, on behalf of the National 
  Association of REALTORS........................................    19
Heidrick, Christopher, Heidrick & Company Insurance and Risk 
  Management Services, LLC, on behalf of the Independent 
  Insurance Agents and Brokers of America........................    16
Lamm, Maria Cox, South Carolina NFIP State Coordinator. and 
  Chair, Association of State Floodplain Managers................    14
Lehmann, Raymond J., Director of Finance, Insurance and Trade 
  Policy, R Street Institute.....................................    22
O'Mara, Collin, President and CEO, National Wildlife Federation 
  (NWF), on behalf of NWF and the SmarterSafer Coalition.........    20
Smith, Velma, Senior Officer, The Pew Charitable Trusts..........    18
.................................................................    13

                                APPENDIX

Prepared statements:
    Guzman, Mabel,...............................................    68
    Heidrick, Christopher,.......................................    74
    Lamm, Maria Cox..............................................    81
    Lehmann, Raymond J...........................................    98
    O'Mara, Collin,..............................................   105
    Pascrell, Hon. Bill, Jr......................................   115
    Smith, Velma.................................................   118

              Additional Material Submitted for the Record

Waters, Hon. Maxine:
    Written statement of the American Property Casualty Insurance 
      Association................................................   129
    Written statement of CoreLogic...............................   134
    Written statement of the Credit Union National Association...   187
    Written statement of the National Association of Federally-
      Insured Credit Unions......................................   188
    Written statement of the National Multifamily Housing Council 
      and the National Apartment Association.....................   189
    Written statement of the National Association of Mutual 
      Insurance Companies........................................   193
    Written statement of the Reinsurance Association of America..   196
    Written statement of the U.S. Chamber of Commerce............   203
McHenry, Hon. Patrick:
    Written statement of the American Property Casualty Insurance 
      Association................................................   205
    Written statement of the National Multifamily Housing Council 
      and the National Apartment Association.....................   210
    Written statement of the National Association of Mutual 
      Insurance Companies........................................   214
    Written statement of the U.S. Chamber of Commerce............   217

 
                        PREPARING FOR THE STORM:
                         REAUTHORIZATION OF THE
                    NATIONAL FLOOD INSURANCE PROGRAM

                              ----------                              


                       Wednesday, March 13, 2019

             U.S. House of Representatives,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:11 a.m., in 
room 2128, Rayburn House Office Building, Hon. Maxine Waters 
[chairwoman of the committee] presiding.
    Members present: Representatives Waters, Maloney, 
Velazquez, Sherman, Meeks, Clay, Scott, Green, Cleaver, Himes, 
Foster, Beatty, Heck, Vargas, Gottheimer, Gonzalez of Texas, 
Lawson, Tlaib, Porter, Axne, Casten, Pressley, Ocasio-Cortez, 
Wexton, Lynch, Adams, Dean, Garcia of Texas, Phillips; McHenry, 
Wagner, King, Lucas, Posey, Luetkemeyer, Huizenga, Duffy, 
Stivers, Barr, Tipton, Williams, Hill, Zeldin, Loudermilk, 
Davidson, Budd, Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, 
Steil, Gooden, and Riggleman.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``Preparing for the Storm: 
Reauthorization of the National Flood Insurance Program.'' I 
now recognize myself for 5 minutes to give an opening 
statement.
    We are here today to discuss the future of the National 
Flood Insurance Program (NFIP), which is critical to ensuring 
access to flood insurance coverage across the country, but the 
NFIP is much more than just an insurance program. The NFIP 
plays an important role in disaster preparedness and resiliency 
by providing flood maps, setting standards for flood plain 
management, and investing in mitigation for our homes, 
businesses, and infrastructure.
    According to the Federal Emergency Management Agency 
(FEMA), everyone is at risk of flooding. That means that this 
is not just a coastal issue, and it means that we all have an 
interest in ensuring a strong National Flood Insurance Program. 
I have long advocated for a long-term reauthorization of the 
NFIP in order to provide certainty in the housing market.
    Unfortunately, the NFIP has carried along through 10 short-
term extensions since Fiscal Year 2017 and has even experienced 
brief lapses during that time. This haphazard approach to 
legislating puts communities at risk and undermines the health 
of our housing market. The NFIP's authorization is currently 
set to expire May 31, 2019, and I believe that we will break 
this cycle. I intend to work in a bipartisan manner with 
Ranking Member McHenry to provide a long-term reauthorization 
to restore stability and confidence in the market.
    Mr. McHenry, I certainly look forward to working together 
on this issue that is so important to all of our constituents.
    As a starting point, I am prioritizing a number of reforms 
to the program, and of course, in our latest conversation, I am 
asking you to please come forward with any concerns, with any 
advice, with any changes, with any issues that your caucus may 
have involved with this reauthorization so that we can move 
forward, recognizing each of our concerns.
    First, of course, I think we must do more to address 
unaffordable premium costs for low-income households, and we 
have talked about addressing the debt many of our constitutents 
have, which has unfairly burdened policyholders with millions 
of dollars in interest and costs and fees on policyholders. One 
of the drafts we are discussing today would do just that by 
creating a demonstration program to provide targeted financial 
assistance, canceling the NFIP's debt, and repealing surcharges 
and fees that contribute to affordable challenges. We are very 
anxious to hear the views of your members on this issue. 
Canceling the debt is a big move, but it has been talked about 
now for quite some time. And so I am looking forward to your 
input on that.
    Second, I think we need to invest more heavily in mapping 
and mitigation, which will save taxpayer dollars in the long 
run by helping to reduce the damage that occurs when floods 
hit. Two of the drafts that I would like to discuss today call 
for updated mapping technologies to improve accuracy and, 
importantly, provide authorization and funding for mapping, 
flood plain management, and mitigation.
    Finally, there are a number of issues that arose in the 
aftermath of Superstorm Sandy related to claims processing, 
including findings of outright fraud. That is why today we also 
will discuss a proposal by Ms. Velazquez that seeks to ensure 
that we have safeguards in place and mechanisms for greater 
accountability and oversight to ensure that claims are handled 
fairly and efficiently to provide relief for policyholders.
    I am very thankful for all of our witnesses here today, and 
for some of our colleagues who have shown up today to be a part 
of this bipartisan effort that we are just beginning today. And 
now, the Chair recognizes the ranking member of the committee, 
the gentleman from North Carolina, Mr. McHenry, for 5 minutes.
    Mr. McHenry. I thank Chairwoman Waters for holding today's 
hearing on the National Flood Insurance Program. As you know, 
in January committee Republicans wrote to you to highlight the 
need to conduct oversight of the NFIP, and we are grateful that 
is underway, and we are hopeful that we can get it to a 
bipartisan piece of legislation that we can take to the House 
Floor, but much work is to be done there.
    A lot has changed since the program started 51 years ago. 
What worked in the Lyndon Johnson era doesn't really work in 
2019. It is clear from experts on the program--and in the 
second panel, we will hear from of a wide variety of them--that 
there is a great need for pragmatic changes. Reforms that 
include better data, increased transparency, better technology, 
and more innovation. Moreover, the Flood Insurance Program owes 
the Treasury more than $20 billion currently, even despite the 
fact that last year, and actually, the last Congress, a year 
and a half ago, we canceled $16 billion of that debt without 
any reforms. That continuous level of indebtedness over the 
past 15 years should give everyone cause for concern about the 
Flood Insurance Program's long-term fiscal stability.
    And I would note that the current legislative proposal 
being circulated that we all saw, that Republicans saw for the 
first time when it became public, forgives $20 billion of that 
debt without any assurance or necessary reforms that give us 
some understanding that it wouldn't just pile back up again.
    I hope today's hearing will address the fundamental 
question of what kind of flood insurance we want for the 
American people: an insurance program that is equipped with the 
tools it needs to perform its insurance functions; or should 
the Flood Insurance Program just require annual appropriations? 
Those are the effective choices and everything in between.
    So how do we protect those in affected areas? How do we 
give them more and better options? How do we enable communities 
to get better maps, more effective mitigation? How do we 
protect the taxpayer? The time is right for reform and 
innovation. Private insurance, better technology, more mapping 
data, faster claims processing, and rethinking old underwriting 
models are just a few of the tools readily available for 
modernizing the Flood Insurance Program.
    At the same time, we must also consider how we can use risk 
sharing to offload some of the NFIP burdens upon the taxpayer 
and the cost savings that come from spreading risk to other 
qualified, capable folks in the private sector who are willing 
to manage it. That is better for the taxpayer in most years 
and, over the long run, would dramatically assist in protecting 
the taxpayer from larger losses. Building a more resilient and 
cost-effective NFIP are goals that would benefit all consumers.
    I look forward to the testimony from our colleagues. We 
will hear from folks who are in disproportionately affected 
flood areas in the first panel, and we will hear from the 
private sector and a variety of folks who have viewed this 
program intensely, and we will have bipartisan questions about 
the effectiveness and efficiency of this program. But one thing 
we are committed to is to having an effective National Flood 
Insurance Program, one that can weather the storm to ensure all 
impacted Americans and taxpayers are protected.
    I yield back.
    Chairwoman Waters. Thank you very much. I am so very 
pleased.
    We have two panels today, but first, we have a number of 
our colleagues who have requested time to share their 
perspective on the issue of National Flood Insurance and its 
reauthorization. To my colleagues, you are all most welcome to 
the committee, and each of you will have 5 minutes. We will 
first hear from the gentleman from Wisconsin, Mr. Duffy. You 
are recognized for 5 minutes, Mr. Duffy.

 STATEMENT OF THE HONORABLE SEAN P. DUFFY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Mr. Duffy. Chairwoman Waters, thank you for inviting me 
today. It was a very kind invitation.
    Republican Leader McHenry, thank you, too.
    And to the committee as a whole, it is my first time 
sitting from this vantage point. You all look very good. It is 
a handsome, good-looking committee, I must say, if I do say so 
myself. I have been waiting for other witnesses to make that 
comment. They haven't yet, so I thought I would.
    So, this program is sick. We have problems in the Flood 
Insurance Program, and Mr. McHenry addressed this, but we have 
5.1 million policies in the program, in the NFIP, and the 
average premium cost is about $700. Last year, in 2018, we had 
revenue of $4.76 billion--$4.76 billion--but we had expenses of 
$11.4 billion. So we had a shortfall of $6.6 billion in the 
last year alone. And when we look at the debt, and I know the 
chairwoman wants to forgive the debt, and many of the panelists 
here want to forgive the debt, but we are butting up against 
our $30 billion borrowing threshold. And we actually as a 
Congress forgave $16 billion of debt last year, and the 
chairwoman knows that we forgave $16 billion in debt. And when 
you look at the program and the reforms that are being 
proposed, how do we actually make the program a little more 
solvent? I don't know that we are ever going to get to complete 
solvency, but how do we make the program work a little bit 
better?
    And I would agree with the chairwoman when, in her plan, 
she puts out ideas that we had worked together on in the last 
Congress on consumer choice and on competition, on reducing 
risks through mitigation, increasing ICC coverage, mapping 
fairness, which Mr. Luetkemeyer has worked pretty aggressively 
on, and improving the claims and appeals process. Those are all 
really important parts of making the program work better for 
people, but I also think we have to address these repetitive 
loss properties. They are 2 percent of the properties, but they 
account for 24 percent of the costs: 2 percent of the 
properties account for 24 percent of the costs. We have to 
address that.
    I want to talk about one part of this program in the reform 
side that I think is important, and I know the Federal bank 
regulators came out with a rule, but trying to bring in the 
private sector to write flood insurance policies is incredibly 
important because we know that, with some properties that are 
subsidized, the premiums are subsidized by the Federal 
Government, but there is a whole other slew of properties that 
are paying rates that are above the actual cost of the 
property. And so, if we let the private sector come in, they 
are going to cherry pick--and I know that Mr. Graves is going 
to talk about this in a second--low-risk properties and not 
take high-risk properties. They are not going to cherry pick 
that way. What they are going to do is the private insurance 
companies are going to come in, and they are going to cherry 
pick the nonsubsidized properties. They want a whole portfolio 
of risk, low risk, medium risk, and high risk. They make more 
money on the high-risk stuff. They are going to take the 
nonsubsidized properties, and the subsidized properties, they 
are not going to take. They can't compete with the government 
subsidy. And so, if we allow the private sector to come in, 
what we are actually doing is helping people. We are helping 
people get a flood insurance policy at a lower rate.
    And why would we say no, no, no? We want to socialize this 
program and say: We want some people to pay more than they are 
required to pay based on their risk, and we want other people 
to pay less.
    I think if you could get a lower rate in the private 
sector, let's let you get a lower rate. And now, some might 
say, well, but the problem with that is we need that money 
because it is going to--it helps with our debt burden.
    I look at the floods that hit our communities. And listen, 
I am sensitive to my colleagues on this panel and the 
communities from which they come, and how important this 
program is to them, and we have to make the program work for 
people. But when I look at, again, the private sector coming in 
and often lowering prices, so that when those storms hit, it is 
not just on the backs of the taxpayers. We defray that risk, 
not just taxpayers but also the private sector, and I think 
that is really important as we analyze this program. How do we 
bring in better pricing, better maps, better services, and try 
to bring us a little closer to a solvent program? Madam 
Chairwoman, we worked a lot on this. I look forward to working 
with you again. I hope I will be a little more reasonable than 
you were with me, and I think we can come up with a 5-year 
route. I hope we get a 5-year reauthorization that works for 
people and they get certainty.
    I yield back.
    Chairwoman Waters. Thank you very much, Mr. Duffy.
    Mr. Graves, you are recognized for 5 minutes.

 STATEMENT OF THE HONORABLE GARRET GRAVES, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Graves. Thank you, Madam Chairwoman. I appreciate the 
opportunity to be here, and I appreciate the opportunity to 
work with you and Ranking Member McHenry on this, and I do want 
to thank my friend from Wisconsin for the hours and hours that 
he and I spent going round and round on this over the past few 
years trying to come up with solutions.
    Madam Chairwoman, you can look at what we have been doing 
with flood insurance. We have been repeatedly kicking the can 
down the road, and the reason for that is that we can't come to 
a consensus on what the right approach is. We have Democrats on 
one side who are saying that what we need to do is we need to 
make this program accessible and affordable. We have 
Republicans saying that the current $20 billion debt--and, as 
my friend just pointed out, we relieved $16 billion, so it is 
actually $36 billion worth of debt--is unreasonable. You know 
what? You are both right.
    You are both right, but we need to change the narrative on 
this issue. So let's take a step back for just a minute. Just 
for 2017 hurricanes, we appropriated $120 billion. It makes $36 
billion look a lot smaller, doesn't it? That was just in 2017. 
If you actually take a step further back, dating back to 1980, 
we have had 215 disasters that have cost over a billion dollars 
each: 215. We have spent $1.5 trillion. All of a sudden, $36 
billion looks pretty small again, when we have spent $1.5 
trillion on these disasters.
    So, on the one hand, my friends who are to the left 
geographically, I agree with you on, let's be fiscal 
conservatives. Let's make the right approach and not sit here 
and spend money hand over fist. To my friends on the right, I 
agree with you that we need to make this program accessible and 
affordable. But the solution is different than I think we are 
pursuing myopically under flood insurance reform.
    You can look at study after study. The Congressional Budget 
Office says you get $3 in cost savings for every $1 you invest 
in proactive mitigation. An updated study says $4. The Army 
Corps of Engineers said it is $7.90. Other studies get up to 
$11 or $12. My favorite, General Russel Honore who came in 
after Hurricane Katrina and really wrestled the Federal 
Government's response, came in and said, you know what--he was 
giving this great talk I was listening to, and he went through 
all these different numbers about the $3 and $4 and the $7,'' 
and he said, ``And there is another study that said it is 
$16,'' but he didn't cite it. And I went up to him afterwards, 
and I said, ``Oh, my gosh, $16 in cost savings for every $1 you 
invest? That is incredible. General, that is awesome. Where did 
you get it? I knew the number was higher.''
    And he looked around, and he said, ``I made that shit up.''
    But I believe it. And you know what? He is right. If we 
make--can I say that? If we make the right proactive 
investments, we can get those types of cost savings. So we have 
to stop focusing myopically on just flood insurance. We have to 
look at the larger resilience. You know there is $100 billion, 
$100 billion in authorized projects at the Corps of Engineers, 
and we are providing about a billion to a billion and a half 
annually for construction? We will finish it approximately 
never. That is our resilience projects. It is a broken system. 
We have to stop just looking at flood insurance and bringing 
that to the table. It is defense. We have to bring an offense 
to the table as well, and that is proactive investments and 
mitigation. That is where the solution is: integrating our 
defense and our offense and stop the strategy of just being 
reactive.
    Keep in mind: You then save lives. You prevent this 
economic disruption that happens whenever we have these massive 
storms and disasters.
    So, Madam Chairwoman, in wrapping up this morning, I just 
typed up about 10 or 11 different things that I think you all 
should be considering as you move forward on legislating.
    Number one, as I said, we can't look at just the balance or 
the debt of the NFIP in a vacuum. There is a larger liability 
issue. We are spending $1.5 trillion since 1980 on disasters.
    Number two, we have to have better oversight of the costs 
and the fees absorbed by nonclaims. I know this is 
controversial, and my friend here gets mad at me when I 
reference this, but there is a GAO study that is a bit dated 
that indicates that, in some cases, up to two-thirds of the 
premiums have been retained by the Write Your Owns. Up to two-
thirds. Again, it is not my statistic. It is the GAO's. Well, 
if two-thirds are being retained, no wonder the program is 
insolvent.
    Number three, the uptick rate. Once again, I know there are 
controversial figures, but let me throw out some numbers. In 
the August 2016 flood in south Louisiana, only about 20 percent 
of the people had flood insurance. You know who got help? 
Almost all of them. So the people who are paying for flood 
insurance are helping to offset, but everyone got help. In 
Hurricane Harvey, Madam Chairwoman, in your home State, I 
believe it was around 15 percent of the people had flood 
insurance. In Hurricane Florence, I think it was 10 percent of 
the people had flood insurance. In Hurricane Maria, I think it 
was 4 percent of the people had flood insurance. But, once 
again, because of the generosity of this Congress--and I want 
to be clear; I agree with this--we are providing help to 
everyone.
    So, Madam Chairwoman, I have some other recommendations, 
but I will submit those for the record, and I want to thank you 
very much for the opportunity to be here.
    Chairwoman Waters. Thank you very much.
    I would ask unanimous consent that Mr. Pallone could go 
next. Mr. Luetkemeyer has a hearing that he has to conduct 
right now, so I would appreciate your cooperation.
    Without objection, it is so ordered. Thank you.
    Mr. Pallone, you have 5 minutes.

STATEMENT OF THE HONORABLE FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Madam Chairwoman, and I also want 
to thank our ranking member and our distinguished colleagues 
who serve on this committee for holding this hearing.
    For more than 50 years, communities and millions of 
individuals across the country have depended on the NFIP to 
help them recover from their darkest hours. And in 2012, 
Superstorm Sandy brought devastation to my district in New 
Jersey. We were the hardest hit, if you will, by Sandy of any 
district in the tristate area, and the NFIP provided financial 
protection for my Jersey Shore constituents.
    However, such a large-scale and damaging event also 
revealed a number of program flaws that prolonged hardship for 
policyholders and cost taxpayers. That pattern has been 
repeated in the years since during other major storms, 
including Hurricanes Harvey, Irma, and Florence. The NFIP is 
nationally significant to ensuring our Nation can manage the 
cost of catastrophic flooding, but aspects of the program can 
and must be improved, and I think the time is now to advance 
viable solutions that will enhance this important program.
    Ensuring a strong NFIP helps families quickly get back on 
their feet post-disaster and is of great importance. For these 
reasons, in the 115th Congress, Congressman Clay Higgins of 
Louisiana and I introduced H.R. 3285, the Sustainable, 
Affordable, Fair, and Efficient (SAFE) NFIP Reauthorization 
Act, and this bipartisan bill seeks to improve program 
effectiveness and reduce unnecessary costs. So I am asking you 
to bring it to the committee's attention briefly to support the 
measures contained within our SAFE NFIP Act as part of any 
future action you take on this program.
    First, I ask that you support a long-term reauthorization 
for at least 6 years. The NFIP has continued through numerous 
short-term extensions, and of course, when you kick the can 
down the road, a long-term authorization seems less possible. 
But if you have a long-term reauthorization, I think it 
provides financial certainty and avoids the significant impacts 
on our economy that are caused by lapses in the program.
    I also ask the committee to support reforms to increase the 
affordability of NFIP for households, and this can be done by 
expanding coverage and protecting ratepayers from excessive 
rate hikes by capping annual premium increases by 10 percent. 
We have seen, as you know, much larger increases than that.
    The NFIP should also offer means-tested flood mitigation 
and affordability assistance. Additionally, the Administrator 
and FEMA should conduct a study on offering insurance coverage 
for small businesses. These changes would be welcomed by hard-
working families and entrepreneurs within my district and 
around the country.
    The committee can provide flood preparedness by proactively 
reinvesting in mitigation efforts. I really want to stress the 
mitigation efforts which would make such a difference in future 
storms. According to the U.S. Global Change Research Program, 
flood and extreme storm events are increasingly happening and 
also are more severe, and there are also rising sea levels 
because of climate change. The reality of climate change is 
hitting home, and changes to NFIP are necessary to ensure 
communities can thrive in the future.
    Flood mitigation efforts have a minimum of a 4-to-1 return 
on investment with some projects enjoying even a 5-to-1 return 
on investments. The average is 4.1. Expansion and improved 
effectiveness of the increased cost of compliance and other 
mitigation provisions should be part of any legislative action.
    And, lastly, Madam Chairwoman, smart changes to the NFIP 
would keep more dollars in taxpayers' wallets. Under the 
current system, it is too easy for private companies to pad 
their profits with money that should flow to disaster-struck 
families or stay with taxpayers. During Sandy, my constituents 
turned to Write Your Own companies for help with property 
damage, only to have these egregious actors that were involved 
in that company knowingly undervalue their claims using 
falsified engineering reports. And so I urge the committee to 
take concrete steps to eliminate the fraud and abuse, and this 
can be done by capping the compensation of Write Your Own 
companies as well as ensuring that the private market pays its 
fair share for the development and use of flood insurance rate 
maps and other products. The committee must ensure 
policyholders and taxpayers are not taken advantage of, and I 
am sure all of you heard all of the reports in the media about 
the fraud and abuse in Sandy and otherwise.
    So let me just thank you again. I hope you will consider 
the path forward that I and others have outlined because I 
think these changes will create the certainty and 
accountability and efficiency that the program needs. Thank 
you, Madam Chairwoman.
    Chairwoman Waters. Thank you very much.
    And now, we will hear from the gentleman from Missouri, Mr. 
Luetkemeyer.
    Mr. Luetkemeyer, you will be recognized for 5 minutes.

STATEMENT OF THE HONORABLE BLAINE LUETKEMEYER, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF MISSOURI

    Mr. Luetkemeyer. Thank you, Chairwoman Waters and Ranking 
Member McHenry.
    Representing a district that touches the Mississippi River, 
the Missouri River, and the Lake of the Ozarks, flood insurance 
is a critical issue for my constituents. And I will point out, 
Madam Chairwoman, that the Lake of the Ozarks has 1,150 miles 
of shoreline. That is more miles of shoreline than in your 
State of California. So my flood insurance problem potentially 
is even bigger than your entire State.
    Now, as we all know, flood insurance reauthorization is a 
difficult issue. The National Flood Insurance Program, NFIP, as 
it operates today has numerous problems that Congress and this 
committee must work to address. Since the end of Fiscal Year 
2017, the program has received a short-term authorization 10 
times. We can all agree this committee can and should come 
together in a bipartisan manner to support a long-term 
reauthorization that will solve some of the systemic issues 
facing NFIP.
    First and foremost, I believe we must take into account the 
impact this program has on the American taxpayer. Despite 
Congress forgiving $16 billion of debt in 2017, today the debt 
at NFIP is over $20 billion. The future solvency of NFIP needs 
to be addressed in any legislation this committee considers.
    As a committee with oversight of NFIP, reauthorizing this 
program with taxpayers still on the hook is bad policy and 
short-sighted. Simply forgiving a debt NFIP holds is equally 
irresponsible and does not solve the root causes of the NFIP's 
insolvency.
    One thing that should help with the program solvency is 
reinsurance. In 2017, FEMA purchased a reinsurance policy worth 
over $1 billion at a premium of $150 million, saving taxpayers 
nearly a billion dollars. In 2018 and 2019, FEMA transferred 
nearly $4 billion of risk off their books. It is clear that the 
risk-transferring efforts of FEMA are working, which is why I 
introduced legislation at the beginning of this Congress to 
require the FEMA Administrator to annually cede a portion of 
NFIP's risk to the private reinsurance or capital markets in 
order to maintain the program's ability to pay claims and limit 
exposure to flood loss. The committee should examine similar 
visions in their discussion on flood insurance to protect the 
taxpayers and ensure the solvency of NFIP for generations to 
come.
    Another issue the committee should consider is replacement 
cost. Currently, FEMA does not consider the replacement cost of 
a structure when it determines NFIP premiums. Instead, the NFIP 
uses a fixed national average for replacement costs used in its 
calculations for premiums. This means lower-income 
policyholders are subsidizing wealthier homeowners within NFIP.
    In response to this, I have introduced legislation to 
require the NFIP to incorporate replacement cost of a structure 
in the calculation for premiums. Low-income Americans should 
not be required to foot the bill for the flood insurance 
premiums of wealthier individuals.
    Third, I would like to discuss continuous coverage. In 
2012, Congress passed the Biggert-Waters Flood Insurance Reform 
Act. It authorized NFIP to include a provision to allow private 
flood insurance to fulfill the NFIP requirement. However, if a 
policyholder wishes to try to buy a private flood policy, they 
must sacrifice their status in the NFIP. Just this week, 
Representative Castor from Florida and myself introduced 
legislation that would allow policyholders to maintain 
continuous coverage in NFIP even if they test out the private 
market. This provision will give policyholders the freedom to 
choose the best flood policy insurance option for themselves 
and protect them if they decide NFIP is their best option.
    And lastly, mapping. I have introduced the Community 
Mapping bill, which is, unfortunately, necessary because FEMA 
is notorious for the lack of timeliness in updating their maps. 
What my bill will allow them to do is the local community, the 
local subdivision will be able to have their own third-party 
mapping under certain standards be done and approved by FEMA 
within 30 days to allow local folks to take advantage of any 
sort of change in the demography of and topography of whatever 
is going on with regards to their area to either minimize--what 
they have done to minimize some of the flood damage that is 
possible.
    In closing, I would like to thank the chairwoman and 
ranking member for holding this important hearing. I believe 
this committee can and should make some of the commonsense 
changes that I have presented here today. These provisions will 
improve NFIP in getting taxpayers off the hook and provide for 
choices for policyholders. I think it is imperative we do this. 
Kicking the can down the road without change is totally 
irresponsible. I look forward to having a healthy debate on 
this issue in the weeks to come, and I yield back the balance 
of my time.
    Chairwoman Waters. Thank you, Mr. Luetkemeyer.
    Next, we will hear from the gentleman from New Jersey, Mr. 
Pascrell.
    Mr. Pascrell, you are recognized for 5 minutes.

STATEMENT OF THE HONORABLE BILL PASCRELL, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pascrell. Thank you, Chairwoman Maxine Waters, and 
Ranking Member Patrick McHenry, for holding today's hearing on 
the importance of reauthorizing the National Flood Insurance 
Program.
    We have not made major changes to the NFIP since Hurricane 
Sandy deeply affected many in my district and my State. I 
remember touring the devastation like it was yesterday: homes 
damaged; businesses destroyed; the mold; the sand; the debris. 
More than the physical destruction, I was struck by the storm's 
human toll. I spoke with my constituents who saw their entire 
lives swept away in an instant. I vowed never to stop fighting 
for them.
    Now, I have been here with Congressman Pallone and Senator 
Menendez for the long run. We introduced bipartisan, bicameral 
legislation this last Congress to build on our commitment. The 
SAFE NFIP Act, H.R. 3285, proposed changes to the NFIP based on 
lessons we learned in Sandy. Our bill helps people prepare 
prior to a storm with accurate maps, flood-prevention 
investments, updates to claims process so survivors get what 
they need to rebuild, and holds bad actors accountable.
    Today, I would like to highlight a few sections of the 
bill. A constituent of mine, Mabel Richardson, brought my 
attention to the fact that my hometown of Paterson, New Jersey, 
did not have accurate maps, causing her home to be in a flood 
zone. She was forced into the Flood Insurance Program, and 
forced to pay thousands each year in premiums. But her home was 
not actually in a flood-prone area. So I worked with Mabel and 
FEMA to learn that decades-old, hand-drawn maps were used to 
design the maps in the first place.
    While I worked with FEMA to change the maps, this is wrong. 
They should have been accurate from day one. Section 204 of our 
bill invests $800 million per year for 6 years in state-of-the-
art technology to map the entire country.
    Meanwhile, the claims process was screwed up from the very 
start. One example is that people fled their homes for several 
days, if not weeks, in Sandy's aftermath. They lived in hotels, 
cars, and motels. Family was elsewhere at times, wherever they 
could find shelter. During this time, mold grew, because 
several feet of water lingered in the homes they left behind. 
These individuals filed damage claims, but adjusters told them 
they were responsible for failing to maintain the property 
after a flood. Figure that out. It is offensive to tell someone 
worried about their immediate safety that they should have gone 
back to their home to prevent some damage. Section 403 of our 
bill clarifies this mold damage issue for survivors in the 
aftermath of a storm.
    Worse, my constituents were told they could appeal any 
decision 90 days after submitting a claim, but the median 
response time for FEMA was 88 days. Section 404, Section 405 of 
our bill extends the appeal deadline, and creates a deadline 
for FEMA to respond.
    These are just some of the many claims process reforms we 
made in Title IV of the legislation. We know bad actors cause 
headaches and waste taxpayers' funds. I heard stories about 
survivors being lowballed by insurance companies and paid just 
pennies on the dollar. Congress investigated and FEMA reopened 
the claims process in 2015. This investigation uncovered vast 
systemic fraud and abuse. FEMA was forced to grant Sandy 
victims an additional $260 million they were entitled to. If 
done right initially, it would have saved taxpayers millions 
from defending lawsuits and reopening the programs. Write Your 
Own companies that intentionally underpaid policyholder claims 
were particularly egregious. Currently, there is a perverse 
incentive to underpay claims, which they did, to no one's 
surprise. Section 407 of the bill makes these companies 
financially responsible for this event, and Section 302 caps 
their compensation to hold them accountable.
    As the committee considers reforms to NFIP and expanding 
the private flood market, please consider the lessons that we 
experienced. The financial incentive favors profit, not people. 
We cannot let this happen. I understand several of these issues 
are addressed in the legislation being considered. I thank you 
for the hearing, and I thank both of you for putting us 
together today.
    Thank you, Madam Chairwoman.
    [The prepared statement of Representative Pascrell can be 
found on page 115 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Finally, we will hear from the gentleman from Louisiana, 
Mr. Scalise.
    The distinguished and honorable Mr. Scalise, you will be 
recognized for 5 minutes.

 STATEMENT OF THE HONORABLE STEVE SCALISE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Scalise. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and other members of the committee for the opportunity 
to talk about the reauthorization of the National Flood 
Insurance Program. With over 5 million policies nationwide, 
NFIP is the sole provider of flood insurance for the vast 
majority of families and small businesses across our country. I 
applaud the committee for moving early in this Congress on 
legislation to provide a long-term reauthorization of the 
program, and I really hope we can all work together toward a 
strong bipartisan bill that gives homeowners certainty instead 
of continuing on the path of short-term extensions that the 
program has experienced since October of 2017.
    As we have seen time and time again, wherever there is the 
possibility of rain, there is the possibility of flooding. 
While the most catastrophic floods are the ones that get the 
most media attention, it is not just coastal areas like mine in 
southeast Louisiana that are vulnerable to flooding. Just in 
the past 5 years, every one of our 50 States has experienced a 
flood event. As a matter of fact, 38 States had a flood event 
large enough that they warranted a Federal disaster 
declaration. Since 1956, there have been 15 States that 
experienced more than 50 federally declared disasters including 
Missouri, Kentucky, and Oklahoma, all States that are very far 
from the coast.
    I have long believed that NFIP is not and should not be a 
partisan issue. While there are many parts of NFIP that are in 
need of reform, one of the biggest challenges we face is how to 
ensure the program remains affordable and stable into the 
future while also limiting the financial exposure to taxpayers.
    On affordability, it is important to keep in mind that if 
NFIP is unaffordable, some people will simply drop their flood 
insurance altogether, which further straps the program and 
leaves taxpayers more exposed after major storms. We must 
protect the grandfathering that currently exists in the program 
so that homeowners don't see unfair and massive rate spikes 
that destroy housing markets in whole communities.
    Also, we have to ensure that everyone who is required to 
have flood insurance actually has the ability to get it. I have 
always believed that we should incentivize more people to carry 
flood insurance, not create a system where people drop their 
insurance because they can no longer afford it.
    There is a certain irony about the way the Federal 
Government handles flood disasters. When you look at past 
disasters, whether it is Hurricane Katrina, Superstorm Sandy, 
the 2015 South Carolina floods, or Hurricane Harvey, Congress 
has passed supplemental appropriations bills totaling billions 
of dollars for recovery, and a lot of those recovery dollars go 
to rebuilding uninsured properties. In the 2015 South Carolina 
floods, for example, the average NFIP coverage rate in counties 
with a Federal disaster declaration was 5 percent. For 
Hurricane Harvey, the percentage of people who carried flood 
insurance was only 10 percent. Of course, we came in, the 
Federal Government, and passed supplemental appropriations 
bills to make sure that everybody was made whole. So, if only 
10 percent of the people had flood insurance, the NFIP paid 
those policies, but the taxpayer paid the other 90 percent.
    And so, when we talk about the debt of the program, let's 
keep in mind: In the major disasters that have been declared 
that I talked about, whether it is Harvey or Katrina or 
Superstorm Sandy, the Federal taxpayers came in and ultimately 
paid for the people who had no flood insurance, and the only 
side that is talked about is the side on NFIP, the people who 
actually paid into a program.
    While some people call for the dismantling of NFIP, from a 
taxpayer perspective, what makes more sense is to work on 
policies that will encourage the creation of a private 
marketplace for families to buy flood insurance. Currently, 
there are no other options outside of NFIP, and dismantling 
NFIP will only serve to increase the rate of uninsured 
properties and, therefore, increase the exposure to taxpayers 
in the event of a federally declared flood disaster.
    I was very pleased to see the banking regulators earlier 
this year clarify that private insurance coverage must be 
accepted by financial institutions to meet flood insurance 
requirements. In doing this, hopefully we will start to see a 
private marketplace develop for flood insurance. This has been 
something that many of us have been deeply committed to, and I 
hope that the bill that the committee will ultimately pass 
strengthens the ability for the private marketplace to start 
offering flood insurance across the country while also 
protecting policyholders.
    Finally, while this point was one of the most contentious 
last Congress, I hope the committee considers addressing 
extreme repetitive loss properties that experience very regular 
flooding events. While any changes to rates and participation 
in the NFIP must be fair and transparent for the homeowner, I 
would encourage the committee to look at responsible and 
realistic changes to how the program deals with those 
properties that experience very regular flooding and rack up 
multiple claims that far exceed the value of the property, 
whether that is through additional mitigation or offers for 
buyouts or other changes.
    Again, I want to thank the committee for the opportunity to 
testify and talk about the importance of a long-term 
reauthorization of the Flood Insurance Program, and I look 
forward to working with you all as we achieve what I think we 
all are setting out to do, and that is a program that is fair 
for ratepayers and for taxpayers with long-term certainty.
    Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you all for being here. I 
appreciate the time that you have spent and your critical 
perspective. Thank you very much.
    We will now move to set up our second panel. Those 
participants on the second panel, if you will come forward as 
soon as our Members exit.
    I want to welcome today's distinguished panel: Maria Cox 
Lamm, South Carolina Department of Natural Resources, on behalf 
of the Association of State Floodplain Managers; Mr. 
Christopher Heidrick, Heidrick & Company Insurance and Risk 
Management Services, LLC, on behalf of the Independent 
Insurance Agents and Brokers of America; Velma Smith, senior 
officer with Pew Charitable Trusts; Ms. Mabel Guzman, broker, 
@properties on behalf of the National Association of REALTORS; 
Collin O'Mara, president and CEO, National Wildlife Federation, 
on behalf of the SmarterSafer Coalition; and Mr. Raymond J. 
Lehmann, director of finance, insurance and trade policy at the 
R Street Institute.
    Each of you will have 5 minutes to summarize your 
testimony. When you have 1 minute remaining, a yellow light 
will appear. At that time, I would ask you to wrap up your 
testimony, so we can be respectful of both the witnesses' and 
the committee members' time.
    So Ms. Lamm, you are now recognized for 5 minutes to 
present your oral testimony.

    STATEMENT OF MARIA COX LAMM, SOUTH CAROLINA NFIP STATE 
    COORDINATOR, AND CHAIR, ASSOCIATION OF STATE FLOODPLAIN 
                            MANAGERS

    Ms. Lamm. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee for holding this 
important hearing, and inviting the Association of State 
Floodplain Managers (ASFPM) to testify. I am Maria Cox Lamm, 
South Carolina State NFIP coordinator, and Chair of ASFPM.
    As we all know, floods are costly natural disasters. In 
fact, they are the nation's most costly natural disaster, and 
unfortunately, the trends are worsening. The NFIP takes a 
comprehensive approach to managing the nation's flood losses by 
balancing flood plain management, mapping, mitigation, and 
insurance.
    At the end of 2018, the NFIP had paid over $69 billion in 
claims. Half of that has come in the past 10 years. Also, the 
NFIP has mapped 1.2 million miles of streams, rivers, and 
coastlines. It has invested more than $1.3 billion in flood 
hazard mitigation for older, at-risk structures. Because of the 
program, over 22,000 communities have adopted local flood risk-
reduction standards, which have resulted in $1.9 billion of 
flood losses reduced every year. However, there is more to be 
done to prepare us for the future.
    While improvements can always be of benefit to the NFIP, it 
is important to ensure the strength of all four of the 
programs. Our written testimony offers 20 recommendations for 
strengthening the NFIP. For the balance of my testimony, I want 
to highlight four of the areas outlined by ASFPM.
    First, to reaffirm your commitment to enhance the flood 
mapping program. Today, about one-third of the country has 
flood risk maps available. The problem is that the priorities 
of the mapping program to date have been to map at-risk areas. 
As a result, mapping never gets ahead of development. I have 
personally seen the impact of this policy. I have heard from 
many local flood plain managers, citizens, developers, and 
elected officials that they wish they had known the true flood 
risk of an area before making decisions and huge investments. 
Many residual risk areas are just simply not mapped, and some 
mapping information is not publicly available. We must do 
better, and we need your help.
    Second, to strengthen the community assistance program by 
officially authorizing that program. The program provides 
funding to States to provide subject-matter experts for NFIP- 
participating communities through the State coordinating 
office. For the past 4 years, South Carolina has experienced 
devastating flooding. My staff and I, through the CAP program, 
are helping impacted communities through the long process of 
recovery. The level of assistance we have been able to provide 
is a direct result of the funding provided by the CAP program.
    Third, reducing risk through mitigation. One of FEMA's 
built-in mitigation programs is increased cost of compliance. 
As I have seen in South Carolina, ICC funding is extremely 
valuable to the recovery process. However, the maximum funding 
limit of $30,000 does not come close to the average cost to 
mitigate a structure from flooding. ICC should be expanded in 
application and scope, including raising the maximum ICC amount 
to $60,000 and clarifying that it is available in addition to 
the maximum claim amount.
    Finally, reforms are needed related to private flood 
insurance and that they should be focused on ensuring that 
other elements of the NFIP are not weakened.
    First, all private flood policies sold that meet the 
mandatory purchase requirement must include an equivalency fee 
which is equal to the Federal policy fee on NFIP policies. 
Currently, this fee pays for 100 percent of flood plain 
management and roughly 40 percent of mapping. If the NFIP 
ultimately loses policies due to private sector competition, 
then there will be fewer resources to help communities and 
States with flood plain management and mapping efforts.
    Second is a requirement that private flood insurance 
policies meeting the mandatory purchase requirement only be 
sold in NFIP-participating communities. Currently, most 
communities in the country participate in NFIP. Because our 
members have enrolled nearly all of the 22,000 communities in 
the NFIP, we uniquely understand the reason for joining is 
accessibility to flood insurance. ASFPM fears that if the 
private flood insurance is available with no requirement to 
join the NFIP and subsequently adopt local codes, small 
communities and those with low policy counts in particular will 
begin to drop out of the program.
    We are very pleased the committee has developed four 
discussion draft bills. ASFPM is supportive of many provisions 
in these bills, and we continue to review and analyze them. Our 
initial comments are included towards the end of our written 
testimony. Thank you for listening to our concerns, and we are 
happy to answer any questions.
    [The prepared statement of Ms. Lamm can be found on page 81 
of the appendix.]
    Chairwoman Waters. Thank you very much, Ms. Lamm.
    Mr. Heidrick, you are now recognized for 5 minutes to 
present your oral testimony.

STATEMENT OF CHRISTOPHER HEIDRICK, HEIDRICK & COMPANY INSURANCE 
AND RISK MANAGEMENT SERVICES, LLC, ON BEHALF OF THE INDEPENDENT 
            INSURANCE AGENTS AND BROKERS OF AMERICA

    Mr. Heidrick. Good morning, Chairwoman Waters, Ranking 
Member McHenry, and members of the committee. My name is Chris 
Heidrick, and I am pleased to be here today on behalf of the 
Independent Insurance Agency Brokers of America, or the Big 
``I'', to present the association's perspectives on flood 
insurance and the NFIP.
    We commend the committee for looking at this very important 
issue, and we look forward to working--we appreciate the work 
you have done so far on the draft bill as early as last week. I 
am the owner of an independent insurance agency located in 
Sanibel, Florida. I regularly counsel homeowners and small 
businesses regarding flood insurance. I also hold the 
designation of associate in National Flood Insurance and 
currently serve as the chairman of the Big ``I'' Flood 
Insurance Task Force, and I am chairman of the Flood Insurance 
Producers National Committee, which is an organization that 
provides technical assistance and advice on NFIP operations.
    The Big ``I'' is the nation's oldest and largest trade 
association of independent insurance agents and brokers, 
representing more than 25,000 agency locations across the 
country. Working with Write Your Own companies, many of these 
agents serve as the sales force of the NFIP. It is from this 
vantage point that Big ``I'' members understand the 
capabilities and challenges of the insurance market when it 
comes to ensuring against flood risks.
    My written and oral testimony today focuses on three 
points: one, the need to reauthorize the NFIP on a long-term 
basis before the program expires on May 31st; two, the need to 
increase takeup rates for flood insurance, whether through the 
NFIP or the private market, to better ensure Americans can get 
back on their feet as quickly as possible after a disaster 
strikes; and three, the need to modernize and simplify the NFIP 
to make the program more transparent and understandable for 
consumers.
    While there are several other important issues impacting 
the NFIP, such as increasing support for mitigation and 
ensuring strong flood plain management standards, my colleagues 
on this panel hold expertise in this area. As I am the only 
witness on the panel from the insurance sector, I will focus my 
statements today on insurance-specific issues.
    Most recently, on December 21st, Congress acted to extend 
the NFIP through May 31st of this year so the program could 
continue to operate during the recent partial government 
shutdown. In doing so, Congress recognized the critical role 
the NFIP plays in the U.S. housing market and the overall 
economy. As such, the Big ``I'' urges Congress to yet again 
extend the program as soon as possible but before it expires on 
May 31st to avoid any unnecessary economic disruption.
    While it is important that the NFIP does not lapse, the Big 
``I'' also encourages Congress to work together to pass a true 
long-term reauthorization of the program as quickly as 
possible. The public instability and uncertainty created by 
continual short-term extensions causes economic damages and 
hinders the ability of the NFIP to help policyholders, while 
also undermining consumer confidence in the program.
    Flooding is the most common and costly natural disaster, 
and yet most property owners do not have flood insurance. As 
such, the Big ``I'' encourages Congress to consider policies 
that would help Americans to obtain flood insurance coverage, 
and this includes not only flooding caused by hurricanes and 
coastal events but also inland flooding. A significant portion 
of flooding occurs outside of perceived high-risk areas, and 
put simply, where it rains, it can flood.
    While the NFIP has its faults, it is a vital program and is 
the primary source of flood insurance for U.S. property owners. 
Historically, flooding has been a difficult risk to underwrite 
in the private market. However, advances in modeling and 
underwriting technology have contributed to some market growth 
in recent years. Yet, to date, the private insurance market 
still only covers a small portion of flood risk nationally. 
Therefore, it is important that we continue along with the NFIP 
and we also have an expanded private market to increase flood 
coverage for the country because an insured survivor recovers 
more quickly and fully.
    Specifically, the Big ``I'' urges Congress to consider 
modest policy changes that would help protect consumers and 
give them from more choices, such as clarifying that private 
flood insurance can satisfy the continuous coverage 
requirements. This is an important consumer protection and an 
affordability measure to ensure that homeowners are not 
unfairly penalized with increased insurance rates. And earlier 
this week, Representative Castor and Representative Luetkemeyer 
introduced legislation on continuous coverage, and I thank them 
for that. The Big ``I'' also offers additional policy 
suggestions in our written testimony.
    Finally, the Big ``I'' encourages Congress to work 
constructively with FEMA on innovative approaches to 
modernizing the program, including ongoing efforts to change 
how the NFIP underwrites policies.
    In conclusion, the Big ``I'' supports the long-term 
reauthorization of a modernized and transparent NFIP that would 
increase takeup rates for flood insurance, and calls on 
Congress to extend the NFIP before it expires. I thank the 
committee for holding this hearing and I look forward to any 
questions.
    [The prepared statement of Mr. Heidrick can be found on 
page 74 of the appendix.]
    Chairwoman Waters. Thank you very much.
    Ms. Smith, you are now recognized for 5 minutes to present 
your oral testimony.

 STATEMENT OF VELMA SMITH, SENIOR OFFICER, THE PEW CHARITABLE 
                             TRUSTS

    Ms. Smith. Good morning, Madam Chairwoman, and members of 
the committee. My name is Velma Smith. On behalf of The Pew 
Charitable Trusts' flood-prepared communities initiative, I 
thank you. A special thanks for getting the ball rolling for an 
on-time, full reauthorization of the NFIP, an essential 
component of our nation's flood-risk management. We support 
your effort to find the right balance for the NFIP's dual 
objectives of insurance and flood-plagued management.
    First, flood maps are central to the NFIP, helping all 
Americans, not just policyholders. We believe Congress must 
help the many communities that still lack modern maps. 
Investment in new technologies is a worthy goal, but even more 
importantly, we need good maps everywhere, not perfect maps 
here and there.
    Ultimately, flood maps, however, cannot tell us all we need 
to know. Thus, we support a national framework for flood-risk 
disclosure, a CARFAX for flooding, if you will. Lack of 
awareness can have devastating consequences, but upfront 
disclosures about flood risk made before financial commitments 
can help consumers make smart decisions. We were delighted to 
find broad agreement on this issue with the National 
Association of REALTORS, and I look forward to working with the 
committee on this issue.
    On the difficult issues of rates and affordability, to the 
extent that Congress offers new relief to policyholders yet 
leaves the structure of the program alone, it may 
unintentionally increase the current financial shortfall and 
eventually threaten the program's ability to pay claims.
    Yet we know also that, to the extent that rates are 
perceived as too high, lower-risk policyholders may drop 
coverage, thereby increasing the pressure to raise rates on 
others. Our recommendation, then, is to carefully target any 
affordability program. An overly generous program without 
changes will simply hasten the date by which Congress will be 
asked to forgive additional loans.
    Also, any rate relief must compensate for the price signals 
that new discounts convey. Congress should be certain to 
provide clear risk information. An affordability program should 
not feed flood complacency. We recommend beginning the 
difficult but important triage of the program's financial 
ailments starting, perhaps, by addressing repeatedly-flooded 
properties, not just one house at a time, but as broader areas 
in need of mitigation assistance.
    The subset of properties that flood over and over again has 
strained the program's finances, but with the new mitigation 
investment in the Chair's bill, we are hopeful that a 
repeatedly-flooded area program could be linked to technical 
assistance and ample resources for participating communities. 
In the long run, an area-wide approach could accomplish much 
more than might be done by taking on the nation's flood 
problems one house and one flood at a time.
    We celebrate the Chair's support of a mitigation State-
revolving fund program, loan fund program, for we believe that 
pre-flood preparation has been the missing piece in the NFIP 
puzzle. Existing mitigation programs are small and cannot of 
themselves make the dramatic change we need in the trajectory 
of the program's finances. A revolving loan fund program could 
be the game changer. As the experts tell us, pre-flood 
mitigation can save, on average, $6 for every dollar spent.
    In closing, let me say that our organization looks forward 
to working with all the members of the committee to support a 
good, on-time reauthorization to keep flood insurance available 
to those who need it without asking taxpayers to subsidize 
risky development, to help drive new development away from 
flood-prone areas, to foster fixes or buyout of problem areas, 
to promote careful consideration of future risk, and 
ultimately, to make the nation better prepared for tomorrow's 
severe storms.
    I look forward to the committee's questions. Thank you.
    [The prepared statement of Ms. Smith can be found on page 
118 of the appendix.]
    Chairwoman Waters. Thank you very much, Ms. Smith.
    Ms. Guzman, you are now recognized for 5 minutes to present 
your oral testimony.

 STATEMENT OF MABEL GUZMAN, BROKER, @PROPERTIES, ON BEHALF OF 
              THE NATIONAL ASSOCIATION OF REALTORS

    Ms. Guzman. Thank you.
    Good morning, Chairwoman Waters, Ranking Member McHenry, 
and members of the committee. On behalf of the 1.3 million 
members of the National Association of REALTORS (NAR), thank 
you for the invitation to testify regarding draft legislation 
to reauthorize and reform the National Flood Insurance Program. 
My name is Mabel Guzman. I am a REALTOR for @properties in the 
City of Chicago, and I have been a REALTOR for 21 years.
    REALTORS thank this committee for its continued leadership 
on long-term reauthorization and reform. Many provisions of the 
draft legislation will provide critical reforms to flood 
mapping and mitigation. NAR urges the committee to work 
together and build on these provisions and remove barriers to 
private flood insurance and develop bipartisan reauthorization 
package.
    Floods are getting worse. Recently, the United States has 
experienced several record-breaking hurricane seasons in a row 
and witnessed the total destruction of places like Mexico Beach 
and most of Puerto Rico. I personally have family in Houston, 
in Florida, and in Puerto Rico who recently went through those 
hurricanes. What they had to experience, we would not wish on 
anyone, like my cousin's daughter who lived without water. 
Luckily, the neighbor who had collected water in his pool 
allowed her to draw from that pool so they could boil water to 
drink, to bathe, and to flush toilets.
    This is not a coastal issue. We saw this in Houston last 
year--and roughly half of the declarations for flood occurred 
in landlocked States. In the past year alone, disasters were 
declared in Kentucky, Indiana, Michigan, Wisconsin, Minnesota, 
and Montana. And in my hometown of Chicago, for instance, we 
have struggled with flooding due to heavy rainfall. According 
to the Illinois Department of Natural Resources, 90 percent of 
the damage claims were for locations outside the mapped 100-
year flood plain, highlighting the degree to which flood plain 
maps have become out of date and no longer accurately reflect 
the risk communities face.
    REALTORS are encouraging people to buy flood insurance even 
when it is not required. I recently told clients interested in 
purchasing foreclosed properties to purchase flood insurance, 
because banks are excluded from disclosure laws that REALTORS 
are required to follow. Additionally, we recommend mitigation, 
because every dollar spent in mitigation saves $6 and you never 
know when it is going to happen.
    While REALTORS are not risk experts, we are trying to do 
our part to close the insurance gap, so we have signed a 
memorandum of agreement with FEMA, and we are working together 
to educate consumers about the importance of considering flood 
insurance no matter where they live.
    The National Flood Insurance Program is central to U.S. 
disaster preparedness efforts and essential to completing half 
a million homeowner sales per year. As essential as the program 
is, this 50-year-old program was cutting edge 50 years ago. 
Today, it has borrowed $40 billion and is not working for 
policyholders or taxpayers. We need to modernize the program to 
work in today's realities.
    NAR supports extending the NFIP, and we also must have 
meaningful reforms. To reauthorize and do nothing will not help 
with inaccurate maps, unfair insurance rates, or the lack of 
resources for property owners to reduce the risk. We support 
these provisions in the bill: reauthorize NFIP through 2024; 
include bipartisan mapping and mitigation; modernize mapping 
for better risk assessment; and low-interest mitigation loans. 
We also encourage opening doors for private flood insurance, to 
ensure consumers are charged fair rates and enhanced 
affordability through mitigation. And please, clarify that FHA 
is subject to mandatory acceptance of private flood insurance.
    Having a competitive environment gives consumers good 
options. Yes to reauthorize, and yes to reform. Because to do 
nothing, we already can see the consequences. It is not only a 
loss of property; it is a loss of life.
    Thank you very much for the opportunity to testify today, 
and I look forward to answering your questions.
    [The prepared statement of Ms. Guzman can be found on page 
68 of the appendix.]
    Chairwoman Waters. Thank you, Ms. Guzman.
    Mr. O'Mara, you are now recognized for 5 minutes to present 
your testimony.

    STATEMENT OF COLLIN O'MARA, PRESIDENT AND CEO, NATIONAL 
      WILDLIFE FEDERATION (NWF), ON BEHALF OF NWF AND THE 
                     SMARTERSAFER COALITION

    Mr. O'Mara. Chairwoman Waters, Mr. McHenry, thank you for 
the opportunity to be with all of you today. My name is Collin 
O'Mara. I am the head of the National Wildlife Federation and a 
member of the SmarterSafer Coalition.
    The National Wildlife Federation is America's largest 
wildlife conservation organization with 6 million members, 
including in all of your States and districts. But we are also 
a member of the SmarterSafer Coalition, which, for more than a 
decade, has advocated for reform of the National Flood 
Insurance Program to ensure the program is smarter and safer 
for those in harm's way, for the environment, as well as for 
taxpayers.
    I had an old mentor who used to talk about how flooding is 
natural, but disasters are manmade. And, you know, he was 
mostly right. And we have to be honest about the conversation 
we are having today, which is that the perverse incentives 
created through this program through the subsidized rates have 
put people in harm's way and made some of the disasters you 
have seen in the last 2 years more extreme because communities 
have kind of encroached in more and more risky areas.
    What I think my old mentor didn't anticipate was that the 
acceleration of risk would get so much worse. And whether it is 
Hurricane Irene, Hurricane Sandy, Hurricane Maria, Hurricane 
Harvey, Hurricane Florence, or Hurricane Michael, in just the 
past 3 years, we have had $450 billion worth of damage. And you 
have all been asked to vote on supplementals for billions of 
dollars, which are dramatically more money than we spent on 
mitigation over the past 50 years.
    Our failure to act is only accelerating and exacerbating 
these problems, and it is a double whammy. So we are 
encouraging folks to move into harm's way, because we are 
subsidizing the true cost. And at the same time, we are 
destroying the natural resources, the wetlands, the dunes, and 
the forests, in some cases, that act as natural barriers to 
protect those communities.
    In my State of Delaware, for example, if you develop on a 
wetland, you are going to destroy between 300,000 and a million 
gallons of storage capacity for water that all of a sudden 
there is asphalt. That water is going to go somewhere else, 
into the neighbor's yard. And by not having that capacity, as 
you saw in Houston and other places, all of a sudden, these 
disasters become much worse.
    So given this new reality, this conversation that the 
chairwoman is leading is incredibly important. And this can't 
just be one of those kind of typical reauthorization 
conversations like we have, because a vote for short-term 
extension is really a vote to exacerbate the tragedies that we 
are facing.
    So we really want to make sure that we are not--we can't 
afford to perpetuate the status quo through just a short-term 
extension without meaningful reforms or only modest reforms. 
And we need to make sure we are protecting these vulnerable 
frontline communities that are facing unacceptable levels of 
risk.
    So to better protect people and natural systems, I want to 
highlight four priority reforms as part of reauthorization. 
First, we have to invest in more accurate maps, and this 
includes property level data. And we are supportive of a lot of 
the measures, and we think we can even go further within the 
draft bill. But the property level data is incredibly important 
because that is where we are seeing a lot of the debates take 
place for whether folks are in or out of requirements.
    Second, we must provide people in communities more choice 
in insurance options, and we have to make sure the risks are 
more transparent. People need to fully understand the risks 
they face so they can take steps to actually protect themselves 
against potential flooding or hurricane damage. Access to 
information and full transparency is absolutely essential. And, 
frankly, there is no State that is doing this better in the 
country right now than Mr. McHenry's State of North Carolina, 
where folks can go online and get a whole range of information 
and steps they can take to save actuarial costs and really have 
that information to make good decisions for themselves and 
their family.
    Third, for those who can afford it, we need to ensure that 
rates do reflect the full risk over time. And at the same time, 
we need to make sure that affordability concerns, particularly 
for vulnerable frontline communities, is an absolute priority 
and that we target incentives for those communities that 
absolutely need the assistance to make sure we are not creating 
additional victimization of communities that for too long have 
been forgotten.
    And then most importantly, we need to invest a much greater 
commitment in resilience, especially for disadvantaged 
communities. We need to invest in mitigation. As all of the 
panelists have said, every dollar we spend is going to save 
between $6 and $10 of avoided damage later. We are being 
incredibly pennywise and pound foolish in this debate, because 
we are seeing the damage that we are paying for with the 
supplements you are all asking to vote on.
    So let me just close with one quick story. I was the 
secretary of natural resources in Delaware during Hurricane 
Sandy. And it was absolutely heartbreaking to see communities 
that had done the right thing, in some cases. They had their 
insurance policy. In some places we were able to invest in 
wetlands; in some places, we had been able to build dune 
systems. Those places that had those investments fared 
incredibly well. Those places that didn't were devastated.
    And although much of the talk today is about the economic 
consequences of different rate structures, we need to figure 
out how to protect these communities. Because at the end of the 
day, the work that we do now is going to be the difference 
between whether these communities thrive in the future or they 
are absolutely wiped out as you have seen in recent storms.
    So thank you for having this conversation. Thank you for 
focusing on vulnerable communities. Thank you for trying to 
have a more responsible program. And we believe we can work 
together with all of you to make sure we have reforms that 
really modernize this program for the 21st Century.
    [The prepared statement of Mr. O'Mara can be found on page 
105 of the appendix.]
    Chairwoman Waters. Thank you, Mr. O'Mara.
    Mr. Lehmann, you are now recognized for 5 minutes to 
present your oral testimony.

STATEMENT OF RAYMOND J. LEHMANN, DIRECTOR OF FINANCE, INSURANCE 
              AND TRADE POLICY, R STREET INSTITUTE

    Mr. Lehmann. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, my name is R.J. Lehmann. I am 
director of finance, insurance and trade policy at the R Street 
Institute. R Street is a think tank whose mission is to 
identify pragmatic, market-oriented solutions to public policy 
challenges. I appreciate the opportunity to testify and share 
our views on reforms of the National Flood Insurance Program.
    Like the National Wildlife Federation, R Street is a member 
of the SmarterSafer Coalition. This broad and ideologically 
diverse group has forged consensus on NFIP reforms that would 
make the program more fiscally sustainable, remove incentives 
for development in environmentally sensitive regions, to invest 
in mitigation and more accurate mapping, and to ensure the 
public has clear information about flood risks. The draft bill 
the committee will consider makes significant progress to 
address several of these priorities. I also hope to highlight a 
few areas where further reform would be appropriate.
    The most significant new element introduced in the 
discussion draft is a proposed demonstration project for means-
tested discounted rates. We have long advocated for 
affordability provisions to help low-income policyholders. For 
too long, the NFIP subsidies have been regressive. We are 
flowing disproportionally to wealthier counties.
    Ensuring that lower-income policyholders are not burdened 
with unreasonably high rates is crucial to the goal of phasing 
out subsidizing grandfather policies. With the addition of an 
effective means-tested affordability program, this committee 
should move forward with a plan to place the pre-2014 
grandfathered policies on a glide path toward actuarial rates, 
because these are the only policies currently currently 
scheduled to remain at below full risk rates.
    The draft would also forgive the entirety of the NFIP's 
$20.5 billion debt, coming in addition to the $16 billion of 
debt that Congress voted to forgive in 2017. It is not feasible 
that the NFIP will ever be able to repay its debt in full. But 
if Congress is going to once again forgive the program's debt, 
it must retain the borrowing authority cap which forces 
Congress to revisit the NFIP's structure should it once again 
prove unsustainable. The current cap of more than $30 billion 
is so large as to provide no meaningful restriction on 
spending. The cap should be lowered, I would suggest to about 1 
percent of total insurance in force, which right now would be a 
cap of about $13.1 billion.
    The discussion draft also raises NFIP coverage limits. The 
current limit is more than adequate for most homeowners. And I 
am not aware of any availability problems for policyholders in 
the excess flood coverage market, which is typically purchased 
by businesses and high net worth homeowners to the extent that 
there is a concern with residential multifamily policies. That 
could be something that could be addressed more targeted.
    The NFIP is and will likely remain the primary source of 
flood insurance coverage. The recent growth of the private 
market should be seen as a complement to the program, one that 
could help close the protection gap that currently leaves more 
than 85 percent of Americans without any coverage for floods.
    One step Congress could take to protect consumers as the 
private market continues to grow is to stipulate that those who 
move to private flood coverage can return to the NFIP at the 
previous rates. This protects consumers if, for example, a 
private insurer raises rates, changes its underwriting 
approach, or leaves the market.
    Finally, I wanted to offer for the committee's 
consideration a proposed reform intended to ease the process of 
adaptation to increased coastal flooding and tropical storms 
that we face as a result of sea level rise and climate change. 
In short, the NFIP should cease writing coverage for any new 
construction in 100-year flood plains. This approach would be 
modeled on the success of the Coastal Barrier Resources System 
(CBRS), a 37-year-old program that protects 3.5 million acres 
of sensitive coastal ecosystems. The model of promoting 
conservation by removing Federal subsidy has been adopted 
elsewhere successfully, including by public insurance programs 
run by the USDA and the State of Florida.
    As with the CBRS, barring new construction in 100-year 
flood plains from NFIP eligibility would not foreclose the 
possibility that developers could find private coverage. It 
also would not relieve the challenges we will likely face in 
the years ahead with the stock of existing structures already 
in those flood plains. It would, however, apply the ancient 
wisdom of the Hippocratic oath: First, do no harm. Where we can 
cease encouraging development of flood-prone land without 
laying any new burden on any current resident, it is an 
opportunity we simply must take.
    And with that, I would be happy to answer any questions.
    [The prepared statement of Mr. Lehmann can be found on page 
98 of the appendix.]
    Chairwoman Waters. Thank you very much, Mr. Lehmann.
    I now recognize myself for 5 minutes for questions.
    Ms. Guzman, I have long advocated for long-term 
reauthorization of the National Flood Insurance Program well in 
advance of expiration in order to ensure stability in the 
housing market. Unfortunately, we have now passed 10 short-term 
reauthorizations of the National Flood Insurance Program since 
Fiscal Year 2017 and have even seen lapses of the program in 
between these extensions.
    Can you talk about the impact that short-term 
reauthorizations and temporary lapses in the NFIP program have 
on the housing market?
    Ms. Guzman. Thank you for the question, Chairwoman Waters. 
Yes, the impact is--40,000 transactions were impacted in the 
last lapse. And it could be as many as 1,300 a day, but we know 
that 40,000 were impacted in the last lapse. What happens is 
people are not able to close on their transactions. And in many 
cases, when they are told to purchase insurance, they are 
purchasing it maybe 5 days prior to closing, maybe 3 days prior 
to closing, because it is not a very complicated process.
    With that, they find out, sorry, there is no flood 
insurance, and there is a requirement for you to have flood 
insurance to close. That upends the transaction. Now they have 
to scurry with their attorneys, and also with the seller, and 
explain to them that they cannot close. And luckily, they were 
able to get a week extension, some of them. Some of them were 
forced to close, and had to borrow money and make that 
transaction happen at that time.
    Lenders can do it and say, we will continue, because we 
know this will be reauthorized. But they are risk-adverse, and 
they are not willing to take that risk and let the people close 
and continue with the transaction and move into their new home.
    Chairwoman Waters. Thank you very much.
    Ms. Lamm, many people know that the National Flood 
Insurance Program provides flood insurance coverage, but not as 
many people understand the role that the program plays in flood 
plain management, mapping, and mitigation. I have long 
advocated for robust funding for these activities because I 
know how important they are in strengthening our resiliency in 
the face of future storms.
    Can you talk about this important part of the National 
Flood Insurance Program and why it is so critical that these 
activities are adequately funded?
    Ms. Lamm. Yes, ma'am. Great question, and thank you. When 
it comes to flood plain management, flood plain mapping, and 
mitigation, all three of those tie in together quite nicely. 
You can't really run one without the other. So, especially at 
the State and local level, these are very important.
    I happen to run the Cooperating Technical Partners Program 
for South Carolina, so the mapping programs run through the 
State. You have to identify mapping, flood areas. Flood plains 
change over time. The maps have to be updated. In order to do 
sound flood plain management, you have to have great mapping. 
In order to know the best places to mitigate, you have to know 
where the floods are going to occur.
    We do have an issue where a lot of people do not realize 
that what we map is a regulated flood plain, but that it is not 
everywhere that can possibly flood, so it is really important 
that we have sound flood plain management, and that individuals 
understand the mapping and what it actually entails. And also, 
when it comes to mitigation, making sure we can properly 
identify who needs to be mitigated.
    Thank you.
    Chairwoman Waters. Thank you very much.
    And I am going to now call on the ranking member, Mr. 
McHenry, for 5 minutes for questions.
    Mr. McHenry. I thank the Chair.
    So I want to talk about data. Because we have within 
counties, we have within parts of our government precise data. 
We have climate data that is collected.
    Mr. O'Mara, we already have this massive amount of data 
used by--with taxpayer dollars collected, right? So what kind 
of data would be helpful to make public for us to have really 
good governance, but also have a better understanding of the 
risks that we are facing? And from your footprint as a former 
regulator, if you could speak to that?
    Mr. O'Mara. Look, this is one of those areas where I think 
just full transparency is important. And I think having as much 
property level data as possible, not just the generalizations 
across the watershed or subwatershed or, you know, at a higher 
topographic level, you want data a couple meters. You want data 
really down, and you want equal amounts of financial 
information.
    And, frankly, your State of North Carolina does this better 
than anybody. You go on the website, you look up your parcel, 
you see where you are in the flood plain, and you see what the 
risks are. You see what the options are for financial coverage. 
You see what the options are for--
    Mr. McHenry. Sir, our county GIS systems actually 
incorporate the flood plain into that county level, property 
level data. So, the county level, we actually have where that 
physical premise is that will be the cost driver of a flood. Is 
that not readily available in other jurisdictions?
    Mr. O'Mara. It is completely uneven across the country. And 
most of it is coming from local jurisdictions more than from 
the Federal level.
    Mr. McHenry. So tell me what that should be, then? As a 
policymaker, what should I be driving for?
    Mr. O'Mara. You should be driving for property level data 
that is publicly accessible that lays out a combination of the 
geotechnical information about elevation and kind of risk for 
the flood plain, but then also financial information, and link 
it all together so there is a one-stop shop. You can go to one 
location and get all the information you need to make a wise 
decision for your family.
    Mr. McHenry. Ms. Guzman, as a practicing REALTOR, is that 
data helpful to you and your customers?
    Ms. Guzman. Absolutely. I would have to say that right now, 
there is a lack of due diligence for the buyer. When they want 
to make a purchase, they really don't have complete 
information. Even though there are State disclosures, those 
disclosures are just basically check the box. Is it in a flood 
plain? Yes. Has it flooded? Yes or no? But it doesn't say how 
many times it has flooded. If they mitigated, what was the cost 
of the flood, which based on your graph, it says 1 inch of 
water would cost $25,000 in a 25,000 square foot home.
    Mr. McHenry. But you are held accountable for these 
disclosures as well?
    Ms. Guzman. Absolutely. And we make them. The thing is you 
check the box, yes, it is in a flood plain. Yes, the home 
flooded. It doesn't account for how many times. They don't have 
to disclose that. They don't have to disclose the cost if they 
mitigated or not.
    The thing is that the buyer--
    Mr. McHenry. Actually, I just--
    Ms. Guzman. And the buyer lacks due diligence because if 
the math--
    Mr. McHenry. This is helpful.
    Ms. Smith, do you want to comment on this on behalf of Pew?
    Ms. Smith. Sure. And we were happy to reach accommodation 
with the National Association of REALTORS, because we also 
believe there has to be transparency, and people have to have 
the information they need to make good financial decisions to 
know whether a property has flooded, whether it is a repeat 
loss property, how often it has flooded, to know that 
information before. And not just for home buyers but for 
renters also.
    Mr. McHenry. So what you are saying is that is currently 
not available in one place?
    Ms. Guzman. Can I follow up? The information should be 
available--
    Mr. McHenry. If you would vocalize that for the record, Ms. 
Smith.
    Ms. Smith. I would say the answer is no. And in many cases, 
it is not available in any place.
    Mr. McHenry. Okay. But this is data that should be 
available. And our technological capacity is far greater than 
it was 50 years ago or even 10 years ago, for that matter, 
because of where we are with GIS systems.
    I want to talk about risk transfer just for a moment.
    Mr. Lehmann, we have seen reinsurance having a positive 
effect on the National Flood Insurance Program over the last 
handful of years. How effective has that been, and how can we 
make it more effective?
    Mr. Lehmann. Certainly, for the first year, the return was 
immediate, because in 2017, we had such significant floods from 
Hurricane Harvey, primarily, that you maxed out the coverage. 
So that was a major return to taxpayers on what they spent on 
premiums.
    Mr. McHenry. So reinsurance has actually been beneficial to 
the taxpayer since we have done that? Is that correct?
    Mr. Lehmann. Yes, that is correct.
    Mr. McHenry. Same way, Mr. O'Mara?
    Mr. O'Mara. Correct.
    Mr. McHenry. Okay. Likewise, given the severity of storms, 
given the nature of our climate right now, Mr. O'Mara, this 
type of climate data should also be a part of this 
conversation, should it not?
    Mr. O'Mara. Absolutely. We want to show the true risk rate, 
right? So we want to show every potential risk. And we should 
be including in the modeling things like sea level rise and 
subsidence and other things so people can make informed 
decisions about the risk they are facing.
    Mr. McHenry. Thank you.
    And thank you, Chairwoman Waters.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from New York, Mrs. Maloney, Chair of our 
Subcommittee on Investor Protection, Entrepreneurship, and 
Capital Markets, is recognized for 5 minutes.
    Mrs. Maloney. Thank you, Madam Chairwoman. And thank you 
for your discussion draft. I would like to publicly thank you 
for including language that I presented in the last Congress to 
take into concern the special mitigation credit needs of New 
York City from lessons that we learned in Hurricane Sandy.
    I would like to ask Ms. Guzman, as you are well aware, New 
York faces very unique issues when it comes to flood insurance. 
In particular, the mitigation techniques that the rest of the 
country uses such as elevating properties on stilts or 
elevating them in some way doesn't work in New York. Most of 
our people live vertically, not horizontally, and it is hard to 
put on stilts a 50-story building. So this makes it very hard 
for families in New York to get their flood insurance premiums 
lowered, because they currently don't get mitigation credit for 
the types of mitigation that we use in New York, such as moving 
a boiler from the basement to the top floor or moving 
electrical equipment.
    So my question to you is, do you think it is a good idea to 
allow mitigation credit for different kinds of mitigation that 
are used, for example, in cities like New York, which the 
chairwoman's discussion draft includes, and can you expand on 
this?
    Ms. Guzman. Yes, absolutely. We believe in a mitigation-
centered approach. And that would include flood vents also in 
basements as well as moving the utilities. Currently, right 
now, that is not included in the current NFIP rates as it 
exists. Giving people more options and other ways of mitigating 
could reduce costs and risk. Again, every dollar spent saves 
$6. That is from the National Institute of Building Science. 
Modernization is key here.
    I do want to go back to the previous question with regards 
to disclosure, which is check the box. The thing is that we 
need ``Flood Facts.'' I was talking to a friend of mine, Rita, 
over lunch and telling her that I would be here testifying with 
regards to flood insurance. I told her that in many cases, 
people don't know whether their home flooded because there is 
no information. And she said, ``That is so weird. I just bought 
a car, spent $30,000, and I found out whether that car flooded 
or not, but if I am going to make a purchase of $200,000 or 
half a million dollars, there is no way for me to find out if 
that property flooded or not?''
    So just like a CARFAX, we really need a ``FLOODFAX'' where 
the buyer can do all the due diligence necessary to make a 
sound decision, because this is going to be the largest 
investment most are going to make.
    Thank you.
    Mrs. Maloney. Thank you, Ms. Guzman.
    And can you talk a little bit about the State revolving 
loan funds that are included in the chairlady's discussion 
draft? How do you think these loans will affect low-income 
households? And is the possibility of forgiveness of the 
principal on the loan enough relief to make sure that these 
loans don't unnecessarily burden low-income families?
    Ms. Guzman. I believe that low-interest mitigation loans 
are a good idea. Right now, people are coming out of pocket to 
make repairs and adjustments to their property. And in many 
cases, because the maps--which I will probably say a thousand 
times today--do not reflect accurately the risk to these 
properties. Additionally, they don't account for heavy 
rainfall. I live in a metro market, and that is exactly what 
happened.
    So the draft bill would give people low-interest loans that 
give them an opportunity to do mitigation projects that reduce 
the cost to the taxpayer as well as reduces the risk to the 
homeowner as well.
    Mrs. Maloney. Thank you.
    And, Ms. Lamm, as you know, over 20,000 communities across 
the country participate in the NFIP, and over 5 million 
policyholders rely on it for flood insurance coverage. Can you 
explain what would happen when those communities and families 
no longer have access to Federal flood insurance during a 
lapse? How would it affect them if there was such a lapse?
    Ms. Lamm. Thank you. The citizens and families--when there 
is a lapse in the ability to have Federal flood insurance, 
there are a couple of things that actually happen. One very 
specific thing is if it is tied to their mortgage and there is 
a lapse, and they are unable to renew or purchase flood 
insurance, their note is called in. Most people cannot afford 
to pay off their mortgage in 30 days. And that is currently the 
way it is done.
    The other thing is, they can't protect themselves. And that 
is the one thing that is most important is that when someone 
does understand their true level of flood risk, that they are 
able to protect themselves, and flood insurance is the one way, 
as we have all spoken about, that someone can actually be able 
to make themselves whole much faster than any disaster 
assistance we could ever provide.
    Mrs. Maloney. Thank you.
    Chairwoman Waters. Mrs. Wagner, the vice ranking member, 
the gentlewoman from Missouri, is recognized for 5 minutes.
    Mrs. Wagner. I thank the chairwoman for yielding. And I 
thank all of our witnesses for appearing today to discuss the 
reauthorization of the National Flood Insurance Program, which, 
as we all know and has been said multiple times, is set to 
expire yet again in May.
    I spoke on the House Floor in November expressing my 
profound dismay with the eighth--eighth--short-term extension 
vote since Fiscal Year 2017. With the NFIP being $20.5 billion 
in debt, we must reform the program to keep it solvent to 
provide coverage for those who truly need it and to protect the 
taxpayers from additional and future bailouts. It is estimated 
that only 3.5 to 4.5 percent of current flood insurance 
policies are covered by the private sector.
    Mr. O'Mara, do you believe that there should be greater 
private market participation in those policies that cover 
threats from floods?
    Mr. O'Mara. Absolutely. And we see the opportunity of the 
Federal program focused more on vulnerable communities and the 
private market take care of more folks who can afford it.
    Mrs. Wagner. The flood insurance market is dominated by 
NFIP, Mr. O'Mara. Do consumers benefit from this near monopoly?
    Mr. O'Mara. I think more data and more competition is good. 
And I think the concerns that have been raised in the past have 
been discounted by the real-life experiences of States like 
Florida, that have shown that you can actually have competitive 
marketplaces--
    Mrs. Wagner. And how does it work in Florida? How does it 
work in Arkansas and places like that in a private market?
    Mr. O'Mara. The places that it is working best are places 
where the policies are at a good level. There are good 
standards around them. And they are making sure that banks and 
others are kind of accepting those as fully viable alternatives 
to the Federal program.
    Mrs. Wagner. Mr. Lehmann, when the NFIP was created in 
1968, the belief was that the private insurance market lacked 
the data and ability to assess flood losses.
    With our little conversation about data here, which has 
been very important, especially relating to mapping, tell me 
what has changed in terms of data technology and the market's 
ability to assess risk since 1968?
    Mr. Lehmann. There are a few things that have changed. 
Among other things, the insurance industry used to be much more 
local. It is a global industry now. Reinsurers, in particular, 
operate internationally, take large risks from different parts 
of the world, balance them against each other, and that is how 
they are able to cover very large events.
    The depth of the global reinsurance markets, the ability of 
catastrophe modeling, the emergence of the catastrophe modeling 
industry, and just general changes in how insurance is 
underwritten has made it possible for a private market to 
emerge. It is not prepared to take over for the NFIP. The NFIP 
remains the primary source. But it is emerging, and it will 
continue to grow.
    What we need is both. We have 85 percent of the country 
without any flood insurance. And there is a significant need 
for the marketing juggernaut of the insurance industry to start 
having an incentive to sell this coverage to people who don't 
currently have it.
    Mrs. Wagner. And in that same vein, which barriers within 
NFIP prevent private insurers from entering the market? And how 
do some of these legislative drafts today help solve some of 
those problems?
    Mr. Lehmann. It seems like a good number of the issues with 
the banking requirements may be resolved by the rule that is 
currently open from the FDIC and the other banking regulators. 
I understand that the FHA remains an open question, and I know 
some of the other panelists have discussed that.
    The biggest disincentive right now to the program is if you 
are going to move from the Flood Insurance Program to a private 
policy and then want to move back into the Flood Insurance 
Program later, you are not currently considered to have 
continuous coverage. And so if you had a subsidized or 
grandfathered policy, you would be stuck with the full risk 
rate. I want policies to generally move towards full risk rate, 
but that could be punitive in the short term.
    Mrs. Wagner. In the short term. In the long term, though, 
we could see real movement, I think, into the private sector. 
And some of the tools that we talked about, like reinsurance 
and additional data dealing with mapping and other things, 
these fact checkers ought to be able to allow underwriters to 
move this into the private sector more. Would you agree?
    Mr. Lehmann. I agree.
    Mrs. Wagner. Mr. O'Mara?
    Mr. O'Mara. Yes.
    Mrs. Wagner. Ms. Guzman?
    Ms. Guzman. Absolutely. And may I add that on that lapse of 
40,000 people who were purchasing, a lot of those were FHA 
loans. And they were not given an option to go and seek private 
flood insurance so that they could close that transaction.
    Mrs. Wagner. I appreciate that.
    I thank the Chair.
    Chairwoman Waters. Thank you.
    The gentleman from Georgia, Mr. Scott, is recognized for 5 
minutes.
    Mr. Scott. Thank you very much, Chairwoman Waters.
    Ms. Waters' bill here is so timely, and so necessary. And I 
certainly want to commend her for providing leadership and 
making sure we get a 5-year plan, because we need to bring some 
stability and responsibility to this for our people. Because, 
ladies and gentlemen, all of the scientists, all of the 
scientific evidence that we can get from the experts, says that 
we are moving into a climate pattern now that is going to be 
more flooding, more rain. Whatever is causing this, the 
scientists are there.
    We have had back-to-back hurricanes. Now, this is important 
for me, because Georgia and the area I represent is right in 
the valley of this. Many of you may remember we had a big flood 
down there, and we were able to get the Vice President to get a 
plane, Joe Biden, and we flew down. And the press took these 
great pictures that showed Six Flags Over Georgia down, 
flooded, to the point that we had to refer to it as Six Flags 
Underwater in Georgia.
    And in that area, we had to bring over $35 million for 
hazard flood mitigation to Cobb County, Douglas County, and 
Fulton County in Georgia where all of that happened. I bring 
that up because it may be possible that we need to do some bold 
things here.
    And first I want to follow up on the line of discussion on 
the private flood insurance industry expansion, Mr. Heidrick--
is that ``Heidrick'' or ``Heidrick?''
    Mr. Heidrick. ``Heidrick.''
    Mr. Scott. ``Heidrick.''
    Mr. Heidrick. Thank you.
    Mr. Scott. Wonderful.
    As you know, there has been testimony and discussion today 
on how the NFIP is not just an insurance program, but also has 
other important functions related to flood plain management. Do 
you think that if the private flood insurance industry expands, 
that it will increase risk because the NFIP will not be able to 
support those other functions? Would you expound on that for 
us, please?
    Mr. Heidrick. Sure. I thank you for the question. No, I 
don't believe that that would be a long-term problem. Private 
insurance companies need data in order to select and underwrite 
and properly price risks, just like the NFIP. And to some 
extent, those private companies use the government-created 
data. But to a large extent, they don't. They rely on private 
vendors. The NFIP is also in the process of going through its 
risk rating 2.0 revision, which is going to change the way that 
they establish rates and the data that they use.
    So if the question is, would a private company pay to 
access the data that the government provides, I would say--I 
don't know this firsthand, because I am not an insurance 
company, but intuitively, I would say if it adds value and it 
is effective and provided efficiently, then intuitively, I 
would say yes.
    Mr. Scott. So how would you describe the current 
relationship between your private insurance and the Flood 
Insurance Program, which is Federal?
    Mr. Heidrick. There are multiple choices, and that is what 
customers really appreciate. In my own agency, there have been 
hundreds of customers that I have rewritten from the NFIP to 
private insurance companies at lower premiums and better 
coverage.
    Mr. Scott. Now, let me ask you this, because we worked 
hard, Ms. Waters, myself, and I must say Mr. Duffy, were able 
to work and get an amendment passed for monthly installments, 
that people could pay their flood insurance in monthly 
installments. And that was a big contribution that we made, 
because before that, they had to pay one lump sum, and so 
people went without it.
    How would that relate with private insurers?
    Mr. Heidrick. May I answer, Madam Chairwoman?
    Chairwoman Waters. Please go ahead.
    Mr. Scott. Thank you.
    Mr. Heidrick. The challenge that we have with monthly 
installments is, to a large extent, solved by escrowing within 
your mortgage payments. If you don't have a mortgage, that is 
where the installments come into play. And it is valuable 
because it helps take up rate, which is something that we are 
all trying to accomplish. But the challenge that we face is 
that flood risk is often seasonal. Snow melt happens at a 
certain time of year. Hurricanes happen at a certain time of 
year. We need to make sure that people can't buy a policy, pay 
a couple of installments for the dangerous part of the year, 
and then drop it.
    Mr. Scott. Thank you. Thank you, Madam Chairwoman.
    Chairwoman Waters. Thank you.
    The gentleman from Florida, Mr. Posey, is recognized for 5 
minutes.
    Mr. Posey. Thank you, Madam Chairwoman.
    I have hesitated to weigh in on this issue too deeply over 
the years for a number of reasons. It is one of those cases 
where it seems like everybody in the room knows how to make a 
baby stop crying except the person holding it. You know, this 
flood insurance issue is not rocket science. It is not a really 
difficult proposition to understand.
    The national participation rate, as we heard earlier, is 31 
percent. You have 31 percent of the people paying for 100 
percent of the losses, so do the math. If it is a good 
actuarial, you are going to do--be taking to shorts every 
single year. And that is what we have been doing with NFIP.
    In Florida, the participation rate is 46.2 percent. And 
just compare--for example, in my county where I live, the 
average premium for private flood insurance is $209. NFIP is 
$501. The median is $100 a year. The poorest of the poor who 
own a home can afford that. For flood insurance, it is $388.
    And there are a number of ways they make that affordable. 
And Madam Chairwoman, if we could have a hearing on that 
sometime or a discussion, I would like to bring some experts up 
here to explain how they do it in Florida, not that you should 
do everything like Florida does.
    But there are a number of reasons that people don't 
participate in the system: they don't know they are not covered 
by their homeowners' insurance policy; they don't think that 
they have a risk; they don't understand the necessity of it. 
There are a lot of good reasons for that.
    Mr. Heidrick, your agency is located on a barrier island, 
and so you know the importance of your customers understanding 
what the risk is. In your experience, how has increasing the 
availability of private flood options affected things?
    Mr. Heidrick. I would say most significantly and what 
stands out in my mind is, immediately after Hurricane Irma, if 
you recall, the weather predictions or the storm surge 
predictions for southwest Florida were dire: a 15-foot storm 
surge as far as 10 miles inland. I had a number of calls, many, 
many, calls in the 2 months following Hurricane Irma from 
clients who told me that they remember the conversation that we 
had about flood insurance, primarily excess flood insurance. 
Most of these customers did have a primary flood insurance 
policy, and many of them through the NFIP.
    But they realized how much exposure they had and how real 
that felt, and came to the conclusion that they may have 
overestimated their tolerance for risk at the time that we were 
initially discussing the coverage and then went on to buy 
either an excess policy or a private policy that would offer 
them the ability to fully insure the value of their home in a 
single coverage.
    Mr. Posey. The standard joke around here is that NFIP 
reform every time means we cut the sales commission for the 
people who brokered the stuff, who have to service it when 
times get bad.
    How do you think that affects the market?
    Mr. Heidrick. A reduction to compensation in any 
application is going to reduce availability. And so a reduction 
in agent commissions is probably going to drive a number of 
agents out of the program.
    The NFIP is incredibly complex. It is way more complex.
    Mr. Posey. That is good.
    Ms. Lamm, you talked about the problem of getting good 
maps. Have you ever asked to use the Department of Defense 
maps? They have every inch of this country mapped. They know 
every nook and cranny, every swale, every everything, the 
National Geodetic Survey probably the same, Homeland Security 
probably the same.
    Ms. Lamm. We have pulled some information from multiple 
resources. Those maps have been made available to us. We have 
made some requests. But the complexity of a flood insurance 
rate map and the modeling is a little different than what some 
of the others do.
    Mr. Posey. Yes. Most of the people selling private flood 
insurance or brokering private flood insurance or insuring 
private flood insurance in Florida don't use those bogus maps 
anyway. The NFIP arbitrarily puts people in, and puts them out. 
They all have the same rate. There is no weighted for risk. I 
mean, it is ridiculous. It is not how we are going to solve the 
problem.
    You know, about the only risk to NFIP that going more to 
the private market would give is it would stop NFIP from going 
further in the hole and being a burden on the taxpayers. The 
coverage would really be more affordable for more people if we 
would do that.
    And I want to share with you, while the insurance companies 
are used for standard homeowners' insurance policies in storms 
to use a 100- or 150-year term in their forecast, they have to 
use a 400-year catastrophe for flood insurance when they go to 
their reserves. So it is not a bait-and-switch.
    And, Mr. O'Mara, you indicate we should have all our rates 
based on the future effects of climate change and ocean rise. 
That is kind of like making me be rated as a driver 20 years 
ago from now when I am 90. I mean, that is ridiculous.
    Thank you, Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from California, Mr. Sherman, is recognized 
for 5 minutes.
    Mr. Sherman. The Chair and I both represent a city which is 
the greatest city in the world built in a desert experiencing a 
drought. But even we realize the importance of flood insurance 
to this country. I see when it rains, it pours. And my region 
of the country has gotten 5 percent more rain. Unfortunately, 
Los Angeles, to my knowledge, has not gotten any, so if we can 
bring some of that rain from the Northeast, that would be 
helpful.
    There is, in automobile manufacturing, a concept known as 
just-in-time parts delivery, or inventory delivery, where they 
bring the parts to the factory just hours before they will be 
put on a car. Unfortunately, Congress is copying that with 
just-in-time legislating, that if we can extend the Flood 
Insurance Program just minutes before it is going to expire, 
that somehow we have reduced inventory.
    Ms. Guzman, are there examples where people can't sell 
their homes, worry about whether their escrow is going to close 
because Congress has waited till the last minute or a minute 
before the last minute or a minute after the last minute to 
reauthorize this program?
    Ms. Guzman. Yes, sir. There are 40,000 examples of that 
happening each month of an NFIP lapse. And without many of 
those folks having the option of seeking private flood 
insurance, they end up not closing.
    That is the impact of each lapse. So it is irresponsible, 
because consumers, our citizens are counting on you to actually 
reauthorize. And they are also actually asking for you to 
reform it.
    Mr. Sherman. So we could be helping home buyers, 
homeowners, people who want peace of mind, people who would 
like to think that, gee whiz, if our kid doesn't get into that 
magnet school, we might want to move. Will we be able to sell? 
We can make all those people better off without spending an 
additional nickel if we just do our job sooner and not wait to 
the last minute.
    Mr. Heidrick, do you support a 10-year authorization of the 
NFIP?
    Mr. Heidrick. Absolutely.
    Mr. Sherman. Back to Ms. Guzman, your testimony suggests 
that providing more resources for property owners to mitigate 
flood risk makes sense. What aspects of the discussion draft do 
you think efficiently do that?
    Ms. Guzman. Well, it is the low-interest loans for 
mitigation. Currently, if someone has to do--I had a client who 
actually had to mitigate their property, and they spent close 
to $12,000 to retrofit to make it happen. That was out-of-
pocket. By the way, they were selling their home in 3 months. 
So it wasn't like we are going to live with this pain, we are 
going to take care of it, and we want to give confidence to 
that next purchaser who buys our home that they did everything 
possible. The sellers not only disclosed the risk, but also 
mitigated so that they are not buying a problem.
    Low-interest loans give them the opportunity to not go 
$12,000 out-of-pocket, and at least finance part of it and then 
be able to payment-over-time resolve this issue. But $12,000, I 
think for any family upfront, is a lot of money.
    Mr. Sherman. Mr. Heidrick, what is the number one complaint 
or concern you hear from flood insurance consumers?
    Mr. Heidrick. Most of the complaints come from uncertainty 
and complexity. The uncertainty with the very short-term 
reauthorizations, as you have described, can keep a customer 
from knowing whether or not they are going to be able to renew 
their policy on time, or if they are going to be able to 
purchase a policy. They are about to purchase a home, and will 
the NFIP be reauthorized or not by the magic hour that you 
discussed? And then the complexity of the program creates an 
awful lot of confusion. And both of those things damage 
consumer confidence in the program.
    So overall, I just hear general dissatisfaction for those 
reasons.
    Mr. Sherman. I don't want to hit too partisan an issue, but 
climate change is real. We are going to have it rain in 
different places. We are going to have rivers overflow their 
banks. We are going to have to have a system to mitigate loss 
before it occurs. We are going to have to have a system to 
ensure against loss that does occur. And I commend the Chair 
for the discussion draft.
    I yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Missouri, Mr. Luetkemeyer, is recognized 
for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    I want to talk about two things here today. One is 
reinsurance and one is private insurance policies, because, to 
me, these are the two things that, if we do nothing else, we 
are changing the Flood Insurance Program. This will protect my 
constituents and the taxpayers. And number two, you shift the 
risk also to the private sector with new policies. And I think 
when we hold this hearing 5 years from now, we will have a 
completely different set of issues we will be talking about, 
and we will be tickled pink about how this has all turned out, 
if we just do those two things.
    So my first question is to Mr. Lehmann. In your testimony, 
you mentioned that reinsurance is a fiscally responsible 
alternative to taxpayer borrowing. In recent years, FEMA has 
purchased over $1 billion a year in reinsurance. Do you think 
the FEMA portfolio should look to expand the reinsurance 
portfolio?
    Mr. Lehmann. Right now, yes. The reinsurance market has 
been in what is called a soft market for quite a while, which 
means reinsurance is pretty cheap. So you can do pretty well in 
leveraging reinsurance.
    At any given point in time, that can change. Reinsurance 
rates can go up, and it might not be as cost-advantageous. But 
right now, it is a great opportunity.
    Mr. Luetkemeyer. It is interesting, because I chaired the 
Housing and Insurance Subcommittee two sessions ago and spent a 
lot of time on this issue. And I did a lot of--I took 20 years' 
worth of income expenses from NFIP, and I could prove--and I am 
a banker so I can actually can add and subtract, use an adding 
machine, a calculator. And so I quickly found out that if NFIP 
had been using reinsurance and purchasing over the last 20 
years, that, number one, they could afford it, and, number two, 
we wouldn't have had to borrow a penny until these last two 
hurricanes last year.
    It is very frustrating to me to see the incompetence that 
has been there with regards to NFIP Directors in the past not 
utilizing a tool that every other insurance company in this 
country uses.
    Can anybody name an insurance company that does not use 
reinsurance? I don't think there are any other than, guess 
what, NFIP. So why is this not done? I have no idea other than 
total incompetence because, number one, they can afford it, and 
number two, my constituents, my citizens would no longer have 
to be on the hook for these borrowings that continue year after 
year when you have a disaster. So thank you for that, Mr. 
Lehmann.
    Mr. Heidrick, you were talking today with regards to the 
insurance agent's perspective. One of the things that we talked 
a little bit about today is the ability for an insured to be 
able to go back to their NFIP policy. Can you tell me how 
important that is?
    Mr. Heidrick. It is critical because currently, there are 
consumers who are trapped in the NFIP. I can give you an 
example. A customer who has had mandatory 25-percent rate 
increases over the last 5 years compounded, their policy 
premium is now triple what it was in 2014. There are private 
market solutions for these people that would offer them an 
option at lower premiums and better coverage. But it is 
irresponsible for me, in my opinion, to offer that alternative 
because I can't quantify the risk that they are taking by 
leaving the NFIP and not being able to return under the same 
terms that they are leaving.
    Mr. Luetkemeyer. Ms. Castor, who is a Democrat, and I, as a 
Republican, have offered a bill to do that very thing: allow an 
individual who goes to a private sector insurance company to be 
able to come back to the NFIP. I believe it is vitally 
important to be able to do that.
    Mr. Hill, from Arkansas, sits directly in front of me here. 
He has two companies in his State that write private flood 
insurance. Both of them will take every single risk. You know, 
a problem a lot of folks see is cherry picking. They don't 
cherry pick because they are smart enough to understand how to 
underwrite every single risk, and every single risk is insured, 
and they went from 20 to 80 percent, I said 20 to 80 percent, 
of what NFIP charges. So why would we not allow our citizens, 
my constituents, your insureds to be able to go to the private 
sector and find better coverage at a cheaper rate? To me, this 
is vitally important. And a key part of this, as you just said, 
apparently, is allowing them then to be able to go back in case 
these companies raise rates beyond what NFIP is if for some 
reason they get canceled or they pull out completely. So I 
appreciate your perspectives.
    Thank you.
    Mr. Heidrick. Thank you.
    Mr. Luetkemeyer. Ms. Guzman, in your testimony, you were 
talking about private insurance as well. Would you like to give 
us an example, perhaps, of somebody that you have talked to or 
of somebody who bought a home who was able to get a private 
policy and was able to save some money and protect themselves?
    Ms. Guzman. Well, the client who did the mitigation for 
$12,000 didn't have flood insurance because they were not 
considered to be in a flood plain area. Again, inaccurate 
mapping. Also, they were out of pocket $12,000. Now, the buyer 
who bought it was very happy that they did the mitigation, but 
still, when they signed the disclosure, did your home flood, 
they checked yes. Is your home in a flood plain, they checked 
no.
    Mr. Luetkemeyer. Thank you very much. I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from New York, Mr. Meeks, the Chair of our 
Subcommittee on Consumer Protection and Financial Institutions, 
is recognized for 5 minutes.
    Mr. Meeks. Thank you. Thank you very much, Chairwoman 
Waters, for hosting this hearing and for your leadership on 
this issue. As most people know, certainty in the flood 
insurance market is critical, especially for a district like 
mine, which is a coastal district including the entire Rockaway 
Peninsula, Broad Channel, and Inwood. For far too long, 
Congress has kicked the can down the road, paying down on 
NFIP's debt, providing long-term reauthorization, and ensuring 
the program's sustainability. We can't continue to kick it down 
the road, but I think that we should be able to get something 
done in this Congress. Considering the leadership of Chairwoman 
Waters and the working relationship with Ranking Member 
McHenry, we should be able to do something in a bipartisan way, 
and I think that their working together helps us get down the 
road.
    For me, central to any reform effort is investments in 
mitigation. We saw firsthand how mitigation investments can 
produce resilient communities that can withstand what are 
increasingly severe storms. Take the community of Arverne By 
the Sea on the Rockaway Peninsula in my district, as an 
example. When Superstorm Sandy devastated most of the Rockaway 
Peninsula, Arverne emerged with minimal water and wind damage, 
and no fire damage, largely because of resiliency measures. To 
be honest, I believe that we need more Arvernes in Queens and 
more Arvernes in other coastal communities nationwide. And that 
can only be yielded through greater investments in mitigation 
coupled with robust policies to address our climate change 
crisis because climate change is real.
    With all that being said, I do want to understand proposals 
to remove en masse properties from special flood hazard areas. 
I believe one of the discussion drafts has such language in it. 
That caught my eye since the Rockaway Peninsula is entirely in 
a special flood hazard area.
    So I will start with Mr. O'Mara. You identified potential 
concerns with this idea. Could you elaborate on potential 
problems here?
    Mr. O'Mara. Thank you, Mr. Meeks, and we really liked 
working with you after Hurricane Sandy to restore some of the 
areas on Jamaica Bay in particular, that had huge resilience 
benefits. And I think you are exactly right. The natural 
defenses are incredibly important.
    Our concern about that provision is it is very unclear in 
the draft, and we want to work with the staff in trying to 
figure out what exactly was intended. We need to have property 
level data. And so, if you start en masse taking out units that 
are in harm's way, you are sending a signal that they don't 
have to worry about potential flood abatement. And if anything, 
we should be looking more at a greater level of stringency so 
folks know very clearly if they are in harm's way from a 
hurricane or inland flooding. And we are just very concerned 
that with the way that it is written right now, you could have 
folks taken out of the program and being told they are safe 
when you and I both know they are not.
    Mr. Meeks. Ms. Guzman, do you have anything to add to that?
    Ms. Guzman. No, sir.
    Mr. Meeks. Let me move on. You know, again, I get flooded 
in my office in Rockaway. A number of my constituents recently 
came in to discuss issues with elevation certificates, raising 
their homes. Elevation certificates. They have secured the 
elevation certificates, yet they see no adjustment in their 
premium despite submitting those certificates to the carriers. 
Now, this is admittedly largely anecdotal evidence, but the 
National Association of Professional Insurance Agents--I don't 
think anybody is here on this panel--submitted testimony for 
the record noting that the elevation certificate process is 
both bureaucratic and lengthy. Has anyone else on this panel 
experienced issues with the current elevation certificate 
process and have ideas on how we can improve the system? Maybe 
I will go to Mr. Heidrick.
    Mr. Heidrick. Thank you for the question. Yes. I have 
experienced issues with elevation certificates. For one, the 
cost of an elevation certificate could range from $200 to 
$1,500 depending on where you are in the country. And with the 
National Flood Insurance Program, that certificate is required 
in order to obtain a quote. So that expense to the applicant is 
incurred before they even know what the premium is going to be 
for that policy.
    We do see error rates on elevation certificates. They are 
done by hand. They are done location by location, and not 
always are they done by a surveyor that has a lot of experience 
with them. So there are times that you get something that 
creates an error. When those errors occur, it is not something 
that is always transparent to the agent. So now the agent 
submits that document to the Write Your Own insurance company, 
and they come back with a premium that is significantly higher 
that what was originally anticipated.
    Mr. Meeks. Thank you. I am out of time. I yield back.
    Chairwoman Waters. Thank you. The gentleman from Georgia, 
Mr. Loudermilk, is recognized for 5 minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman.
    Thank you to the panel for being here. It is a mess. That 
seems to be status quo for a lot of things we do here. It has 
long been known that NFIP is unsustainable fiscally. I mean, I 
have been reading over the draft of the legislation that we are 
going to forgive $20 billion in debt, and that is after 
Congress has already forgiven $16 billion in debt.
    One thing that I hear from people back home is frustration 
with the Federal Government, that the government doesn't live 
by the same rules that we put on the people. I mean, how many 
businesses or how many individuals would we just go and forgive 
their debt? Occasionally, creditors will do that, but then the 
IRS is going to send you a bill for the tax portion of the debt 
you were forgiven. So I think we need to be a little more 
fiscally responsible as we move forward. And I am quite 
perplexed that we are not going to address any major reforms 
regarding the fiscal problems that we have with flood insurance 
on this. And unless you make reforms, you will never change 
behavior. In a few years, we will be back in this position 
again.
    But, with that, I do appreciate the focus we have on 
mitigation. There seems to be interest in making the program 
more fiscally--that portion at least reformed in that area, but 
it is unfortunate we are not doing anything to make it more 
fiscally stable and sustainable. One of the ways I think we can 
make it more sustainable is to bring more capital investment 
into the NFIP program, and it is something that has been 
unanimously supported on this committee in the past. And I am 
pleased that banking agencies have recently decided to move 
ahead with clarifying that private sector flood insurance 
policies can be used to meet mandatory purchase requirements.
    So, Mr. Heidrick, I know the growth of the private flood 
insurance market is not going to happen overnight. It is going 
to take a while, but are there insurers interested in 
underwriting more flood policies?
    Mr. Heidrick. Thank you, Congressman. The answer is yes, 
and as unnecessary barriers are removed, for example, the 
continuous coverage discussion that we had earlier, more and 
more private insurers will come into the market responsibly as 
long as they have access to the data and know they can 
underwrite and know they can create a set of rates that are 
predictable and accurately reflect the risk.
    Mr. Loudermilk. So, in the previous panel, Mr. Duffy laid 
out a scenario of private insurers coming in and taking a 
multitude of risk, but it wouldn't be necessarily going for the 
subsidized market. Do you agree with his analysis on how the 
private insurance insurers would come into the market?
    Mr. Heidrick. I think the best way to characterize how 
private insurers will work is look at any other aspect of the 
industry. If you watch television, you will see several 
commercials from auto insurance companies over the course of 
your hour or whatever it, is all claiming to save their 
customers on average $400, $500, $600 a year. The reason why 
that happens is that every private insurance company is going 
to have its own methods for selecting and pricing risk, 
including the NFIP, and they can all coexist and make a profit 
having their own proprietary methods of selecting and pricing 
risk.
    Mr. Loudermilk. Okay. Thank you. One of the things that we 
have addressed before is just how complex the NFIP program is, 
and I think we can agree across the board that it needs to be 
simplified. In fact, when we had the reform package in the last 
Congress, I submitted an amendment that was unanimously 
supported by the committee that would require GAO to study the 
NFIP program and how it could be simplified in statue, 
regulation, and administration for policyholders and private 
sector providers. Mr. Heidrick, again, do you agree that it is 
quite complicated and difficult for policyholders to 
understand?
    Mr. Heidrick. It is complicated for agents to understand as 
well. I mean, it is a 400-page manual. It is complicated and 
complex. Consumers don't understand it, and that simplification 
should be to increasing takeup rates just like adding private 
insurance companies. And the more options that we give to 
consumers that make sense, the more people you would think 
would buy flood insurance, and the more Americans we would have 
or more households we would have insured for this peril.
    Mr. Loudermilk. Thank you. I have several other questions. 
I can submit them for the record since I see I am running out 
of time.
    And, Madam Chairwoman, I will yield back.
    Chairwoman Waters. Thank you very much.
    The gentleman from Missouri, Mr. Clay, Chair of our 
Subcommittee on Housing, Community Development and Insurance, 
is recognized for 5 minutes.
    Mr. Clay. Thank you, Madam Chairwoman, and thank you, Mr. 
McHenry, for calling this hearing.
    Let me start with Ms. Smith. Ms. Smith, in your testimony, 
you indicate that the problem of rate setting has been 
challenging for a number of reasons. Some view the Flood 
Insurance Program backed by the government as a subsidy, and it 
actually provides an incentive for many to build or rebuild or 
develop in areas that have shown a propensity for flooding and 
other storm-related damage. Time has shown that, while some of 
the assumptions about flood management and prevention are true, 
it is not an exact science. Can you touch on some of the Pew's 
recommendations in the area of the rate structure of the NFIP?
    Ms. Smith. Yes. Thank you for the question. We understand 
that, on the one hand, if people see rates as too high, they 
won't buy flood insurance, and that is a problem. On the other 
hand, if we do affordability and lower rates, we potentially 
run into more need to borrow. So what we are saying is that we 
would anticipate the solution is very targeted to the very most 
needy folks who need that insurance and need some help with 
that insurance. At the same time that we try to address some of 
those persistent problems that the program has, we would like 
to see--we are very pleased to see a big investment in 
mitigation. As Mr. Scott said, this is an area where we need to 
do something bold, and we need to really help some of those 
communities that have the greatest risk.
    We also need to learn from the mistakes we have made in the 
past. We have created a lot of risk. We put people in harm's 
way, and we need to do a better job looking at the future about 
where we should be building, where we should be investing, 
where a community wants to extend sewer and do new development. 
It needs to be away from where they are going to be at flood 
risk.
    Mr. Clay. How about the area of rebuilding? Should we allow 
that, or should we have some strict controls over that?
    Ms. Smith. I think we have to look hard ahead of time and 
have consideration that if you are going to rebuild in certain 
areas, you are either going to have to rebuild higher, you are 
going to have to rebuild stronger, and in some places, it is 
only sensible to move out of the area. So it is a little of all 
of the above.
    Mr. Clay. Thank you for those responses.
    Mr. Heidrick, do you find that the high costs are always 
risk-related, or do you find that low-risk policyholders are 
cost-burdened by the numerous fees, surcharges, and assessments 
that are paid on top of the premiums?
    Mr. Heidrick. The nonrisk portions, the taxes, the fees, 
the surcharges affect all policyholders, and as a percentage 
basis, some of the least expensive policies would have the 
highest percentage of nonrisk premium portions. So, for 
example, if you have a $500 premium, and it has a $225 
surcharge or a $250 surcharge, on a percentage basis, that 
seems extreme, and it does cause people to drop their coverage.
    Mr. Clay. So what should we do about those who should have 
flood insurance but cannot afford it?
    Mr. Heidrick. Affordability is incredibly important to 
making sure that as many people as possible are protected 
against this peril. What I would urge is that any affordability 
solution that we come up with should be outside of the rate 
structure of the NFIP because the best indicator of what one's 
risk is, is the premium that they are charged to transfer that 
risk.
    Mr. Clay. Thank you for that.
    And, Mr. O'Mara, currently the Federal Government regularly 
pays out billions of dollars for disaster relief in the 
aftermath of a major flooding event, and research shows that we 
can significantly reduce the amount of costs incurred by damage 
as a result of flooding by investing in mitigation. Can you 
talk about what we could do about mitigation?
    Mr. O'Mara. Absolutely. And I thank you, Mr. Clay. The best 
investments we can make are in the hot spots where we have seen 
repeated flooding and repeated losses. And so, as the other 
committees are talking about infrastructure, having this 
committee weigh in and say, ``We want to make sure that 
resilience is a part of it''--I am very partial to the natural 
solutions, rebuilding the wetlands, the dunes, repairing 
corridors that can absorb a ton of water so they don't flood 
out people--that is a great solution.
    Mr. Clay. Thank you, and I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Colorado, Mr. Tipton, is recognized for 
5 minutes.
    Mr. Tipton. Thank you, Madam Chairwoman.
    And I appreciate the panel taking the time to be here 
today. I am from Colorado, and my home happens to be at 6,200 
feet. The nearest river is probably about 10 miles away, and 
you guys might call it a creek. But believe it or not, in 
Colorado, we do have flood issues to deal with.
    One of the greatest challenges that we have really had has 
been wildfires that we have been going through: Durango, 
Colorado, 45 miles away from my home; Basalt, just outside of 
Aspen. We have these burn scars literally burn everything to 
the ground, and we do have flooding. Right now, good news. We 
have abundant snowfall. It is snowing right now in Colorado. 
But that snow will melt, and if it comes out of the hills quick 
and fast, we are going to see some real impacts.
    And I would like really to have something that there has 
been a fair amount of conversation today on. I have taken a 
real interest in terms of some of the mapping. That is what we 
are hearing back locally, and I would like--maybe we can just 
start with you, Ms. Lamm. And how quickly does or does not 
FEMA's flood map respond to rapidly changing terrain?
    Ms. Lamm. It doesn't.
    Mr. Tipton. Mr. Heidrick?
    Mr. Heidrick. I don't have experience with mapping.
    Mr. Tipton. Okay.
    Ms. Smith?
    Ms. Smith. Mapping is a slow process, and communities need 
to be able to stay on top of changing risks.
    Mr. Tipton. So it is slow.
    Ms. Guzman?
    Ms. Guzman. It is horrible. It is not up-to-date.
    Mr. Tipton. Mr. O'Mara?
    Mr. O'Mara. It is horrible, and it doesn't use the latest 
technology like LIDAR that would actually have pinpoint 
precision so folks would know exactly what the risks are in 
real time.
    Mr. Tipton. Okay. Mr. Lehmann?
    Mr. Lehmann. Indeed, LIDAR would also help with having 
actual property level mapping as opposed to these really not at 
all bespoke maps that we use now.
    Mr. Tipton. So I am gathering from Mr. O'Mara and Mr. 
Lehmann's comments, and the rest of you could maybe chime in on 
this: Are we using the best technology available right now in 
the mapping?
    Ms. Guzman. No. Absolutely not. I mean, what you are 
looking at, it is really interesting, on FEMA's fact sheet for 
building on higher flood zones, it states: ``One way flood risk 
is communicated is through maps.''
    Yet, their maps are completely inaccurate. They do not 
reflect building elevations, especially in areas that are 
considered flood zones. The home may be already in higher 
elevation so it is considered low risk, but that homeowner is 
paying a larger rate even though they are not at risk at all 
based on the elevations. These maps are 100-year flood plain 
maps in a 50-year-old program that is trying to solve today's 
realities, so it has to be modernized.
    Mr. Tipton. Great. So it would be a sensible assumption 
that if we want to be able to protect people from flooding, to 
be able to reduce some of the costs, maybe we ought to use good 
technology, and actually get the mapping up to date? Is that a 
fair statement to make?
    Ms. Guzman. Yes, and may I add, it would save some 
homeowners $500. They would not have to get a Letter of Map 
Amendment (LOMA) to show that they are on higher elevations 
because now the mapping is accurate at the property level.
    Mr. Tipton. Great. And I appreciate you bringing up that 
point in terms of being able to reduce some of the cost that we 
have. And just kind of looking over some of the bios here, 
maybe this is a good question for Mr. O'Mara and Mr. Lehmann. 
Could a more robust private market for flood insurance help 
combat the challenges that we have of insuring flood risk?
    Mr. O'Mara. Absolutely. We think that having more private 
options and more consumer choice and more transparency would 
allow two things: We would have more private capital in the 
market, which would reduce the risk to taxpayers, and 
simultaneously, you could focus the program more on vulnerable 
frontline communities that frankly need the help more than some 
folks who can afford other alternatives.
    Mr. Tipton. Great. So, just to follow up, and then, Mr. 
Lehmann, you might want to be able to speak to these as well.
    Mr. Lehmann. Right.
    Mr. Tipton. Would a more competitive flood insurance market 
actually lower the cost, as Ms. Guzman was saying is important 
for consumers?
    Mr. Lehmann. For many consumers, yes. Not for everyone. 
There are some people who are heavily subsidized in the NFIP, 
and the private market would be more expensive for them. But 
for the vast majority of consumers, they are paying too much.
    Mr. Tipton. Great. So, opening up some competition, having 
better mapping, maybe we can actually achieve a goal that 
everybody agrees needs to be achieved?
    Ms. Guzman. Agreed.
    Mr. Tipton. Thank you all.
    I have no more questions.
    Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Green, the Chair of our 
Subcommittee on Oversight and Investigations, is recognized for 
5 minutes.
    Mr. Green. Thank you, Madam Chairwoman. And I thank the 
witnesses for appearing as well.
    Flooding is something that we experience almost routinely 
in Houston, Texas. We have had a tax day flood. We have had a 
Memorial Day flood. And, of course, we have had what I hope is 
a once-in-a-lifetime flood, Harvey. We know what flooding is 
all about. I want to assure the chairlady that I support this 
legislation. I believe that it is going to be beneficial to the 
people that I represent, and I want to make sure that when they 
suffer these great tragedies, there will be help for them.
    No private market can provide an affordable policy for 
flood insurance victims. The private market has not stepped up 
to provide an affordable policy--of course, unless you have a 
Federal backstop. Well, if the Federal Government is going to 
provide the backstop, we ought to have a lot to say about the 
amount that will come off of the top. It is not enough for us 
to take the lion's share of the liability and allow the assets 
to be enjoyed by someone else.
    So I support the chairlady's legislation, and I do so 
because it would benefit my constituents, many of whom are 
still in recovery.
    I yield back the balance of my time.
    Chairwoman Waters. Thank you.
    The gentleman from Texas, Mr. Williams, is recognized for 5 
minutes.
    Mr. Williams. Thank you, Madam Chairwoman.
    Thank you all for being here today. I start off every 
hearing with a simple yes-or-no answer from all of the 
witnesses, and I will start with you, Ms. Lamm. Yes or no. Are 
you a socialist or a capitalist?
    Ms. Lamm. I defer to the next one in line.
    Mr. Williams. Do what?
    Chairwoman Waters. Ms. Lamm, thank you very much. You don't 
have to answer that.
    Mr. Williams. Are you a socialist--
    Ms. Lamm. Am I socialist or a--
    Mr. Williams. Capitalist.
    Ms. Lamm. Capitalist. I thought it was a yes or no.
    Mr. Williams. Yes, ma'am.
    Ms. Lamm. Yes.
    Mr. Williams. Okay. Thank you.
    Sir?
    Mr. Heidrick. Capitalist, sir.
    Mr. Williams. Thank you.
    Socialist or capitalist?
    Ms. Smith. Capitalist.
    Mr. Williams. Thank you.
    Yes, ma'am?
    Ms. Guzman. I thought this was a yes-or-no question, 
correct? Yes.
    Mr. Williams. Are you a socialist or are you a capitalist?
    Ms. Guzman. I am just following directions, yes or no, so 
yes.
    Mr. Williams. Next?
    Mr. Lehmann. Yes, sir. I am a capitalist.
    Mr. Williams. Thank you. Thank you for that. I, too, am a 
capitalist and a small business owner who knows the value that 
competition brings to the marketplace. When the Flood Insurance 
Program was created in 1968, the government believed that we 
did not have sufficient data or technology to accurately assess 
risk for this product to exist in the private sector.
    Mr. Lehmann, what has changed since 1968 in terms of data, 
technology, and the market's ability to assess risk?
    Mr. Lehmann. There has been an emergence of a technology 
called catastrophe risk modeling which does provide 
significantly more clarity to insurance companies on the 
landscape of risk that they face. The nature of the insurance 
market itself has changed. It is much more global. Insurance 
companies and reinsurers are able to spread risk around the 
globe. In the old days where you had a County Mutual somewhere 
in the Mississippi River Valley, if there was a flood, all the 
policyholders would be hit at the same time. That is not the 
case today. And so these things have made insurers more able to 
write private flood insurance at a time when they were not able 
to in the sixties.
    It should be clear, though, that we do still need the NFIP, 
and when we talk about things like cherry picking, the 5 
million people who have NFIP policies right now are not the 
entire universe of people who need insurance. There are many 
more people who need flood insurance. There was a University of 
Bristol study early last year that said something like 41 
million Americans are actually at risk of riverine flooding. 
The current maps that we have from FEMA only show about 13 
million, so we need to about triple the number of people who 
have flood insurance.
    Mr. Williams. Mr. O'Mara and Mr. Heidrick, I would like to 
hear from you on that, also.
    Mr. Heidrick. Sure. As insurance companies are creating 
their rate structure, they are modeling with technology, 
running through thousands and thousands and thousands of 
simulations, different possible weather events and what would 
the outcomes be. That computing power didn't exist 10 years 
ago, let alone 50 years ago, and that is what is allowing the 
insurance companies to actually run these models, prepare and 
run these models to come up with a set of rates that they feel 
they can rely on.
    Mr. Williams. Okay. Good. Mr. O'Mara?
    Mr. O'Mara. The only thing I would add to that is the 
computing power is also in the surveying work, and having LIDAR 
technology, we could figure out exact elevations and 
understanding the systems and overlay climate data and actually 
understand the intersection of what the likely outcomes are for 
some of these communities that we didn't have access to. We 
were drawing topo maps with lines 50 years ago.
    Mr. Williams. Okay. I think that a great way to help solve 
the issue would be to have better flood mitigation programs in 
place, and I cosponsored a bill with Representative Charlie 
Crist of Florida to set up a revolving loan fund in other words 
for community homeowners and businesses to take the necessary 
steps to prevent serious flooding problems before they occur. 
This is just one example of a mitigation program that will 
ultimately save taxpayer dollars.
    Ms. Smith, can you give us your opinion on using the 
revolving loan fund as a mitigation technique?
    Ms. Smith. Yes. Thank you for the question. We think that 
this has great potential. States have experience using State 
revolving loan funds for clean water, for drinking water, in 
some places for energy efficiency. We can pay a little to save 
a lot. We have been being very much pennywise and pound 
foolish, and if we put the money upfront toward helping 
communities mitigate now, there will be a payoff in the future.
    Mr. Williams. Okay. Thank you.
    I yield my time back. Thank you for being here.
    Chairwoman Waters. Thank you.
    The gentleman from Florida, Mr. Lawson, is recognized for 5 
minutes.
    Mr. Lawson. Thank you, Madam Chairwoman, and witnesses, 
welcome to the committee.
    One question I have, Mr. Heidrick, as someone I know who is 
in the insurance business, and earlier you heard Congressman 
Posey talk about the private insurance industry, and I looked 
at some of those results yesterday where the rates was much 
cheaper. And what do you think contributed to those rates being 
less than what it is with the NFIP program?
    Mr. Heidrick. In my experience, the rates in the private 
market are not always cheaper. In many cases, they are. The 
difference usually comes from either better data in order to 
price and select risks. Some of it comes from the fact that the 
premiums that private companies are charging are not inflated 
for some policyholders to offset subsidies for other 
policyholders.
    Mr. Lawson. Okay. And how would you explain it like in 
Florida where we have a large percentage of people that--I 
think maybe 40-some percent who have flood insurance compared 
to other areas around the country?
    Mr. Heidrick. There is certainly more awareness of the risk 
of flooding in the State of Florida than in many other places. 
Usually, a community that has experienced a devastating flood 
is aware. But what I find is, I have a lot of clients who have 
primary homes in other parts of the country, and they come down 
to my area of southwest Florida and have vacation homes, and 
the risk of flooding is not lost on them. In fact, many of them 
are paying cash for their homes and still buying flood 
insurance because they understand that risk. When you can stand 
on a barrier island and look at the water on one side and then 
turn around and look at the water on the other side, it is 
pretty clear that you are going to have a risk of flooding.
    And throughout the State, we get so much rainfall and we 
have had, of course, Hurricane Irma that has come through 
recently. I think that there are a lot of things that have 
increased the awareness of Floridians, but I would say at the 
same time, the State legislature in Florida has done a number 
of things to encourage the growth of a private market, and that 
has created more choices for consumers.
    Mr. Lawson. And as you know, we created Citizen in Florida, 
and then, as time went on, we wanted to depopulate Citizens so 
it could go to the private market, and we have seen it happen. 
And the private market is saying that they still can take a lot 
more risk in policies from Citizens that we have in the State 
of Florida.
    Ms. Lamm, currently the Federal Government regularly pays 
out billions of dollars for disaster relief in the aftermath of 
major flooding events. Research shows that we can significantly 
reduce the amount of costs incurred by the damage as a result 
of flooding by investing in more mitigation. In the 
Jacksonville and Duval area, a year ago, where we had a lot of 
flooding, it cost a lot of businesses and a lot of homeowners 
who didn't have insurance, and it took months and months to get 
it up and going again. And at one time, I proposed money for 
the Army Corps of Engineers to invest in mitigation that could 
help solve a lot of the flooding problem. So can you talk about 
what we know about cost-benefit of investing in mitigation and 
specific example of mitigation projects that have helped 
prevent flooding and damage in other areas?
    Ms. Lamm. Thank you. Mitigation is a huge benefit when it 
comes to flooding. Many would agree that the water is supposed 
to be there; the people are not. But they are there. So what 
are we going to do about it? We need to mitigate. We need to 
find ways to assist them with either elevating their homes, 
buying them out, or doing some other form of mitigation.
    An example that I have from South Carolina is that in 2016, 
Hurricane Matthew devastated the Pee Dee Region of South 
Carolina, specifically Marion County, and many homeowners in 
Marion County were able to elevate their homes, and they used 
the high-water marks as their goal of how high to get their 
home to. When Hurricane Florence came through again, some of 
those homes were high enough. And while the citizens had to 
leave their homes, their homes stayed high and dry, and thus, 
making the recovery process easier by mitigation.
    Mr. Lawson. I yield back.
    Mr. Heck. [presiding]. The gentleman from North Carolina, 
Congressman Budd, is recognized for 5 minutes.
    Mr. Budd. Thank you, Mr. Chairman, for hosting this 
hearing, and thank you to our witnesses on this second panel 
for your time today.
    Mr. Heidrick, I would like to start with you. In your 
testimony, you describe the Write Your Own Program as necessary 
and outline that the Big ``I'' would oppose policies that harm 
the Write Your Own Program. I certainly believe that we should 
always encourage more private-sector participation in the flood 
insurance market ideally through private policies. And while 
there is a gradual uptick in private-sector offerings, I am 
concerned that the number of Write Your Own companies has 
dropped from about 117 down to about 60, the last I understand. 
So, looking at the past couple of storm seasons and how they 
have impacted my home State, North Carolina, I think we can all 
agree that more property owners need to purchase flood 
insurance. I have heard that this morning.
    So, in your opinion, Mr. Heidrick, how much do 
policyholders benefit from the Write Your Own Program, and what 
do you think the impact would be if the trend of companies 
leaving that program without a corresponding increase in 
private-sector options continues?
    Mr. Heidrick. Thank you for your question, Congressman. 
Probably the best way that I can do this is to contrast it with 
the direct servicing program that the NFIP operates. Over 80 
percent of the NFIP policies are written through the Write Your 
Own Program. And that is because the support that the Write 
Your Own Program provides to agents is much, much more 
effective than the direct servicing agency. It takes much 
longer for me to get problems solved and respond to clients, 
and those are the things that get clients to buy and retain 
their coverage.
    The Write Your Own companies do a lot more training, and 
they have an incentive to see their book of business grow to 
have more customers insured for the peril of flood which is the 
reason why we are all here, is to try to ensure that has many 
people as possible have insurance and have the ability to 
recover after a storm as a result.
    Mr. Budd. Understood. So I strongly assume you would agree 
with me that the committee should be looking for ways to 
strengthen the Write Your Own partnership and to provide 
additional consumer choice via private insurance coverage?
    Mr. Heidrick. Yes, sir.
    Mr. Budd. Thank you. Despite protecting more than 5 million 
Americans from the risk of flooding, the NFIP is in horrible 
fiscal shape due to mismanagement here in Washington, and the 
bottom line is that we know the NFIP has inadequate rates, 
which do not reflect the actual cost of living in a high-risk 
flood zone, and are the source of many of the program's 
problems. Yet, the discussion drafts before us in no way, 
shape, or form even address this issue of rate inadequacy that 
is fundamentally plaguing the program, which has ultimately 
caused policyholders to be strung along from one short-term 
extension to the next. While the drafts before us today fail to 
do so, Mr. Heidrick, in your testimony, you mention the 
Administration's efforts to modernize NFIP underwriting via 
risk rating 2.0, and it seems like a good first step. But in 
your opinion, will it go far enough? From my perspective, it 
seems that until my constituents stop funding subsidies for 
folks who live on the coast in high-risk areas, then we are 
going to have a program that continues on a fiscally 
unsustainable path.
    Mr. Lehmann, I would also be curious to get your thoughts 
on this as well.
    Mr. Lehmann. As I mentioned in my testimony, my proposal is 
to cease writing new construction. I mean, if you are not 
making the problem any worse by encouraging, actively 
encouraging people, making it easier for them to build in 
flood-prone areas, then over time, you will see those rewards 
in the program becoming more sustainable.
    The program itself is still not going to be sustainable. 
Part of the problem is the fact that, whenever we have wanted 
to assist people, whether it be for affordability reasons or 
the other subsidies, we have done it by discounting rates. So 
you are not bringing in enough premium to ever be sustainable, 
and you will forgive this debt today, but it will come back for 
sure. There is no question about that.
    Mr. Budd. Thank you all again for your time.
    And I yield back to the Chair.
    Mr. Heck. The gentleman from New Jersey, Congressman 
Gottheimer, is recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Mr. Chairman, and thank you all 
for coming in today to testify on this critical issue.
    Getting a long-term bipartisan reauthorization of the 
National Flood Insurance Program is not just vital to the 
country, but it is incredibly important to the people of New 
Jersey, my State. More than 225,000 homeowners in New Jersey 
rely on the National Flood Insurance Program to protect their 
families. Towns in the Fifth District, like West Milford and 
Lodi, are flood-prone. When their homes have been damaged or 
destroyed due to flood damage, they have been able to repair or 
rebuild them thanks to the National Flood Insurance Program. I 
have seen firsthand how essential this program is to the people 
of New Jersey's Fifth Congressional District. They cannot 
continue to live in uncertainty when it comes to flood 
insurance. They need more commonsense reforms, and we need to 
deliver them through a long-term reauthorization that provides 
responsible governance and doesn't have policyholders drowning 
in premiums. We must utilize innovative technologies to improve 
mapping, modernize flood insurance, and save taxpayers' hard-
earned dollars.
    I look forward to your answers on how to improve the 
National Flood Insurance Program, and I appreciate you taking 
the time today so far to tell us how we can work with our 
colleagues here on both sides of the aisle to get this 
reauthorization done.
    If I can ask a specific question about Hurricane Sandy, 
because in late October 2012, as many of you probably know, 
Superstorm Sandy made landfall in the United States. The storm, 
which is the second costliest hurricane in United States 
history, resulted in more than $65 billion in damages and 
destroyed or damaged 346,000 homes in New Jersey. New Jersey 
felt the destructive power like no other State. Economic losses 
were estimated to be approximately $30 billion. Businesses were 
destroyed. People lost their jobs and homes, and most 
regrettably, 37 people lost their lives. Yet in the aftermath 
of Sandy, numerous policyholders have claimed that they may 
have been underpaid. There have been findings of fraud, altered 
engineering reports, and inadequacy of FEMA's oversight and 
control. This is beyond unacceptable.
    Can you all discuss some of the steps that FEMA has taken 
to address these problems and explain what more needs to be 
done to prevent this from ever happening again? And I will 
defer to any one of you who wants to take this. Mr. Heidrick? 
Thank you.
    Mr. Heidrick. Sure. I will be happy to answer. Thank you.
    Mr. Gottheimer. Thank you.
    Mr. Heidrick. What happened in Superstorm Sandy is 
unacceptable, and everybody in the industry would agree with 
that. However, since then, we have had 4 storms in the last--
actually, 6 storms in the last 2 years. For Harvey and Maria in 
particular, the NFIP received 120,000 claims, settled 92 
percent of them within the first 90 days, and paid over $10 
billion in claims with less than 1 percent of those claims 
going to litigation. I think that result shows a lot of 
progress that the NFIP has made. It is a different management 
team that is there. It is not the same people that are there. 
They have better technology that gives them better data that 
allows them to provide better oversight of the Write Your Own 
Program and provide better solutions to consumers.
    Mr. Gottheimer. So you can get ahead of fraud? I mean, some 
of the things we found in Sandy, we figured out what was 
causing some of those issues?
    Mr. Heidrick. Every insurance company has to deal with 
fraud in every industry.
    Mr. Gottheimer. Right.
    Mr. Heidrick. But having better technology provides FEMA 
management with better data and more timely data. During Sandy, 
I believe they were looking at information that was 6 months 
old to try to manage their day-to-day operations.
    Mr. Gottheimer. If I can turn to flood mapping in the time 
that I have left, I have heard from a number of my constituents 
when they believe their property is being improperly mapped by 
FEMA. I know we addressed this a bit because typically the only 
recourse for these constituents is costly and very time-
consuming, as you know. In the 21st Century, there is no reason 
why we can't utilize 2019 technology like GPS mapping to 
improve the way FEMA maps property in New Jersey's Fifth 
District and across the country. Obviously, in our phones, we 
can do incredible mapping. There is no reason why we can't 
actually figure this out for the insurance program. Do you 
think NFIP's map revision process can be improved, and do you 
support the reforms that improve the NFIP's map revision 
process? Mr. O'Mara?
    Mr. O'Mara. Thank you. So, in my previous life, I was 
secretary of natural resources in Delaware. And one of the 
things we did is we used LIDAR data to have kind of 2-meter 
data for the entire State for a couple million dollars. If you 
had property level data across the entire country, you would 
lose all those fights over appeals. Folks wouldn't have to 
provide their own maps. Folks wouldn't have to spend hundreds 
of dollars to get surveyors to do the additional work. If you 
had that level of data with transparency, you would transform 
the ability of folks to understand the risk they are facing.
    Mr. Gottheimer. It is there, right? This data is there.
    Mr. O'Mara. Yes. There are some places that you have places 
to fill in the gaps.
    Mr. Gottheimer. All right. Ms. Guzman, do you want to add 
to that?
    Ms. Guzman. Absolutely. The buyer could do their due 
diligence. People could actually make an informed decision 
before they purchase because they could actually see what the 
risks are up-front. Without that data right now, they are 
actually kind of flying blind.
    Mr. Gottheimer. Right. It is a guessing game.
    Ms. Guzman. Yes.
    Mr. Gottheimer. Right. Ms. Smith?
    Ms. Smith. I would add just a caution that I think we now 
know that where it rains, it can flood, and I think one of the 
problems that we have is that people assume that the maps are a 
prediction. And the maps can give you a relative sense of risk, 
but they truly can't predict precisely. So we need improved 
maps, and I do believe FEMA is moving on using new 
technologies. But we need to stay on top of the risk.
    Mr. Gottheimer. Thank you. I yield back.
    Mr. Heck. Thank you. The gentleman from Ohio, Congressman 
Davidson, is recognized for 5 minutes.
    Mr. Davidson. I thank the chairman, and I thank our 
witnesses for extended testimony, interactive Q&A, and really 
good expertise in offering ways to improve the current National 
Flood Insurance Program.
    I think it is safe to say this is one of many federally 
crafted programs that if you looked at it as a clean slate, no 
one would design it to work the way that it works today. Maybe 
someone, but I don't think very many people. And so, as we look 
at how to go forward, it always strikes me as odd that there is 
so much resistance to change Federal programs that everyone 
acknowledges don't work exactly the way they should. And I have 
I listened to a number of you talk about the expected future 
impact and a number of my colleagues talk about the expected 
future impact of climate change. And as is generally agreed 
upon by people who embrace the most extreme impacts of climate 
models, flooding becomes an increasing concern. And so I am 
particularly interested in how we would want to remain static 
with the reauthorization of an admittedly broken program in 
light of its admittedly broken current results, its current 
debt, and the idea that we will just forgive that; we will keep 
operating it, maybe even subsidize things more than we already 
have, but we won't accrue the debt because we just are going to 
spend the money. Why would the government keep operating a 
program in that manner?
    And, Mr. Lehmann, I just wonder, if you had to be 
actuarially sound, what sort of changes might you make in view 
of the most alarmist positions on climate models or in the 
result of just actuarial soundness?
    Mr. Lehmann. The program as it currently is structured, the 
subsidies and grandfathering are not based on need. They are 
largely based on the age of the home and how old your map is, 
and neither of those provides any good public policy 
justification for it. So moving everyone who can afford it to 
risk-based rates has to be a priority. There will be people who 
need help. There will be people who need assistance, so we 
don't oppose creating a targeted means-tested affordability 
program to help those people. It should be outside the rate 
structure. It should not just be a discount. It should be a 
voucher. Ideally, it should be a voucher that you could go and 
buy private insurance with as well and not just the NFIP 
because lower-income people should have that option of choice 
as well.
    Mr. Davidson. So, if I take it correctly, you are saying, 
let's let the market function where it can, and we will use 
actuarially sound underwriting principles?
    Mr. Lehmann. Yes.
    Mr. Davidson. It is almost like you are advocating for 
something akin to the housing market, though that too is 
distorted by numerous Federal programs where we might actually 
have actuarially sound mortgages for lots of Americans, and 
then we do believe in a social safety net, so we have a fairly 
large Federal housing program.
    Mr. Lehmann. We want people to respond to the price 
signals. We want people to build where it is appropriate to 
build and not build where it is not appropriate to build. And 
we can provide some assistance to people who need that 
assistance. But nonetheless, both the market and the climate 
models are telling us the same thing. They are telling us that 
risk is increasing; flood risk is increasing. We need to be 
prepared for that, and some of that preparation is going to be 
painful.
    Mr. Davidson. And so it is painful when someone would have 
to move out of a home, whether it is just for repairs or for 
remediation, not just rebuild the house, rebuild it on stilts 
or with tiles that drain the area better. We will rebuild it a 
second time. Then we will rebuild it a third time. Does anyone 
find it unreasonable that we would put a cap on the number of 
times we would rebuild a property? And I will just go down the 
line.
    Ms. Lamm, is that unreasonable?
    Ms. Lamm. No.
    Mr. Davidson. Mr. Heidrick?
    Mr. Heidrick. No. The private insurance company is not 
going to continue to insure repetitive loss properties either.
    Mr. Davidson. Ms. Smith?
    Ms. Smith. No.
    Mr. Davidson. Ms. Guzman?
    Ms. Guzman. No.
    Mr. Davidson. Mr. O'Mara?
    Mr. O'Mara. No.
    Mr. Davidson. Mr. Lehmann?
    Mr. Lehmann. No.
    Mr. Davidson. So there's uniform consensus that at some 
point, we have to say, you know what, this place is going to 
flood, and we should just quit rebuilding it.
    Unfortunately, that has been one of the more controversial 
provisions to be able to move past this body. So thank you for 
your expertise, and I yield back.
    Mr. Heck. The gentlewoman from Michigan, Congresswoman 
Tlaib, is recognized for 5 minutes.
    Ms. Tlaib. Thank you all so much for coming.
    This is such a really important issue in my district. Since 
1978, more than I think $75 million in damage payouts have been 
made to Michigan homeowners. And FEMA has bought out, I think, 
226 machine properties in a flood zone including Ecorse Creek 
in my district, in the 13th Congressional District.
    Many of us have heard from constituents, and I am sure you 
as well from your customers, where they believe that their 
property is being improperly mapped by FEMA. One of my 
constituents in Dearborn Heights got a notice to purchase flood 
insurance, even though he lives half a mile from the creek, and 
his property has never flooded. So he paid hundreds of dollars 
to hire a surveyor, to contest it, and he was very successful, 
but that is not going to be the case for a lot of my residents.
    Typically, the only recourse is very time-consuming and 
costly, as a lot of my colleagues have mentioned. And so, in 
regards to how complaints are put forward and how they are 
addressed, if you were to pick kind of a process to be able to 
contest or to make a complaint in that they don't, you know, 
shouldn't hire it or maybe it is around affordability or the 
process in itself? And Mr. Heidrick or Ms. Smith, anybody who 
is able to answer that, and I apologize if it was asked before.
    Mr. Heidrick. Thank you for the question. I think what you 
are asking about is letter of map revision, letter of map 
amendment processes.
    Ms. Tlaib. Yes.
    Mr. Heidrick. Okay. Thank you. On Sanibel, it is even more 
pronounced because a letter of map amendment is simply filing 
an elevation certificate, and you are basically showing FEMA 
that, ``You said that I am below the base line elevation, I am 
likely to flood, but I have this document from a surveyor that 
says I am actually elevated high enough.'' A letter of map 
revision is much more complicated and requires engineering work 
and costs thousands and thousands of dollars.
    But I can tell you that in the community of Sanibel, my 
home, in the last 3 years there have been 30 letters of map 
revisions that have been created, and every single one has been 
approved. The total cost, I don't have the exact number, but 
back of the envelope, I could probably say it is between 
$500,000 and a million dollars that policyholders and small 
businesses and condominium associations have paid to get that 
done. It is an expensive appeal.
    Ms. Tlaib. Yes. And, you know, Ms. Lamm, you probably saw, 
as many of you have, in 2017, the Inspector General reported 
they found, like, 58 percent of all FEMA flood maps to be 
inaccurate and out of date. What are some of the hindrances? 
What are some of the challenges in FEMA fulfilling this 
requirement? Have you heard about any? Have they talked about 
pilot programs, anything like that to address this issue around 
inaccuracy with mapping?
    Ms. Lamm. Inaccuracy with mapping comes from multiple 
avenues. For example, in my State of South Carolina, we have 
LIDAR. We have LIDAR for the entire State. However, it is out 
of date now, so it is time to fly it again, and the funding is 
limited from multiple resources including FEMA and the State.
    The other thing is gauges. Gauges are really important 
because gauges increase the precision of your mapping. My State 
is very limited in the number of USGS stream gauges or really, 
any stream gauge, very limited, so it is very much needed.
    Ms. Tlaib. But FEMA knows that?
    Ms. Lamm. FEMA knows that.
    Ms. Tlaib. Is there anything other than maybe beyond what 
the legislation is providing? What can we--as a new Member, I 
want to be able to push this forward and almost require it as a 
must before they proceed. You know, mapping is key. That is the 
basis of--
    Ms. Lamm. I think one thing that can be pushed forward as 
well that we have seen is pushing for changes in technology. 2D 
mapping is something that we personally have seen that--we 
produced a 2D model in Horry County, South Carolina, where 
Myrtle Beach is, and when Hurricane Florence came through, it 
matched almost perfectly. So we have been able to--there are 
some new technologies out there. I think as a new Member, 
pushing forward new technology and making it easier for FEMA 
through statutory requirements and some of the policies 
encouraging them to move in that direction.
    Ms. Tlaib. I am short on time. Just really quick, it was 
troubling, very troubling for many of us as Michigan laws 
require these disclosures, but then many folks are not really--
the law does not require the seller to disclose whether the 
property is mandated to have flood insurance. Do any of you 
believe that we should try to standardize disclosure 
requirements to protect consumers and homeowners alike?
    Ms. Smith. Yes. Absolutely. We think it would be helpful 
across the board so that people would know about past flood 
risks, past flood damages, and about whether the property is 
going to be a repeat loss property and what the flood rates 
would be.
    Ms. Tlaib. Thank you. I yield back.
    Mr. Heck. The gentleman from Illinois, Congressman Casten, 
is recognized for 5 minutes.
    Mr. Casten. Thank you, Mr. Chairman, and thank you to the 
panel. I am glad we have taken so much time talking about 
mitigation today, and I appreciate the inclusion of language 
within the legislation that would make property acquisitions an 
eligible activity for ICC coverage. I think this could--I 
emphasize ``could''--help to jumpstart efforts to help lower- 
and middle-income folks relocate away from vulnerable areas.
    I think that people asking whether you believe in climate 
change is sort of like asking whether you believe in gravity. 
We have the reality of the world we live in right now, that 
insurance is designed to cover something that is expensive, 
rare, and unpredictable, and flooding continues to be 
expensive, but it is no longer rare, and it is no longer 
unpredictable. And any actuarial product to solve that is going 
to be increasingly insolvent. We just have to deal with that. I 
am guessing from the nods of the panel that I don't need to ask 
anybody to confirm that. If anybody disagrees, please interrupt 
me.
    I want to direct my first question to Mr. O'Mara. 
Specifically on mitigation, it seems like we have a lot of 
agreement that we should do this. The SmarterSafer Coalition 
has specifically stressed the importance of nature-based 
approaches to resiliency. Can you provide a little color on 
exactly what that is for us?
    Mr. O'Mara. Sure. I will use an example of my home State of 
Delaware. We are sinking. We are facing sea level rise. We have 
more coastal storms. Places that have healthy wetlands that can 
absorb millions of gallons of water are less likely to get--the 
communities behind them are less likely to get flooded out than 
places that paved over everything with nowhere for the water to 
go. And if you use an example from Texas, places that had some 
prairie, places that had some level of natural infrastructure 
where you could basically absorb and slow down both the volume 
and the velocity of water did much better during the storms. 
And a lot of us have said this today: Every dollar we spend on 
that is $6 of savings, and we would like to see this be a huge 
part of any infrastructure conversation across all the 
different committees of jurisdiction.
    Mr. Casten. Can you speak to how ICC funds could be used 
for property acquisitions to facilitate those kinds of 
outcomes?
    Mr. O'Mara. Yes. There have been examples at the State 
level in different places where folks have done buyouts or 
different things. Again, compensating folks so they can 
relocate and have a different community, but making investments 
in those natural solutions, headwaters of watersheds, in some 
cases, reforestation, in some cases it might be more dune 
systems, but using those dollars to actually invest in those 
kinds of solutions. And then all of a sudden, you create a 
solution at a regional level, instead of just property by 
property, because you have to use stuff in addition to raising 
elevation. But if I can make one investment that helps 500 
houses, that is a better investment than 500 individual 
solutions.
    Mr. Casten. All of that, I think, sounds to me like a 
fairly permanent solution. Can you talk about what we need to 
do to make sure that if we make those changes, we don't end up 
with people basically rebuilding on the same land in the next 
cycle?
    Mr. O'Mara. Yes. I think there are just questions about if 
government is going to play that role of intervening, making 
sure there are covenants put on those properties to make sure 
there isn't construction in the future. In some States, they 
are using things like the Land and Water Conservation Fund and 
being creative, trying to have different resources and turning 
these areas into parks in some cases. There have been ideas 
before about not having some of these be eligible for some 
government programs if you are rebuilding in these areas. But 
we would love to work with you to make sure that we don't do 
the same idiotic things over and over again.
    Mr. Casten. Okay. With the bit of time I have left, I want 
to talk about equity, because obviously once you talk about 
relocating people, there is an inherent equity issue that is 
there. There was an NPR report recently that said that the 
current property acquisition programs are not equitable and 
that money is not necessarily doled out to those who need it 
the most but to those whose property is worth more.
    A question for Ms. Smith, what do we do to better structure 
those programs to increase the accessibility to everyone who 
needs that preflood mitigation, but it is done in a more 
equitable fashion? And maybe just to tie the second part on, 
does the ICC coverage for property acquisition facilitate that 
expansion in an equitable way, or how might we need to adjust 
it to make sure it does?
    Ms. Smith. Well, for the folks who are low-income folks, I 
think you start behind when we start with the NFIP because, as 
the affordability studies that FEMA has produced show, people 
who have low incomes tend to not to buy the insurance. So, if 
you have mitigation programs that are only addressing the 
problems of insured properties, they are going to not help the 
low-income people.
    There are a variety of things, so that is why we think that 
the community level kind of mitigation--the protecting or 
restoring of wetlands that will stop the water from flowing 
over a large area--the kind of preservation and kind of storm 
water drainage improvements that can help a variety of people 
are some of the best things that can be done for a larger 
community.
    Actually, as I think of it, Mr. Scott, I just found out the 
Falcons new stadium in Atlanta has a cistern, was built with a 
cistern as part of the stadium that will take 80 percent of a 
100-year flood, so there can be solutions for everyone.
    Mr. Casten. Thank you. I yield back.
    Mr. Heck. The gentlewoman from New York, Congresswoman 
Ocasio-Cortez, is recognized for 5 minutes.
    Ms. Ocasio-Cortez. Thank you, Mr. Chairman. I just have 
to--I can't resist commenting on the earlier question which 
does, I can confirm, happen at every hearing: socialism or 
capitalism. And I am just thrilled at the adaptation today that 
the follow-up was yes or no because I do think that the yes is 
a great answer because mixed economies are a thing. And I would 
also like to note the irony of the fact that we are gathered 
here today in bipartisan support of a socialized insurance 
program that is designed to help people when the private market 
fails to protect homeowners. So I just can't go on without 
noting that because I love it. It is just--I love it. Anyway, I 
will move on.
    The National Flood Insurance Program was solvent for a long 
time. It paid for itself. It was able to help people without--
it was able to help people on a not-for-profit basis, and while 
in some years, it was under, in other years, it was over. And 
overall, it leveled until 2005, which is when Hurricane Katrina 
hit in Louisiana, which added a $19 billion cost. And at the 
time, many folks thought that Hurricane Katrina was a once-in-
a-generation event. We had never seen this before, and it will 
probably never happen again at the same level of catastrophe. 
But then came Hurricane Sandy in New York, and we were told 
again that this was a once-in-a-generation event. And then came 
Hurricane Harvey in Texas, Hurricane Irma in Florida, Hurricane 
Maria in Puerto Rico, 3,000 dead and outages for 11 months, 
Hurricane Florence in North Carolina, and Hurricane Michael 
impacting large swaths of the southeastern United States.
    So my question here, and I will start with Ms. Smith, I am 
interested in the role of the NFIP in the broader constellation 
of preparedness because we know that, in this larger trend of 
hurricanes, this is not an accident, and that these are not 
once-in-a-generation events. This is not a once-in-a-generation 
event. This is what climate change looks like now in the 
present day. So are there any other programs designed to work 
with the NFIP to prepare for the damages to come ahead of time 
and not after a storm?
    Ms. Smith. I would say there are, but they aren't big 
enough. They have been small. FEMA has administered a small 
predisaster program, but it has just not been enough and we 
have to get ahead of the game. I think we can also change the 
way we have land use regulations in the NFIP to help 
communities make smarter future decisions.
    Ms. Ocasio-Cortez. And I would like to go down the line. In 
each of your professional opinions, is the NFIP currently 
structured to foresee and accommodate and prepare for the 
damage that will come to people's homes and communities due to 
climate change? I will start with Ms. Lamm, and that is an 
actual yes-or-no question.
    Ms. Lamm. So, yes or no. I would say, not exactly.
    Ms. Ocasio-Cortez. It is not.
    Ms. Lamm. There are some areas, yes; some areas, no.
    Ms. Ocasio-Cortez. Mr. Heidrick?
    Mr. Heidrick. I would agree with that.
    Ms. Smith. No.
    Ms. Guzman. No.
    Mr. O'Mara. Yes, not even close.
    Mr. Lehmann. No. And if I can just expand a little bit, it 
is because all ratemaking is based on the past, right? So we 
don't--and this is what insurance companies do as well. They 
might do a catastrophe model to see how the world is changing 
in the future, but rates are based on the past, and they are an 
extrapolation to the future. If the future changes, then the 
rates don't reflect that.
    Ms. Ocasio-Cortez. Right.
    Ms. Guzman. We are also not addressing urban flooding, 
which we may say thousand-year storms now are the new normal.
    Ms. Ocasio-Cortez. So it seems like there is kind of this 
fundamental paradox where this area of insurance cannot operate 
the same way as other areas because the future is virtually 
guaranteed, with broad scientific consensus, to change.
    So, in my brief time left, I have here from New York City a 
2018 flood plain map. These are the flood plains predicted from 
last year. They also provide a 2050 flood plain map and a 2100 
flood plain map. So I can buy a home and see that if I want to 
pass it on to my kids, it will be underwater. Ms. Smith, is 
this available in all parts of the country?
    Ms. Smith. No, it is not. And I think there are some other 
places that have started to do similar, but the more we do of 
that, the better.
    Ms. Ocasio-Cortez. And when people buy a home, do you think 
that they should have this information printed out right there 
and handed to them?
    Ms. Guzman. Are you asking me? Yes. Absolutely. First of 
all, it is about due diligence and making a--
    Mr. Heck. The gentlewoman's time has expired.
    Ms. Ocasio-Cortez. Thank you.
    Mr. Heck. The gentlewoman from North Carolina, 
Congresswoman Adams, is recognized for 5 minutes.
    Ms. Adams. Thank you, Mr. Chairman.
    And thank you all for being here today.
    I want to ask Ms. Lamm, the NFIP is currently $20.5 billion 
in debt. Every year policyholders pay approximately $400 
million in interest to service the debt.
    Do you believe that Congress must address the NFIP's debt? 
And do you think that it makes good sense for policyholders who 
may be already suffering from affordability challenges in a 
cash-strapped program to pay $4 billion just in interest 
payments on a debt that NFIP will never pay?
    Ms. Lamm. Thank you. I believe that a forgiveness of the 
debt is important. We have to forgive the previous debt because 
you are 100 percent correct. We are never going to get ahead. 
But getting rid of the current debt and then processes and 
policies to move forward to make the program more solvent would 
be of great benefit.
    Ms. Adams. Okay. Thank you.
    Congress has been grappling with the issue of affordability 
of flood insurance for a long time. So do you think the 
discussion draft that we are considering today, which would 
stand up a pilot program to offer means-tested assistance for 
low- and moderate-income households to help them afford flood 
insurance is a step in the right direction?
    Ms. Lamm. Yes, ma'am.
    Ms. Adams. Are there other potential solutions that you 
think should be under consideration?
    Ms. Lamm. I think that we just need to keep in mind that 
any time we are doing a better approach that helps low- to 
moderate-income people be able to either obtain insurance or 
community-based is a good way to keep going. And building the 
capacity at a State level, I think is also important.
    We mentioned earlier the community assistance program which 
funds flood plain management. That is where the rubber meets 
the road at a local level because that assistance provided to a 
community can help them better prepare their citizens for the 
floods that come in the future.
    Ms. Adams. Okay. You mentioned local. Last year, Hurricane 
Florence came into my district of 850,000 residents there in 
Charlotte. One thing we had in our favor is it sits in 
Mecklenburg County, which is one of the few places in the 
country that has begun emptying out its flood plain, reducing 
risk by helping to move people at home from the most vulnerable 
neighborhoods. And I would like to commend my good friends on 
the city council and our mayor, Mayor Lyles, for their 
foresight and thoughtfulness in tackling the issue.
    Ms. Smith, could you speak about the importance of local 
communities having access to programs like FEMA's buyout 
program which can help to reduce burden on the NFIP?
    Ms. Smith. Absolutely. There have been many communities 
like Charlotte and the Mecklenburg area, who realized a long 
while ago that they needed to change where people were living, 
change where new development was going. For example, the City 
of Birmingham, Alabama, has had buyout programs for over 20 
years. They think 20 years of buyouts has avoided $60 million 
in losses over that time period.
    In Florida, the money that has come from FEMA, the State is 
tracking how many losses are avoided. And after Matthew, they 
think the projects they had done previously meant that they had 
saved probably more than $80 million in losses in that one 
storm.
    So if communities can leverage a bit of money from the 
Federal Government, it will be money well spent.
    Ms. Adams. Okay. What about some of the limitations to the 
current program?
    Ms. Smith. Largely funds, and the difficulty is that, 
again, right now, the money flows to people who have the flood 
insurance if it is to individuals. But trying to get 
communities money ahead of time so that they can think through 
and plan for what they will do rather than if you wait until 
after the storm when everyone needs to get back in their home, 
and you just are in a rush as opposed to making smart decisions 
about where and how to build again.
    Ms. Adams. Okay. Being proactive, I think, is the best way.
    Thank you very much. I appreciate your responses and I 
thank all of you for being here.
    I yield back, Mr. Chairman.
    Mr. Heck. The gentlewoman from Texas, Congresswoman Garcia, 
is recognized for 5 minutes.
    Ms. Garcia of Texas. Thank you, Mr. Chairman.
    And thank you all for sticking it out with us. It looks 
like we are coming toward the end.
    First, let me just kind of underscore some of the points 
that my colleague from Houston, Mr. Green, made earlier.
    I think Houston is beginning to feel like a pinata. We have 
been beaten up by one flood after another after another. And I 
know for me, in my district, we are still recovering, and we 
still have some families who have not been able to return to 
their homes. And regrettably, many of those are the folks that 
we really need to help because the median income in my district 
is about $42,000.
    When you look at the homes in Harris County that were 
flooded, there were 154,170 homes flooded in the county. Many 
of those were in my district. Only about 55,570 had insurance. 
And I don't know how much was FEMA, through the National Flood 
Insurance Program, and how much was private.
    But the bottom line is that is only 36 percent, about one 
out of three. So that means that the other two out of three 
have no coverage and have to go somewhere.
    I am not one of those to suggest that, well, they have to 
figure it out themselves. They have to eat cake. They have to 
do it on their own. I do think we need to do something to make 
our insurance more affordable, not only private insurance but, 
more importantly, our national program.
    And I am sure that many of you all are aware of the 
Affordability Framework document that has been prepared. And 
when I reviewed it and looked at the options--it looked at 
four--it seems to me that the chairwoman is correct, that we 
probably do need an income means insurance program so that we 
can assist those who are having trouble getting insurance. We 
already have so many people trying to decide whether they get 
their prescriptions or they pay their electricity or get 
groceries.
    At a time like this, you have an additional burden of, do I 
now make a choice of trying to get some flood insurance so I 
can be covered next time? Because many of these decisions are 
made after the fact.
    So my question starts with that. Do you all agree with this 
framework, and which one of the four choices--programs would 
you do? Or are you happy with the chairwoman's 5-year 
demonstration for a means-funded program? And I will start with 
you, Ms. Smith.
    Ms. Smith. I would say that the chairwoman's approach is a 
good place to start, because she is trying to sort of thread a 
needle that we are going to try to help low-income folks. I 
think clearly, we need FEMA to run the numbers against what 
will happen.
    The difficulty is that the program is so deeply underwater 
in debt right now that there is not much money to work with. So 
I think we want to try to help the low-income people but also 
make some changes so that we don't face the shortfall.
    Ms. Garcia of Texas. Okay. If I can ask the rest of the 
panel, and this time yes or no in the interest of time, because 
I have one more question and very little time left.
    Ms. Guzman?
    Ms. Guzman. Yes. We support the provision. First of all, we 
want to make sure that when the rates go up, they go up 
gradually. We don't want people getting sticker shock and then 
being faced where they are now--
    Ms. Garcia of Texas. So, yes, you support the program.
    Ms. Guzman. Yes.
    Ms. Garcia of Texas. Great.
    Mr. O'Mara?
    Mr. O'Mara. There wasn't enough focus on mitigation. We 
want to see more to reduce risk on the front end.
    Ms. Garcia of Texas. Okay. So you are a yes or a no?
    Mr. O'Mara. I mean, yes, but--
    Ms. Garcia of Texas. Okay. That is fine.
    Next?
    Mr. Lehmann. In my written testimony, I do have some 
comments on the program as it is proposed. I support the idea 
but not necessarily the structure.
    Ms. Garcia of Texas. Okay. Ms. Lamm?
    Ms. Lamm. Yes, with means-tested--
    Ms. Garcia of Texas. Mr. Heidrick?
    Mr. Heidrick. The Big ``I'' hasn't formulated a specific 
support for any one specific proposal but looks forward to 
working with the committee to develop one.
    Ms. Garcia of Texas. Okay. And then I wanted to follow up 
with you, Ms. Guzman. One of my colleagues asked about 
disclosure. And I believe you answered about full disclosure, 
but, Ms. Guzman, I think you represent the REALTORS?
    Ms. Guzman. In review, every State has disclosure but 
disclosure is merely check-the-box. What we want are more 
accurate mappings. We would like to have access to FEMA's 
database where people can actually see if those claims on that 
property were made--
    Ms. Garcia of Texas. So your organization does favor 
disclosure of, yes, the house was damaged, and it was this much 
in these areas?
    Ms. Guzman. The only way that is going to be available is 
through modernization of the mapping program. That is the only 
way it is going to be available.
    Ms. Garcia of Texas. Okay. Does anybody else want to jump 
in on this one?
    No?
    Well, there it is.
    I yield back the rest of my time.
    Mr. Heck. The gentleman from Virginia, Congressman 
Riggleman, is recognized for 5 minutes.
    Mr. Riggleman. Thank you very much. It looks like I am 
last, I think, maybe, looking around. Is that possible?
    Mr. Heck. Not quite.
    Mr. Riggleman. I don't know if this is a fun question but I 
have been reading some of these provisions, and I just want to 
let you know that I live in a very rural district, the Fifth 
District of Virginia. It starts about an hour south of here and 
goes all the way to the North Carolina border.
    When we talk about rural, you are talking about by-right 
structures. For instance, I have a by-right farm structure 
zoned A1 in Virginia--and this is a question; if it is not 
answerable, it is okay, because it is actually curiosity as I 
was reading this section--that holds special items. So I own a 
distillery. It has about 400 barrels of bourbon and whiskey in 
it.
    But there are a lot of structures like that in the Fifth 
District that are allowed to be built for special use that it 
is really not defined exactly what it is as far as residential 
or commercial. So if you have these facilities, which are 
neither residential or commercial structures, and they serve a 
specific unique function, based on what I see in the Fifth 
District, which has a lot of special and unique functions with 
special-use buildings that are built by-right--and we can start 
left to right. I don't want to take really long, because I know 
you are tired. But this is actually a curiosity question. I 
think this is in Section 9, agricultural structures and special 
flood hazard zones. By the way, I have an intelligence 
background in GIS, so this gets really exciting for me. And I 
know I just nerded out on that a little bit.
    But can you provide some insight, from left to right on 
this issue because, in your opinion, does this legislation 
properly address all those concerns or any concerns about by-
right structures with special use that are neither residential 
or commercial?
    I know that is a very specific question in Section 9, but 
it is near and dear to my heart in our rural district, in the 
Fifth District of Virginia. We can start right to left with Mr. 
Lehmann or Ms. Lamm, go right to left, Mr. Lehmann. And I know 
we have 3 minutes left, so you don't have to take a whole lot 
of time.
    But do you see that--does this address those concerns for 
by-right structures outside of the residential or commercial 
area?
    Mr. Lehmann. I will humbly submit that I do not know.
    Mr. Riggleman. Thank you, sir. I knew this was specific, 
so--
    Mr. O'Mara. Yes. I think we will get back to you. But I do 
think that if you have good mapping and kind of good data, the 
case-by-case mitigation measures to make sure that that 
individual study is resilient, it should be rewarded with a 
price structure that matches. And if it is not resilient, then 
it should be priced accordingly.
    Mr. Riggleman. No. That is excellent.
    The last flood we had in our area--the reason I am asking 
some of this--was in 1969, in that specific area. But with GIS 
mapping, it said it actually wasn't a flood plain. So I didn't 
build anything there. But there are some other areas that we 
did not think would flood. I don't know if you guys know, but 
in our district, we have seven or eight counties under FEMA. 
Michael put a punch to it on flooding there destroying one 
whole town.
    So I don't know if they knew that was specifically--some of 
those structures were in the flood plain. So that is why I am 
asking the question. I know it is specific. And I promise, this 
isn't ``stump the dummy,'' which I got when I was an 
intelligence officer, I promise. It is actually a real 
curiosity question.
    If structures outside of those specific definitions would 
be covered with some type of change in the GIS posture, and, I 
am just sitting here looking at it because there is millions of 
dollars of special use buildings in our district.
    Ms. Guzman. Well, the way it is right now, you have to have 
an NFIP policy on each and every building that you have on your 
land, which is ridiculous because there should really be based 
on your survey so that you cover comprehensively completely. 
Even on residential homes--
    Mr. Riggleman. Ma'am, you are in my head. You are exactly 
right.
    Ms. Guzman. And so, send me bourbon. But anyway--
    Mr. Riggleman. Yes, ma'am.
    Ms. Guzman. But also, on residential homes, they would have 
to have a separate policy for garages as well, so it is not 
included.
    So, if they could change that and make it one policy for 
all buildings on the property, then it would be much more 
comprehensive and better coverage.
    Mr. Riggleman. Thank you.
    Ms. Smith. Thank you for the homework. I am not going to 
try to answer right now.
    Mr. Riggleman. And, again, it was just something--looking 
at a structure, I am like, my goodness, I am not residential or 
commercial, and I know about 50 or 60 businesses that are not 
either. And even outside of liquor, which I don't know if I can 
say in here, I think I can, but outside of liquor, beer, you 
are also talking about wine, but you are talking about other 
structures that hold other things, nothing illicit, it is the 
Fifth District of Virginia, but that is why I am asking those 
questions.
    Yes, sir?
    Mr. Heidrick. My agency is located on the barrier islands 
in southwest Florida. So we don't insure a lot of farms or 
farm-oriented businesses. And one thing I learned is, don't try 
to become an expert in something that you are not, so--
    Mr. Riggleman. Yes, sir.
    Mr. Heidrick. --I don't have an answer for you, but we can 
get one for you.
    Mr. Riggleman. Thank you.
    Ms. Lamm. Not specifically to that. We will get you an 
answer. But we are also in support of the pilot program for 
policies for multiple agricultural structures. But we will get 
a specific answer to your specific question.
    Mr. Riggleman. And what you said, Ms. Guzman and Ms. Lamm, 
about the multiple structures used on by-right builds for 
specific types of industry, and I am talking tens of millions 
of dollars. And based on the flooding that we have had 
recently, there is a concern in the district about flood 
insurance for that specific idea.
    But I have 90 seconds. That was perfect. You guys are 
amazing.
    Thank you very much, and I yield back.
    Mr. Heck. The gentleman from Texas, Congressman Gonzalez, 
is recognized for 5 minutes.
    Mr. Gonzalez of Texas. Thank you.
    My question is for Mr. O'Mara.
    On page 7 of your written testimony, Mr. O'Mara, you stated 
that, in addition, Congress should consider mapping beyond a 
special flood hazard area. Floods and risks do not stop at a 
line drawn on a map, which I can't agree more with. And many 
properties and communities outside of these areas are at risk 
of flooding. In fact, almost a quarter of all flood claims 
occur outside the risks of SFHAs.
    What additional features should be collected in addition to 
elevation data, or, in a sense, what else beyond SFHA should we 
be doing?
    Mr. O'Mara. We want to see the state-of-art technology 
around LIDAR being used as the standard to do a map at the 
property level across the entire country. When you have 3 
thousand-year storms in 3 years, all of a sudden, the 
traditional lines of a hundred-year flood plain don't make 
sense anymore.
    And so, for us, it is just the best data possible as 
transparently provided as possible so then folks can know the 
risk and make assessments. And hopefully, there is some ability 
to then make much wiser decisions. And right now when you are 
looking at topographic maps, in some cases, they are 10 to 15 
and 20 years old.
    Mr. Gonzalez of Texas. Even older than that, I think.
    Thank you for your response.
    The next question is for Ms. Guzman.
    Ms. Guzman, in your written testimony, on page 5, you state 
that NAR supports the following bill provisions: expand mapping 
to all areas and risks in the United States, which I can't 
believe we haven't done already; and provide for a digital 
display and property-specific mapping.
    What property-specific mapping are you referring to? And 
what attributes beyond elevation should be collected at the 
property level?
    Ms. Guzman. Well, not only elevations, but also to show the 
actual buildings that are on that plain or that location. 
Without that information, people can't--first of all, when we 
talk about smart and safe construction--there, I said it, I get 
a dollar--with this data, they actually can go ahead and see 
where to build much more effectively. Now, if they go ahead and 
build in an area where they could be potentially high risk, 
they know that they had to do mitigation in advance. So that 
there is low risk to the people who move in and also less risk 
to the taxpayer who may have to cover something in the future.
    But policyholders then go in with eyes wide open. They 
could actually do their due diligence and see what the impacts 
are for them to moving in there and what the true cost of 
owning that property is going to be over a period of time.
    Mr. Gonzalez of Texas. Thank you.
    Now, how far are we from this? If we all agreed today that, 
hey, we are going to begin, we are going to get on it, and we 
are going to do this nationwide, how long would it take for us 
to be able to come up with accurate mapping?
    Ms. Guzman. I have no idea.
    Mr. O'Mara. It is a resource issue. We could do it fast. A 
lot of States have great data. There is data across different 
parts of the Federal and the State Governments. They have 
pieces of it. A lot of it is not interoperable right now. But 
if it was a priority that had a few dollars attached to it, it 
would be one of these smartest investments we could possibly 
make to make our country more resilient.
    Mr. Gonzalez of Texas. I agree.
    Ms. Guzman. And I believe also leveraging people who 
already have those resources, because some people are already 
actually doing it, so why reinvent the wheel insted of working 
with those who already have the data?
    Mr. Gonzalez of Texas. Thank you.
    Anyone else want to address the question?
    Mr. Heidrick. The flood zone that is most outside of the 
special flood hazard area, the X flood zone, is incredibly 
broad. It is defined by the NFIP as having a probability of 
flooding in any given year somewhere between 0.2 percent and 
0.99 percent.
    So you have one flood zone that includes a structure that 
is 5 times more likely to flood than another. There is an awful 
lot we can do to improve, and the bar is not high to improve 
upon.
    Mr. Gonzalez of Texas. Mr. O'Mara, just going back to you, 
you said that we could do this really fast. How fast? A year?
    Mr. O'Mara. A lot of this is done kind of using technology, 
kind of flying over places, right? So, in the State of 
Delaware, we did the entire State in a handful of days. And 
this is where working across jurisdictions to try to think 
about the best way to do it, but there are--a lot of States 
have the data, but do the quick gap analysis, what needs to be 
done, what needs to updated most recently, and you could be 
talking within a year.
    Mr. Gonzalez of Texas. Very good.
    Ms. Lamm. I would disagree that you could do it in a year. 
It took--
    Mr. Gonzalez of Texas. So how long?
    Ms. Lamm. Well, it depends on funding. If you were to dump 
enough money--
    Mr. Gonzalez of Texas. Assuming the funding was there.
    Ms. Lamm. Assuming the funding was there, I would think it 
would take about 5 years.
    Ms. Smith. I would--
    Mr. Gonzalez of Texas. Go ahead?
    Ms. Smith. I would also caution that maps are a partnership 
with local governments, and local governments have to adapt 
then so that the law actually has a built-in process for review 
and appeals. And some of those can take several years as well. 
So the hydraulics and the hydrology can take a long time, and 
then the review of the map can take a long time as well. It is 
going to be something--
    Mr. Gonzalez of Texas. So how long? 5 years?
    Ms. Smith. Potentially, 5 years. But we have to keep going 
because risk will change. So we have to keep going.
    Mr. Gonzalez of Texas. Right.
    I have areas in my district, for example, that are now 
flooding that weren't in the flood zone. And we have some that 
are in the flood zone but haven't flooded in over 100 years. It 
is just really difficult to have to manipulate through that.
    Thank you. I yield back.
    Mr. Heck. The Chair recognizes himself for 5 minutes.
    Ms. Guzman, FEMA issued a report not that long ago which 
indicates that incomes within flood zones, flood plains, tend 
to be lower than outside flood plains. Do the REALTORS agree 
with that assessment?
    Ms. Guzman. Yes, this is true, first of all, because it is 
about affordability. So they are looking for something that 
they can pay for sustainably over a 30-year period.
    What is incorrect about this is that it is really not 
cheaper for them to live there. Number one, they are not 
getting the true cost of what that home is and what it is going 
to cost them over the period of a lifetime while they live 
there because--
    Mr. Heck. Because of the flooding?
    Ms. Guzman. Exactly.
    So they could be out of pocket, and their flood insurance 
rates are going to continue to go up as well.
    So to say that we have affordable housing, is it really 
affordable when your rates are going to be maybe $10,000 to 
30,000 a year? That is not affordable, and that is not 
sustainable.
    Mr. Heck. So is this not, then, frankly, just more evidence 
that we are not producing or creating enough affordable housing 
in this country, that our housing stock is too low, especially 
in the affordable market?
    Ms. Guzman. I think that is a local discussion, and you 
would have to go community by community to see what their 
efforts are.
    Mr. Heck. But is it not true overall if we are seeing a 
disproportionate presence of low-income people in ``less 
desirable areas,'' namely flood zones?
    Ms. Guzman. If we take Louisiana and the Lower Ninth, for 
example, many of those people have lived there for over 40 
years. And many of them inherited property. So it is not 
necessarily that they were low income. They also inherited 
property. They were there for a long period of time. So their 
risk was that they didn't get flood insurance because they 
couldn't afford it, but they already own the home outright.
    So we have to look at this from a community standpoint and 
go by every municipality or town and measure it that way. I 
don't like broadbrush discussion on something like this.
    Mr. Heck. Well, I do, and here is mine: We are not creating 
enough affordable housing in this country, period.
    And, with that, I ask unanimous consent to submit to the 
record additional materials as given to the Chair.
    Hearing no objection, it is so ordered.
    I would like to thank the witnesses on our second panel 
very much for your testimony today.
    The Chair notes that some Members may have additional 
questions for these witnesses, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    I ask our witnesses to please respond as promptly as you 
are able.
    I thank you again very much for your participation.
    With that, the hearing is adjourned.
    [Whereupon, at 1:30 p.m., the hearing was adjourned.]

                            A P P E N D I X



                             March 13, 2019
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