[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                       THE REAUTHORIZATION OF THE
                        NATIONAL FLOOD INSURANCE
                      PROGRAM: FEMA'S PERSPECTIVE
=======================================================================

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON HOUSING
                             AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 28, 2023

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 118-18
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                               __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
52-396 PDF                 WASHINGTON : 2023                    
          
-----------------------------------------------------------------------------------    

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas                EMANUEL CLEAVER, Missouri
TOM EMMER, Minnesota                 JIM A. HIMES, Connecticut
BARRY LOUDERMILK, Georgia            BILL FOSTER, Illinois
ALEXANDER X. MOONEY, West Virginia   JOYCE BEATTY, Ohio
WARREN DAVIDSON, Ohio                JUAN VARGAS, California
JOHN ROSE, Tennessee                 JOSH GOTTHEIMER, New Jersey
BRYAN STEIL, Wisconsin               VICENTE GONZALEZ, Texas
WILLIAM TIMMONS, South Carolina      SEAN CASTEN, Illinois
RALPH NORMAN, South Carolina         AYANNA PRESSLEY, Massachusetts
DAN MEUSER, Pennsylvania             STEVEN HORSFORD, Nevada
SCOTT FITZGERALD, Wisconsin          RASHIDA TLAIB, Michigan
ANDREW GARBARINO, New York           RITCHIE TORRES, New York
YOUNG KIM, California                SYLVIA GARCIA, Texas
BYRON DONALDS, Florida               NIKEMA WILLIAMS, Georgia
MIKE FLOOD, Nebraska                 WILEY NICKEL, North Carolina
MIKE LAWLER, New York                BRITTANY PETTERSEN, Colorado
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director
                 Subcommittee on Housing and Insurance

                    WARREN DAVIDSON, Ohio, Chairman

BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri, Ranking 
BLAINE LUETKEMEYER, Missouri             Member
RALPH NORMAN, South Carolina         NYDIA M. VELAZQUEZ, New York
SCOTT FITZGERALD, Wisconsin          RASHIDA TLAIB, Michigan
ANDREW GARBARINO, New York           RITCHIE TORRES, New York
MIKE FLOOD, Nebraska                 AYANNA PRESSLEY, Massachusetts
MIKE LAWLER, New York                SYLVIA GARCIA, Texas
MONICA DE LA CRUZ, Texas             NIKEMA WILLIAMS, Georgia
ERIN HOUCHIN, Indiana                STEVEN HORSFORD, Nevada
                                     BRITTANY PETTERSEN, Colorado
                           
                           
                           C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    April 28, 2023...............................................     1
Appendix:
    April 28, 2023...............................................    31

                               WITNESSES
                         Friday, April 28, 2023

Maurstad, David, Assistant Administrator, Federal Insurance 
  Directorate, Federal Emergency Management Agency (FEMA)........     5

                                APPENDIX

Prepared statements:
    Maurstad, David..............................................    32

              Additional Material Submitted for the Record

McHenry, Hon. Patrick:
    Written statement of the R Street Institute..................    36

 
                       THE REAUTHORIZATION OF THE
                        NATIONAL FLOOD INSURANCE
                      PROGRAM: FEMA'S PERSPECTIVE

                              ----------                              


                         Friday, April 28, 2023

             U.S. House of Representatives,
                            Subcommittee on Housing
                                     and Insurance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 9 a.m., in 
room 2128, Rayburn House Office Building, Hon. Warren Davidson 
[chairman of the subcommittee] presiding.
    Members present: Representatives Davidson, Posey, 
Luetkemeyer, Fitzgerald, Garbarino, Lawler, De La Cruz, 
Houchin; Cleaver, Velazquez, Tlaib, Torres, Garcia, Williams of 
Georgia, Horsford, and Pettersen.
    Ex officio present: Representatives McHenry and Waters.
    Chairman Davidson. The Subcommittee on Housing and 
Insurance will come to order. Without objection, the Chair is 
authorized to declare a recess of the subcommittee at any time.
    Today's hearing is entitled, ``The Reauthorization of the 
National Flood Insurance Program: FEMA's Perspective.''
    I now recognize myself for 5 minutes for an opening 
statement.
    Mr. Maurstad, thank you for appearing today for the second 
hearing of the Housing and Insurance Subcommittee in the 118th 
Congress. The Federal Emergency Management Agency (FEMA) plays 
a vital role through its disaster recovery efforts, and today, 
we will explore its management of the National Flood Insurance 
Program (NFIP), which has existed for over 50 years, and until 
recently has operated in the same manner and relied on the same 
outdated tools since its creation. And I just applaud the 
progress you are making as flooding in the United States is a 
significant, costly problem for both coastal and inland 
residents.
    Unfortunately, there is only one provider for nearly all 
residential flood insurance, the government-backed NFIP, which 
sells 93 to 95 percent of all residential flood insurance in 
the country. That is not just a bad idea from the perspective 
of creating a workable insurance model; it has also proven to 
be costly for taxpayers. To date, the program finds itself 
$20.5 billion in debt, even after Congress outright forgave $16 
billion just a few years ago.
    It seems clear to me that the program is in desparate need 
of reform, and I am glad that FEMA is bringing that reform. The 
process needs to start with this hearing, and with a 
reauthorization, and we hope this hearing will help us achieve 
the consensus to pass legislation.
    Lately, the committee has not been too involved in the 
oversight of ongoing operations and programs. Today is the 
first time we have heard from FEMA on the NFIP in over 6 years. 
That is something we need to get more serious about, if we are 
going to modernize the program that was created before the Moon 
landing in the 1960s.
    This committee has an important role to play in its 
oversight of the NFIP. And through hearings like this, Congress 
can identify whether the program is operating in an effective 
and transparent manner. Congress, however, has been missing in 
action from that job, as the previous Majority left the program 
on autopilot for a series of short-term extensions and 
appropriations bills.
    And frankly, the previous Republican Majority didn't finish 
a major reform. That has not only removed us from the process; 
it has made the program vulnerable to uncertainty for its 4.7 
million policyholders. We can and we must do better.
    To ensure stability while Congress does this important work 
of reforming the program on a longer-term basis, I have 
introduced H.R. 1392, the National Flood Insurance Program 
Extension Act of 2023, which would reauthorize the program 
through at least December of 2024. This bill would not only 
avoid a lapse in coverage, but it would also give this 
committee the time and the deadline freedom it needs to do a 
deeper dive into flood insurance reforms and to conduct 
additional hearings on NFIP-engaged stakeholders and craft a 
longer-term reauthorization.
    This work is crucial and will ensure that the program is 
moving in the right direction for both taxpayers and 
policyholders, particularly given FEMA's recent internal work 
to incorporate industry best practices and technology into its 
management of the program. That includes, most notably, the 
work regarding the adoption of Risk Rating 2.0 methodology, 
which is a transformative initiative to modernize how 
accurately it measures flood risk.
    Risk Rating 2.0 is a good first step in moving towards 
long-term financial visibility for the NFIP, and one that 
certainly deserves our attention to ensure this program can 
serve communities most at risk of flood events, and remain 
viable for years to come. I look forward to exploring it and 
FEMA's other recent modernization acts with you today. And we 
may have a set of policy recommendations for Congress on 
reforms that get this program on a sustainable path.
    With that, I thank the witness for his testimony today, and 
I look forward to the conversation.
    I yield back. And I now recognize the ranking member of the 
subcommittee, Mr. Cleaver from Missouri, for 4 minutes for an 
opening statement.
    Mr. Cleaver. Thank you very much, Mr. Chairman. And let me 
preface my comments by saying that I look forward to working 
with you. I think this is a serious and significant issue to 
which we have to give a great deal of our time and interest and 
creativity to resolve.
    Floods are the most frequent and severe weather threat and 
the costliest natural disaster facing the United States of 
America. Flooding events have occurred in all 50 States and 98 
percent of U.S. counties. According to the Department of 
Homeland Security, 90 percent of natural disasters in the 
United States involve flooding. Supercharged by climate change, 
these natural disasters are increasing in both frequency and 
severity.
    Shortly after I was elected, Hurricane Katrina hit. And at 
that time, our ranking member, Ms. Waters, and Representative 
Biggert led a delegation down to Mississippi and Louisiana. We 
saw firsthand what devastation had occurred in that area. And 
since Katrina, we have had significant events even on the East 
Coast, even in New Jersey and New York. We need to address this 
issue.
    Hurricane Katrina was destructive and it cost a great deal 
of money, the costliest flood in U.S. history, which means that 
the National Flood Insurance Program was hit with major losses 
and is still struggling. This includes $16.2 billion for 
Hurricane Katrina, $1.3 billion for Hurricane Irene, $8.8 
billion for Hurricane Sandy, $1.1 billion for Hurricane Irma, 
and $1.5 billion for Hurricane Ida and others.
    The NFIP is indispensable to the resiliency of American 
communities and more than 5 million policyholders. Many of 
these families are low- and moderate-income families or are 
forced to live in flood-prone areas due to the affordable 
housing crisis that this committee has not yet held a hearing 
on this Congress.
    However, the growing strength of floods and the storms that 
cause them are increasingly straining the financial health of 
the NFIP. The NFIP is now over $20 billion in debt, and the 
program pays well over $1 million a day in U.S. Treasury 
interest. This is the third-largest NFIP activity by cost. In 
no uncertain terms, the current program is fiscally 
unsustainable.
    I said all 50 States earlier, but that should also include 
the U.S. Territories. In many ways, they have been dealt with 
almost as if they were stepchildren to the United States of 
America. In no uncertain terms, the current program is fiscally 
unsustainable. NFIP reauthorization, what should be a long-term 
reauthorization, is an opportunity to put the program on sound 
financial footing, increase risk analysis and communication, 
improve community resilience, and make technical and 
operational enhancements to the program.
    This committee has an opportunity to make our families, 
businesses, and communities safer and more resilient, and to 
build and rebuild in a way that meets the challenges of the 
reality of climate change.
    I am interested to see the Republican plan on flood reform, 
as I just mentioned to the Chair. And I intend to make myself 
available to work with him.
    Thank you very much. I yield back.
    Chairman Davidson. The ranking member yields back.
    The Chair now recognizes the Chair of the full Financial 
Services Committee, Chairman McHenry, for 1 minute.
    Chairman McHenry. I want to thank the chairman and the 
ranking member. And I want to thank the members of this 
committee for working in a bipartisan way to reauthorize the 
National Flood Insurance Program. This is a continuation of the 
work that then-Chairwoman Waters, and myself as then-Ranking 
Member, worked on 4 years ago, to authorize the program in a 
balanced way.
    We reported that bill out of committee without an ascending 
vote, and dealt with a lot of challenging issues there. So, we 
want to reauthorize the program in a balanced and bipartisan 
way.
    We thank the Administrator for being here, for his 
testimony, and for his leadership and his team's leadership to 
make sure that we take into account the changing climate, and 
make sure that we take care of those in our society who are 
challenged to pay these bills.
    We want to make sure that we have a program that is current 
with the risks and balanced for the American people. So, I want 
to thank this subcommittee for dealing with this in a 
thoughtful way.
    For a point of personal privilege, I want to acknowledge a 
long-time Financial Services staffer, Ed Skala, who has worked 
on this committee for longer than I have been a Member of 
Congress. And for the first time, his mother, Beatrice, is 
here, and his sister, Bonnie, as well as his niece, Alexa. 
Thank you for being here. Thank you for keeping tabs on Ed. He 
has sharpened up today, because you're here, and we are 
grateful for that. But I am very grateful for his advice and 
his counsel. He is a long-time key member of the Financial 
Services Committee staff, and works with both Democrat staff 
and Republican staff very well. And I count on Ed's counsel 
every day, so thank you.
    With that, I yield back.
    Chairman Davidson. The Chair recognizes the ranking member 
of the Full Committee, Ms. Waters, for 1 minute.
    Ms. Waters. Thank you very much, Mr. Davidson, and I 
appreciate this hearing today.
    Congress designed the NFIP to be self-funded through annual 
insurance premiums collected from policyholders. Currently, the 
NFIP is drowning in $20.5 billion of debt, with $1 million in 
interest accruing every single day. And I just wonder what 
effect it would have if Congress simply enacted a clean 
reauthorization of the NFIP and maintained the status quo for 
the program instead?
    I am not going to raise that question now, but I am anxious 
to hear what is going to be said today. I want Mr. Maurstad to 
explain to us how he is going to carry out the functions of the 
NFIP. I want him to talk about money. I want him to talk about 
debt. And I want to get down to some real answers today. With 
that, I yield back the balance of my time.
    Chairman Davidson. The ranking member yields back.
    Today, we welcome the testimony of Mr. David Maurstad. Mr. 
Maurstad is FEMA's Assistant Administrator of the Federal 
Insurance Directorate and Senior Executive of the National 
Flood Insurance Program. He has over 25 years of experience in 
both public service and insurance. Mr. Maurstad received his 
Masters of Business Administration from the University of 
Nebraska.
    We thank you for taking the time to be here. You will be 
recognized for 5 minutes to give an oral presentation of your 
testimony. And without objection, your written statement will 
be made a part of the record.
    Mr. Maurstad, you are now recognized for 5 minutes to give 
your oral remarks.

 STATEMENT OF DAVID MAURSTAD, ASSISTANT ADMINISTRATOR, FEDERAL 
  INSURANCE DIRECTORATE, FEDERAL EMERGENCY MANAGEMENT AGENCY 
                             (FEMA)

    Mr. Maurstad. Good morning, Subcommittee Chairman Davidson, 
Subcommittee Ranking Member Cleaver, Full Committee Chairman 
McHenry, Full Committee Ranking Member Waters, and members of 
the subcommittee. Thank you for the opportunity to testify 
today regarding FEMA's perspective for the reauthorization and 
reform of the National Flood Insurance Program. For more than 
50 years, the NFIP has been critical to the nation's resilience 
policy.
    Today, as our changing climate poses a serious threat to 
our nation, and as the number and severity of disasters 
continues to grow, the NFIP requires meaningful structural 
change. Since the NFIP's last multi-year reauthorization in 
2017, the NFIP has experienced 25 short-term extensions and 3 
brief lapses. The short-term extensions are disruptive and 
cause existing and potential policyholders to lose confidence 
in the NFIP. We believe that a 10-year reauthorization, with 
comprehensive program reforms, is vital. We propose 17 
recommendations to reform the NFIP that are guided by four key 
principles.
    First, ensuring that more Americans are covered by flood 
insurance by making insurance more affordable to low- and 
moderate-income policyholders. Flood insurance is unaffordable 
for some policyholders. Under current law, FEMA does not have 
the authority to establish and charge premiums based on a 
policyholder's ability to pay. Although the NFIP offers 
mandatory discounts and cost subsidies, these discounts and 
subsidies do not take into consideration the policyholder's 
financial need, and in fact can make risk communication 
difficult because people may equate lower costs with lower 
risk.
    Reforms that address affordability, such as the use of a 
targeted assistance program, can offer current and prospective 
low- and moderate-income NFIP policyholders a graduated risk 
premium discount, while providing them with the knowledge of 
the full risk to communicate a property's true flood risk.
    Second, communicated risk in real-time, providing Americans 
with the tools to manage flood risk. Reforms that increase the 
scale and frequency of flood mapping and incorporate emerging 
priorities and technologies into the flood hazard and flood 
risk identification process will expand the ways in which the 
NFIP communicates risk. Raising awareness of true flood risk 
enables people to make informed decisions about their family 
and property. Home buyers and renters may lack awareness about 
flood risk when they complete real estate transactions.
    Reforms that would require States to establish minimum 
flood risk reporting requirements for sellers and lessors 
before residential transactions close would address this 
challenge. Additionally, we need to reform how we measure and 
communicate flood risk. The nation's evolving risks require 
flood hazard information that is more robust than Special Flood 
Hazard Area, and 1 percent annual chance to flood elevation.
    Third, reducing risk by addressing extreme repetitive-loss 
properties. Previous losses are a significant indicator of 
risk, meaning that if a property has flooded before, there is a 
high likelihood it will flood again. Since 1978, 350,000 
structures have had 2 or more paid losses, and nearly 3,000 
have suffered 10 or more losses. The NFIP must have better 
tools to address insured structures that experience multiple 
flood claims. Almost 3 percent of insured properties are 
considered unmitigated repetitive-loss properties.
    Reforming the NFIP to institute an objective threshold to 
deny coverage to the most flood-prone structures would 
discourage unmitigated rebuilding in areas with a history of 
flooding, and reduce financial risk to the NFIP, while ensuring 
coverage is still widely available to individuals, families, 
and businesses who might not be eligible for private-market 
coverage.
    Fourth, instituting a sound and transparent financial 
framework that allows the NFIP to balance affordability and 
fiscal soundness. Without this in place, longevity and 
sustainability of the program is at risk. The NFIP currently 
carries $20.5 billion in debt to the U.S. Treasury and 
anticipates paying approximately $619 million in interest in 
Fiscal Year 2023. As currently structured, the program is 
burdened with interest expense and is unable to pay this debt 
back in full.
    Canceling the NFIP's debt provides the program with a solid 
foundation that can support financial reforms around borrowing, 
future interests, enhanced liquidity, and an upper limit for 
the size of an NFIP event. These reforms address fundamental 
structural challenges and are essential to building the viable, 
sustainable NFIP that the nation needs and deserves.
    It is critical that Congress provides urgently-needed 
multi-year reauthorization and currently reform the NFIP. We 
look forward to working with Congress to develop a long-term 
solution that addresses the needs of the NFIP, its 
policyholders, and the nation.
    I am pleased to answer any questions.
    [The prepared statement of Assistant Administrator Maurstad 
can be found on page 32 of the appendix.]
    Chairman Davidson. Thank you, Mr. Maurstad. We will now 
turn to Member questions, and I will recognize myself for 5 
minutes.
    Thanks for addressing the need for reform. For 15 years 
now, the Government Accountability Office (GAO) has 
consistently labeled NFIP as a, ``high-risk program,'' calling 
it out for several things, including premium rates that do not 
reflect the full risk loss, transferring some of the financial 
burden of flood risk from individuals to taxpayers. And a lack 
of transparency that leads some to, ``mistakingly perceive that 
they are not at risk of flood loss.''
    Unresolved affordability issues, which are addressed for 
many policyholders--all of that seems like a pretty grim 
picture with the job that you have walked into. Can you paint 
for us a picture of what the program's future looks like if we 
don't reform NFIP? And how critical is it that we bring this 
50-year-old program into the 21st Century with modern tools and 
techniques?
    Mr. Maurstad. Yes, sir. Thank you very much.
    First of all, it starts with the financial structure of the 
program. As already been mentioned a number of times, being 
saddled with interest costs that provide no real benefit to the 
program is harmful. If we do nothing, there is a 2-percent 
chance that at the end of 10 years, the National Flood 
Insurance Fund will have more dollars than when they started. 
But if we enact all of the proposals that we have put forward, 
there is an 81-percent chance, not 2 percent, an 81-percent 
chance that the fund will have more resources at the end of 
that 10 years.
    So structurally, as we look at the NFIP as a multipronged 
program of floodplain management, of flood risk grants and 
flood risk identification, the insurance having that sound 
financial framework is critical for the sustainability of the 
program.
    Chairman Davidson. Thank you for that. I applaud you, 
frankly, for the progress you have made on IT infrastructure 
for the program as well. One of the things that comes up often 
is mapping. So, how can a homeowner appeal or challenge a 
zoning determination?
    I know that under Risk Writing 2.0, flood zones are no 
longer a rating element for NFIP rates, but they are important 
for the application of mandatory purchase requirements for 
properties under the Flood Disaster Protection Act of 1973, as 
well as to determine eligibility for policyholder discounts 
like the Newly Mapped status, et cetera.
    Can you describe what the NFIP's current mapping appeals 
process is for homeowners under Risk Writing 2.0? And how that 
interacts with the appeals process? And I guess maybe how that 
is distinct from the mandatory purchase requirement?
    Mr. Maurstad. The investment of probably over $5 billion in 
the 22,400 community flood maps across the country is vital as 
we continue to look at how we can best identify flood risk.
    There are two primary purposes, as you indicated. The first 
outlined the Special Flood Hazard Area, the high-risk area 
where communities then agree on participating with the program 
to regulate construction in that area. And the second is the 
mandatory purchase requirement.
    Dealing with the first, it is a local ordinance, so to 
start with, you can look to the local government to make sure 
that your property is accurately reflected in the local 
community's Flood Insurance Rate Map. Beyond that, we have two 
ways, you can go directly to FEMA for a flood map amendment, 
and then, there is also a second way. So, we encourage 
policyholders to work with their agents, and to work with their 
community leaders and regional staff who are there to be 
helpful. Also, if there is a question about their flood zoning, 
to come to FEMA, and we will help address that.
    Chairman Davidson. Thank you. When it relates to a 
mandatory purchase, I think in particular it would be good to 
have a path where if the lender for a property doesn't 
necessarily agree that it is in a flood zone, if you can 
establish with surveys and whatnot that this is clearly not in 
a flood zone, that we let the underwriter take the risk and 
then say, okay, those are astute folks you have chosen, and 
proven that it is not in a flood zone, you can decide.
    I think just for the record, and you might not note this 
off the top of your head, but let's look to repeat losses. What 
is the record for the number of times we have repaid or paid 
for the same property? I have heard reports as high as 30 or 35 
times. Do you know the record off the top of your head?
    Mr. Maurstad. I do not. I know that it is way too high.
    Chairman Davidson. Could you get back to us with that, the 
record holder?
    Mr. Maurstad. Yes, I will.
    Chairman Davidson. Thank you. My time has expired.
    I now recognize the ranking member of the subcommittee, Mr. 
Cleaver from Missouri, for his questions.
    Mr. Cleaver. Thank you very much, Mr. Chairman.
    With Hurricane Katrina, some of the things we saw were 
Senator Trent Lott's house was wiped away, with nothing left. 
Congressman Gene Taylor's house was wiped away; only the front 
stoop was still there. Even though we had some initial 
problems, eventually they were taken care of, but the majority 
of the victims were poor, in Mississippi, in and around Biloxi, 
and also in New Orleans. And while renters do qualify to 
purchase NFIP coverage, and are often affected by flood 
disasters, they are less likely to have flood insurance. The 
people in New Orleans--we had public housing decimated in New 
Orleans. And at the time, we only had one--we still do, one 
replacement. So, we could only replace the units that were just 
awful. The poorest people in the country suffer the most when 
these disasters hit.
    Mr. Maurstad, can you discuss what we know about the 
renters' relationships with private flood insurance and what 
may be some answers to this issue?
    Mr. Maurstad. Yes, sir. Thank you for that question. I 
recall the devastation associated with Katrina very well, as I 
was leading the National Flood Insurance Program at that time 
also. And it really exposed a number of the faults associated 
with the program that we need to continue to work on and 
address.
    And certainly, there is no question that with the 
discriminatory land practices of the past, many less-fortunate 
Americans live in the high-risk areas for flood in communities 
across the country, which is really why the affordability 
proposal that we have included in our recommendations is 
important for the committee to consider. Being able to help 
those individuals get the financial resources they need after a 
flooding event is critical, because they are the ones who have 
the most difficulty in recovery. We have seen that time and 
time again.
    Mr. Cleaver. Thank you very much.
    We know that a defining characteristic between the NFIP and 
the private market is that the Federal Government cannot deny 
consumers who apply for coverage, including from the NFIP. Yet, 
the private market often can, unless it is based on some kind 
of discrimination. In fact, we have heard from homeowners in 
Houston, Texas, that when the water came out of the bayou after 
Hurricane Harvey, they were dropped by their private insurers . 
While some had the means and desire to still purchase new flood 
coverage after being dropped, many share that they were denied 
coverage by the private market. Can you expand on the market 
trends and what role NFIP might play here?
    Mr. Maurstad. There are a couple of points I would like to 
make, sir. One is we need more property owners, renters, and 
small businesses to have flood insurance coverage. There is a 
huge flood insurance gap that needs to be filled. The NFIP is 
working to do that, but we also need the private sector to 
increase their efforts to try to make sure that property owners 
have the coverage that they need. As you pointed out, 
especially renters, because we know very few renters recognize 
the flood risk they have.
    So, we are working with our agents to make sure that we 
also have a focus on not just the dwelling but also those who 
rent. It is a very serious problem.
    One of the provisions in our recommendation is to let a 
policyholder who leaves the National Flood Insurance Program 
and tests the private market, and then decides they they want 
to come back to the NFIP, that we bring them back into the 
program in the same position that they were in when they left 
the program. So, if they were on a glide path to their full 
risk rate, they would enter the program back in the same place 
on that glide path as when they left.
    Mr. Cleaver. Thank you. My time has run out. I am really 
interested in the whole issue of reinsurance and how it impacts 
the industry. You and I have had some conversations about this 
already.
    I yield back, Mr. Chairman.
    Chairman Davidson. Thank you.
    The gentleman from Wisconsin, Mr. Fitzgerald, is now 
recognized for 5 minutes.
    Mr. Fitzpatrick. Thank you, Mr. Chairman. In late July 
2022, FEMA released a concerning draft proposal called, 
``Direct to Customer.'' In its release, FEMA noted that it is 
imperative that FEMA enable the digital sale and servicing of 
flood insurance to increase the number of people covered. FEMA 
noted that this is a long-term project and stressed that they 
are in early stages of looking at the concept. In this digital 
age, there is often a rush to cut corners under the erroneous 
notion that an automated process can replace human interaction 
and expertise.
    Any kind of proposal that undercuts the valuable and 
trusted role of the independent insurance agents and brokers in 
their role in how this plays out could have a negative impact 
on increasing flood insurance participation rates. We talked a 
little bit that about earlier this morning.
    We saw a similar dynamic play out in Economic Injury 
Disaster Loans (EIDLs) offered directly by the Small Business 
Administration (SBA) during the pandemic, a perfect example, 
which had a much higher incidence of fraud than the Paycheck 
Protection Program (PPP) loans which were issued through 
financial institutions. We have had a lot of concerns about the 
Direct to Customer approach to distribute flood insurance, 
which ultimately would not reach customers that the NFIP or 
agents are not already reaching.
    And the agents, whom we heard from last month, continue to 
play a role in the servicing plans. It is unlikely a call 
center would offer the same kind of perspective. To me, it 
sounds like a mess. So my question to you is, what is your take 
on the status of FEMA's exploration of offering Direct to 
Customer flood insurance plans?
    Mr. Maurstad. Thank you very much for that question. My 
first response would be that we are being very careful and very 
deliberate about our exploration of whether it makes sense for 
the National Flood Insurance Program to entertain the thought 
of developing a Direct to Customer program. As an agent for 2 
decades, I fully understand the value associated with agents. 
And at this point in time, and as we continue our exploration, 
there is no intent to not have agents involved in our Direct to 
Customer program.
    We rely on the insurance agents to be able to accurately 
and helpfully provide the information that their customers need 
to analyze their flood risk, and then have the insurance 
coverage that they need so much after a flood event.
    Mr. Fitzpatrick. Bear with me, too, on this question, but 
just kind of following up on a proposed Direct to Customer 
online sales--I just wanted to prove that point. But the data 
that is required, simple stuff, the foundation type, the 
presence and number of flood openings, depending on the 
foundation type, data on construction, existence and 
identification of any substantial improvements, construction 
type, flood-proofing status, eligibility for machinery and 
equipment elevation discount, square footage, number of floors, 
and building replacement costs are all of the things that a 
hands-on agent would take a look at, am I correct? This is not 
just a simple formula in which you say, plug in this number, 
plug in this number, and here is how much you are going to get.
    Mr. Maurstad. Absolutely. You are not going to get any 
argument from me on the importance of the agent in the process. 
And again, I would emphasize that we are in the exploration 
phase of looking at this, but we do feel it is our 
responsibility today to look at every way in which we can 
potentially close the insurance gap that the country faces. If 
we are going to have a modern NFIP that meets the needs of the 
customers where we are, we at least have to have the answer as 
to why we do or do not have Direct to Customer.
    Mr. Fitzpatrick. Thank you very much.
    One of my concerns is that this can definitely be 
oversimplified, especially in some of the hearings that we have 
had here in Congress.
    I yield back.
    Chairman Davidson. The gentleman yields back. The Chair now 
recognizes the ranking member of the full Financial Services 
Committee, the gentlewoman from California, Ms. Waters.
    Ms. Waters. Thank you very much.
    I am from California and we have been suffering recently 
with both fires and flood. And for a couple of years, we had a 
drought. And then, because of climate change, which is denied 
by some people, it rained for, I think, 3 weeks or more every 
day, so we have some real problems.
    And now, we really have to figure out what to do. Not only 
are we having these problems in California, but I was recently 
in Florida and I saw people who had gotten a little bit of 
money from FEMA that won't even begin to restore their homes, 
et cetera, et cetera.
    Congress has designed the NFIP to be self-funded through 
annual insurance premiums collected from policyholders. 
Currently, the NFIP is drowning in $25.5 billion in debt. To 
who do you owe the debt?
    Mr. Maurstad. We owe the debt to the Federal Treasury, 
ma'am.
    Ms. Waters. To the government.
    Mr. Maurstad. Yes, to the government.
    Ms. Waters. Are you part of the government?
    Mr. Maurstad. We are.
    Ms. Waters. So, the government wants you to repay the 
government this debt. Is that right?
    Mr. Maurstad. That is our obligation.
    Ms. Waters. Oh, that doesn't make good sense.
    The NFIP is drowning in $20.5 billion in debt with a 
million dollars in interest accruing every single day. Again, 
what effect would it have if Congress simply enacts a clean 
reauthorization of the NFIP and maintains the status quo for 
the program and its debt?
    Mr. Maurstad. Thank you. The cancelation of the debt is one 
of the 17 recommendations that we put forward, and is the basis 
from which we can start to begin a sound financial framework 
for the program that is understandable, transparent, and 
predictable. So, it is vitally important that we have the debt 
canceled, that we don't have the burden of the interest costs 
that you mentioned that are only going up in this high-interest 
environment. It is a key part of the recommendations that we 
have put forward.
    Ms. Waters. So in addition to your basic responsibilities, 
you can't even get to mitigation and helping locals with 
mitigation measures and other kinds of things that would help 
when these floods come? Have you made it known to everybody on 
both sides of the aisle that we need debt cancelation?
    Mr. Maurstad. Yes. We have been very clear on how important 
that is. And we also do want to thank Congress and the 
Administration for the unprecedented amount of dollars that 
have been provided to FEMA for our mitigation programs, whether 
that be for building infrastructure and community programs, or 
for our Flood Mitigation Assistance Grant Program.
    We do have more mitigation dollars available than we had 
before. We still are a long ways from meeting the entire need, 
but it is definitely progress. And we are looking at making 
sure that all communities, including socially-disadvantaged, 
vulnerable communities, are also a part of these new grant 
proposals that are unfolding.
    Ms. Waters. Since I have worked on flood insurance for a 
long time, would you describe the competition in the United 
States from various areas putting pressure on you to say, my 
area is more important than their area, I need more up here 
than they need? Would you describe the kind of competition that 
you are confronted with, where people are desparate for help 
that you cannot provide?
    Mr. Maurstad. There isn't any question that Members are 
most concerned about their own constituents, and that is who we 
hear from a lot. But I would say that all across the country, 
we work through our regions with the States to identify the 
risky areas in their communities that would be able to have 
access to our mitigation funding. So, we run a national 
program. We are sensitive to all parts of the country. And I 
think we are doing a good job of making sure that we don't 
leave anybody behind.
    Ms. Waters. You are doing the best job that you can 
possibly do, but today, I want you to let these people know 
they can leave us fighting with each other about what is needed 
on the East Coast as opposed to what is needed in the south and 
on and on and on, or we can cancel this debt and do something 
about flood insurance. That is all I want you to do.
    Mr. Maurstad. There is no question that the competition for 
mitigation funds is steep. We generally are 3 to 4 times over-
subscribed when we have our grant process, so there is a great 
need for mitigation across the country.
    Mr. Fitzgerald. [presiding]. The gentlewoman yields back. 
Next, we have the gentlewoman from Texas, Ms. De La Cruz, for 5 
minutes.
    Ms. De La Cruz. Thank you, Mr. Chairman, for holding this 
important hearing today. And thank you, Mr. Maurstad, for 
taking the time to appear before Congress.
    As the chairman mentioned, this is the first time that a 
FEMA official has appeared before this committee in over 6 
years. It is time for Congress to assert its role in reforming 
the National Flood Insurance Program in order to ensure its 
long-term solvency after years of short-term funding extensions 
and minimal oversight from this body.
    As the vice chairwoman of this subcommittee, I look forward 
to working with Chairman Davidson, along with my colleagues 
here, to ensure that the NFIP is best serving the American 
taxpayers and is sustainable for the long-term. With that in 
mind, what steps has FEMA taken to improve the efficiency and 
effectiveness of the NFIP's administration? And how can the 
program be reformed to better serve its policyholders and 
taxpayers?
    Mr. Maurstad. I would say that the answer to that is in the 
17 recommendations that we have provided. There were nearly 100 
subject matter experts who worked on the development of the 
recommendations, and thousands of hours were put into what the 
program experts believe needs to happen to make sure that we 
have an NFIP that is sustainable into the future. We are 
looking at what we need to do from a pricing perspective to 
make sure that we are fairly and accurately identifying the 
risk and charging the right premium for it. We are in the 
process of developing new policy forms, our products, so to 
speak, so that we can better serve our policyholders and 
improve our distribution of the program through a simpler 
method by which agents can do business with the NFIP.
    Ms. De La Cruz. And with that being said, I have had 
insurance experience for over 20 years; I owned my own agency 
for over 20 years. And the NFIP is something very near and dear 
to my heart. I have one of the poorest counties in the entire 
nation in my district, Hidalgo County, that is really dependent 
on NFIP and the benefits that it provides to the customers. So 
when we talk about reform to better serve the policyholders, I 
think about how we can distribute this product to get more 
consumers involved. As an agent myself, I can tell you it is 
burdensome.
    What is burdensome is that we have to use our agency 
platform in order to sell homeowners coverage, and then we have 
to go to a completely different platform in order to actually 
sell the flood insurance product. And that takes time, and it 
takes more education in learning a whole new platform. How can 
we solve the efficiency in the agency program to make it easier 
for an agent to be able to sell the product?
    Mr. Maurstad. As I mentioned earlier, I was an agent for a 
couple of decades also, and I certainly understand the concerns 
that you raise, which was one of the drivers behind why we 
developed a new rating engine, and have replaced the old 
manual, which was twice the size of the binder that I have in 
front of me, and it took many hours to be able to write a 
policy.
    With our new rating engine, you can answer roughly a dozen 
questions and get the premium for a particular property. So, we 
have really streamlined the application process and the ability 
for agents to more effectively market and sell our product.
    Ms. De La Cruz. With that, I yield back.
    Mr. Fitzgerald. The gentlewoman yields back.
    Next, we will go to the gentlewoman from New York, Ms. 
Velazquez, for her questions.
    Ms. Velazquez. Administrator Maurstad, I have long called 
for a 10-year reauthorization of NFIP. And I believe that it is 
important so that it provides sufficient time for Congress and 
FEMA to evaluate the programs and consider the types of reforms 
that are needed to make it more stable.
    But wouldn't you also agree that it is hard to consider 
reforms or have hearings like this when you are working under 
short-term reauthorization windows? I am constantly worried 
about the program lapsing.
    Mr. Maurstad. The short answer is yes, which is why one of 
our recommendations is in fact to reauthorize the program for 
10 years, to provide the stability that the program needs and 
that the communities and our policyholders deserve.
    Ms. Velazquez. I represent New York, and in New York, 
multifamily housing is central to the housing stock. To date, 
FEMA data on Risk Rating 2.0 has focused exclusively on its 
impact on the single-family residential market. Where 
multifamily and commercial properties are included, they are 
combined with single-family and do not shed full light on the 
risk these buildings my face. Is FEMA planning to separate data 
on multifamily and commercial properties from data on single-
family structures so that the owners of these properties might 
fully understand their risk?
    Mr. Maurstad. I think you certainly raise an interesting 
concern, and it's one that I will take back. We of course are 
looking at ways that we can best understand the impact our 
program has, whether it is on renters, single-family 
homeowners, or multifamily dwellings.
    We are looking at ways that we can now capture the data 
with our improved information technology system. And we will 
definitely take that back and have more conversations with you 
on--
    Ms. Velazquez. Please, do so. This is an issue that I have 
been raising every time we have held hearings on flood 
insurance.
    While it seems small compared to single-family homes in the 
NFIP risk pool, commercial and multipolicies must pay 
significant amounts into the NFIP overall. Can you give us a 
sense of how much those properties are receiving on the claims 
side in an average year? Are they on financial traffic or a 
benefit on the program?
    Mr. Maurstad. I don't have that information with me, but we 
can certainly get that information for you and provide it to 
you.
    Ms. Velazquez. Thank you.
    Mr. Maurstad. Yes, ma'am.
    Ms. Velazquez. According to the Puerto Rico Planning 
Board--and we are talking about a U.S. Territory--200,000 
residences on the island are located in flood-prone areas. Yet, 
according to FEMA's data, as of February 2023, only 4,368 units 
have active NFIP policies. What actions is FEMA taking to 
ensure that more homeowners and renters in Puerto Rico are 
covered by NFIP policies in light of what we witnessed after 
Hurricane Maria?
    Mr. Maurstad. Yes. That is very much an issue of concern to 
the program. I have actually met with the insurance 
commissioner of Puerto Rico when I was down there working with 
him on what we can do to increase the number of property owners 
who have flood insurance protection.
    And we will keep working on that, because as I said, seeing 
homeowners and renters who don't have coverage in neighborhoods 
that I visited after events is tragic; their lives are 
completely disrupted and turned over. So, we need to do what we 
can to make sure they have their coverage. I believe the 
affordability proposal that we have included in our 
recommendation would be helpful.
    Ms. Velazquez. You need to be more proactive in that sense; 
a lack of awareness and information is an issue here. Thank 
you.
    Mr. Fitzgerald. The gentlewoman yields back.
    Next, we will turn to the gentleman from Florida, Mr. 
Posey.
    Mr. Posey. Thank you, Mr. Chairman.
    Mr. Maurstad, how much has the flood insurance program 
spent on maps?
    Mr. Maurstad. I will get you the exact figure, but it is 
upwards of a $5-billion investment.
    Mr. Posey. A $5-billion investment?
    Mr. Maurstad. Yes, sir.
    Mr. Posey. Does that include recent years?
    Mr. Maurstad. I will get you the exact figure and the 
amount by year, but that is cumulative. In the last few years, 
roughly speaking, it is been about $600 million.
    Mr. Posey. What is the most times the flood insurance 
program has paid for a total loss or maximum policy limits on 
one single insured property?
    Mr. Maurstad. The number of times?
    Mr. Posey. Yes.
    Mr. Maurstad. I don't have the exact number. That question 
came up earlier. I will certainly get it. I know that as I 
indicated in my opening remarks, there are hundreds of 
properties that have more than 10 losses.
    Mr. Posey. We have heard numbers as high as 16 times paid 
for a single total loss. I even heard one time that they paid 
30 times for a total loss of a property, which is absolute, 
complete insanity, in my opinion.
    Mr. Maurstad. Sir, right now we don't have the authority or 
the ability to not provide coverage to someone who is in a 
participating community. That is why we put forward in our 
recommendations a multiloss provision that would address the 
problem that you--
    Mr. Posey. I would think once you paid for total loss, you 
say, okay this is off the map, we are not going to insure this 
property again, much less more than 10 times, thousands of 
properties, perhaps. Last fall, one news source said that 
Administrator Criswell called the FEMA flood maps, ``useless.'' 
Could you briefly explain what she meant by that?
    Mr. Maurstad. I am not familiar with that remark. I know in 
my conversations with Administrator Criswell, she is supportive 
of the mapping program that we have, recognizing as we put 
forward in our recommendations that we can do more than we are 
doing now to identify risk outside the high-risk areas through 
non-regulatory products. And I believe that the Administrator, 
without doubt, sees the value associated with the Flood 
Insurance Rate Maps in the 22,400 communities across the 
country.
    Mr. Posey. When I was first elected 14 years ago, they said 
that to properly evaluate risk, they needed new maps, which 
would cost $500 million, and then, it would take 3 to 5 years 
to evaluate the maps. I passed amendments here a couple of 
times saying, why don't you just use DOD, Homeland Security or 
NOAA maps; they have a current topo in every inch of this 
country. There is no need to go outside to pay for more maps to 
be developed.
    The Association of State Floodplain Managers estimated that 
the price to consistently update floodmaps would range from 
$107 million to $480 million annually. Director Criswell has 
said that the current policy fee for mapping would have to be 
raised to a level that would threaten affordability and 
discourage insurance. Would you care to comment on that?
    Mr. Maurstad. Again, I think that the investment in our 
flood maps, whether it is from the policyholder fee or whether 
it is from the appropriation from Congress, is important to 
make sure that our maps accurately reflect the 1 in 100 percent 
chance event in the communities across the country.
    Mr. Posey. Why does FEMA continue to resist making all of 
the data and methods models that they use, the calculations and 
how they calculate it under Risk Rate 2.0, completely and fully 
transparent?
    Mr. Maurstad. Sir, I believe we have provided all the 
information that we have been requested to provide. We have 
been very transparent; we provided the entire methodology for 
the development of the actuarial sound pricing model that we 
now use. If there is additional information that would be 
helpful to you, we will certainly do our best to provide it for 
you.
    Mr. Posey. How can policyholders appeal their premiums 
under 2.0?
    Mr. Maurstad. They can work with their agent the same way 
that they work with premiums on the other insurance that they 
have with the agent. If they think the information that has 
gone into developing their premium for their particular 
property is inaccurate, then they can work with their insurance 
agent to correct that and make sure that the premium that they 
are being charged reflects the risk of their property.
    Chairman Davidson. The gentleman's time has expired.
    Next, we will go to the gentlewoman from Michigan, Ms. 
Tlaib.
    Ms. Tlaib. Thank you so much, Mr. Chairman.
    If I may, I would like to submit a New York Times article, 
``A Broke, and Broken, Flood Insurance Program,'' into the 
record.
    Chairman Davidson. Without objection, it is so ordered.
    Ms. Tlaib. Thank you so much.
    Mr. Maurstad, thank you so much for being here.
    As you know, I come from an incredibly strong community, 
the City of Detroit, where we have birthed movements on a 
number of things that I think kind of change the trajectory for 
our whole country, not just in the automotive industry, but in 
music, and everything.
    But even now, I talked to our Chair of our committee about 
the fact that many of our families farther away from bodies of 
water are now impacted in a very significant way from flooding. 
We are seeing that more and more.
    In my district, I was shocked that 4 times within one 
summer, I think between June and July, the City of Dearborn had 
huge amounts of flooding. In Inkster, I met a senior citizen 
whose basement didn't get coverage or anything. She is still 
dealing with mold, and she is in her 70s.
    So, I started looking and researching, what is the process 
of getting flood insurance? Of course, mapping continues to 
come up. But, say, for instance, Mrs. Smith from Inkster, or 
from Aviation Sub in Detroit, or from Dearborn, picks up the 
phone and says, ``I want to get flood insurance.''
    By the way, the average home insurance in Detroit 
specifically is about $3,700. And the majority of homes in my 
communities that I mentioned are valued at less than $100,000. 
These are working-class families.
    But she picks up the phone, and she wants insurance. You go 
to the list or whatever, and it comes back incredibly 
unaffordable, right? We talked about this. What is she supposed 
to do at that point? Because whether she went to the FEMA site, 
they said, sorry. First, they don't clean out basements--I 
don't understand that--unless there is, like, a room or 
somebody sleeps down there. It is this whole process they go 
through.
    And then, even though she brought her pictures, she showed 
me her receipts of all of the things, there was no sense of how 
she could even get covered. I don't know what we are supposed 
to do when the national program, to me, doesn't include all of 
the Americans who are impacted by flooding right now.
    And even when I talk to Full Committee Chair McHenry--we 
talked about this. I don't know. You tell me, Administrator. 
Out of the close to 5 million who can afford this, what is 
their income? What is the value of their homes? Is it the 
million-dollar homes that get access to the flood insurance? I 
want to know, because the families in my community are not able 
to access this in an equitable way. And I don't know how we 
change this, because I know we are just going to renew this and 
not make any changes. That is exactly what is going to happen. 
I have seen it happen over and over again.
    Mr. Maurstad. The affordability problem is one that has 
been around for a while. And, in fact, Congress recognized in 
the 2012 reauthorization that, as discounts and subsidies were 
going to move away, that affordability was going to be more of 
an issue.
    So, you charged FEMA with developing an affordability 
framework, which we provided to Congress in 2018, which is the 
basis for the proposal that we have put forward to develop a 
means-tested, premium-assistance affordability program. But the 
report tells us that about 25 percent of the individual 
policyholders in the high-risk area are low-income. It also 
tells us that 50 percent of the property owners in the high-
risk area are low-income.
    So, it is abundantly clear--and I understand how difficult 
it is to have those kind of conversations with people who need 
the coverage so badly and have had losses. But it has the 
information that we need to provide assistance through our 
affordability proposal.
    And I appreciate the committee's attention to that 
recommendation.
    Ms. Tlaib. I will end with this. One of the things--and I 
agree with Congresswoman Velazquez about the lack of access of 
information in regards to accessing the flood insurance. What I 
do notice is, even when my folks do have some sort of 
insurance, I have to call. And I personally call, and I would 
recommend my colleagues to pick up the phone and use the power 
of your office to call these insurance companies that deny the 
claims.
    It infuriates me when I have to pick up the phone or use my 
letterhead to say, hey, here is all of the things that my 
resident submitted. Is there is nothing you can do in regards 
to some of what is happening there? My residents are paying 
into a system and they are not getting--
    Mr. Maurstad. There absolutely is something that we can do. 
And, in fact, Congress also took steps to do something when we 
created the Office of the Flood Insurance Advocate for those 
who are having a difficult time working their way through the 
program, so they have that means.
    So, in addition to your having to do what you indicated you 
do with your letterhead, you can also send them to the Office 
of the Flood Insurance Advocate at FEMA to help them.
    But back to some of the earlier conversations--
    Chairman Davidson. The gentlewoman's time has expired. 
Maybe you could get that in writing.
    I will now turn to the gentleman from New York, Mr. 
Garbarino.
    Mr. Garbarino. Thank you, Mr. Chairman.
    Superstorm Sandy was one of the biggest natural disasters 
in U.S. history. While it was technically no longer a hurricane 
by the time it reached the shores of Long Island, Sandy caused 
massive coastal flooding that reached the heights of 5 and 6 
feet in places across my district.
    Given the risk of flooding along the South Shore of Long 
Island, my constituents are keenly aware of the need for 
affordable flood insurance. However, since Risk Rating 2.0's 
implementation, just under 4 million Americans have seen their 
premiums increase. In many instances, individual household 
rates have more than doubled since the launch of the new Risk 
Rating 2.0.
    Mr. Maurstad, you have gone on the record as saying it is 
both equitable and adaptable. You have also gone on to say that 
it corrects pricing inequities for close to a million 
policyholders living in low- and moderate-income communities. 
However, these comments seem to be in direct contrast with 
recent comments made by Secretary Mayorkas during his most 
recent appearance before the House Homeland Security Committee.
    To quote Secretary Mayorkas, ``DHS is reviewing and needs 
to continue to review the Risk Rating 2.0, given the concerns 
that have been expressed.''
    To me, it sounds as if the methodology for setting flood 
insurance premiums needs more tweaking than initially expected. 
From the outside, looking in, there seems to be a clear 
disconnect between you and the Secretary on the effectiveness 
of Risk Rating 2.0. Is FEMA and/or DHS currently reviewing the 
methodology behind Risk Rating 2.0's determination of risk? 
And, if so, can you provide an explanation of what is exactly 
is being reevaluated?
    Mr. Maurstad. Yes, sir. Thank you.
    I actually have been in conversation with the Secretary's 
office, and they continue to be as supportive of Risk Rating 
2.0 as when he issued a statement on April 1, 2022, in support 
of the changes.
    The only report that I am aware of is that the GAO is 
currently reviewing the Risk Rating 2.0, and we are cooperating 
fully with them. And I think that report will be coming out in 
the next couple of months.
    Mr. Garbarino. Okay. I think you should check with the 
Secretary, because last week in front of the committee, he said 
that DHS is reviewing and needs to continue to review Risk 
Rating 2.0.
    With what I have seen happen with a lot of constituents and 
their policies under Risk Rating 2.0, I think it needs to be 
reviewed and possibly changed. So, I think I understand what he 
said last year in support of it, but what he said last week is 
different.
    One comment I will make before I move on to my next 
question is that this is a topic I have been following closely 
since arriving to Congress, and I have been working closely 
with Leader Scalise on it. I appreciate his leadership on the 
issue, and I hope that we all can work together that ensure 
that the U.S. flood insurance market is stable and affordable 
for all Americans, particularly those on a fixed income.
    And I want to ask this as a follow-up to my colleague, Mr. 
Posey's, question. He asked about--and I think in your answer 
you talked about how, if something is wrong with the premiums 
or if a homeowner thinks their premiums are too high, they can 
go to their agent and possibly get it fixed. I believe 93 
percent of insurance policies, flood insurance policies, are 
written under NFIP and set.
    And I also heard from my constituents. One thing I keep 
hearing from them is that on Long Island, they have taken steps 
to mitigate flooding, whether it is by raising their house or 
by other structural changes. But those changes are not 
reflected in their monthly premium. I asked one of the 
witnesses at our last hearing about whether there are clear 
financial benefits for policyholders who have implemented these 
mitigation features, and the answer that I received really just 
created more uncertainty.
    We were told that the challenges that agents have under 
Risk Rating 2.0 is that the black box rating engine is making 
it nearly impossible for agents and floodplain officials to 
provide specific guidance to consumers who want to both 
implement mitigation and know what their return on investment 
or monthly premium is going to be.
    So, Mr. Maurstad, I will pose the same question to you that 
I did at the last hearing. Under Risk Rating 2.0, are there 
clear financial benefits for policyholders who have implemented 
these mitigation features, as it uniquely pertains to the 
person's monthly premiums? If so, what do those benefits look 
like?
    Mr. Maurstad. Yes, certainly, there is no question that if 
policyholders take measures to mitigate their risk, either by 
elevation of their structure or by moving air conditioning 
equipment up off the floor, there is a credit for that. And it 
is very clear, and we can provide you some examples of that.
    Back to the rating engine that I mentioned before, there 
have been over 100 million quotes provided through that rating 
engine. So, people are clearly looking at what the options are 
within Risk Rating 2.0.
    Mr. Garbarino. I am out of time.
    Chairman Davidson. The gentleman's time has expired.
    The Chair now recognizes the gentlewoman from Colorado, Ms. 
Pettersen.
    Ms. Pettersen. Thank you, Mr. Chairman.
    I am grateful that this committee is focused on a pathway 
forward to reauthorize the National Flood Insurance Program 
because this is absolutely critical in Colorado. My communities 
throughout my district experience heavy snow melts or serious 
storms which can potentially lead to damaging and dangerous 
floods.
    In recent years, the ongoing risk of catastrophic wildfires 
has only compounded the challenges that Coloradans are facing. 
We now see communities narrowly avoid immediate danger of a 
wildfire, only to find their homes susceptible to flood damage.
    As Coloradans recover from fires, we also are seeing 
communities where the ability to purchase wildfire insurance is 
not even an option. Similar to flood insurance, though, many 
homeowners don't even realize that their typical insurance 
policy does not cover these catastrophic events until disaster 
strikes.
    Improved transparency and clear disclosures of flood and 
fire danger are necessary to better educate people about their 
potential risks when they are purchasing homes, and I do hope 
this committee also works on providing tangible support for 
homeowners who live in communities like mine, which are 
susceptible to wildfires.
    Post-fire flooding can damage and harm communities for 
months and even years following a wildfire. How does FEMA's 
Flood After Fire Campaign seek to work to educate homeowners 
about the potential threat of flooding in the aftermath of a 
wildfire? And are additional resources necessary to ensure that 
more people actually follow through and purchase flood 
insurance after a wildfire?
    Mr. Maurstad. There are many sources of flooding, and you 
have articulated a couple that a lot of folks don't think 
about. Certainly, flood after fire is a huge issue. The 
circumstances can actually--it sometimes takes more than 6 
years for the ground to be able to be like it was before. So, 
that flood risk is not only just for that next season, but for 
about 5 or 6 seasons afterwards.
    And yes, we did a Flood After Fire Campaign in Colorado to 
try to help people understand what their flood risk is, and we 
are doing similar things in other parts of the country. And we 
are going to continue, because it is vital, as one of the 
themes, of course, is we need to close the flood insurance gap. 
Only 4 percent of property owners in the country have flood 
insurance and we need to do better than that.
    So, any help that we can provide you in that regard, we 
certainly want to provide.
    Ms. Pettersen. Great. And do you actually target it 
specifically to communities for your awareness campaign around 
potential flooding and the options for flood insurance to those 
communities that have been affected specifically? And do you do 
it after every wildfire? Or how does that work?
    Mr. Maurstad. Yes. We don't do it after every wildfire. But 
we do work with State insurance commissioners and different 
State insurance organizations in situations where we have flood 
after fire. We do some targeted outreach, as we did in 
Colorado. We don't do it after every wildfire.
    Ms. Pettersen. It seems like our offices could help support 
our constituents with information like that when, 
unfortunately, things like this are inevitable in communities 
like Colorado.
    Another question that I have is, currently, the flood-
related disclosure requirements are set at the State level, and 
neither renters nor homeowners may be aware of the flood risks 
of a particular property. What are the requirements to obtain 
and maintain flood insurance following a disaster assistance 
for previous floods? Do you think federally-required flood 
disclosures would be a helpful tool for consumers, especially 
for renters, to understand their risks and the availability of 
fair and affordable flood insurance cover through NFIP?
    Mr. Maurstad. I absolutely do. And one of our 17 
recommendations, in fact, would create such a uniform standard 
throughout the States and Territories.
    Ms. Pettersen. Great. Thank you so much.
    I yield back.
    Chairman Davidson. The gentlewoman yields back.
    We are jumping around here. We have Members who are voting, 
but Mr. Horsford from Nevada will be next.
    Mr. Horsford. Thank you, Mr. Chairman.
    While I appreciate that we are continuing the important 
discussion around the National Flood Insurance Program and the 
importance of its reauthorization with a long-term 
reauthorization, I do have to say that I wish we were better 
using the time of this subcommittee to really focus on the 
pressing issues that our constituents really need us to 
address, including the housing affordability crisis that is 
crippling our country. At a time when sales volumes remain 
depressed, pending listings are down 23 percent from last year, 
and the average household spends 31 percent of their income on 
mortgage or rent, Congress needs to act.
    My constituents are struggling to find a way to put and 
maintain a roof over their heads, and that should be the first 
concern for this subcommittee. I know under the leadership of 
the Democratic Majority, that was the priority, so I want to 
know, where is the housing on our agenda? When are we going 
have a hearing on housing affordability?
    We entered this Congress 4 months ago in the midst of a 
housing shortage, and it has only deepened since then. While I 
understand that we have to cover a whole host of issues and 
topics, today's housing crisis is just simply too consequential 
for me to remain silent. We are nearly 14 million homes short 
of the aggregate demand, and this lack of supply is driving 
housing costs through the roof.
    I am told stories, painful stories, by constituents in my 
district who are struggling to be able to afford rent or to buy 
a home. However, from what I have seen, there is only one 
approach coming from the other side and that is to slash the 
Federal housing budget, putting millions more of our people, 
our constituents at risk of losing their homes, and doing 
nothing to incentivize new constructions.
    This is a nationwide crisis and, again, I ask the Majority 
on the other side of the aisle: Where is the plan on housing? 
When will we have a hearing? This is the Subcommittee on 
Housing. So, I would ask the Majority: When will we have a 
hearing?
    I also want to ask the Majority whether you will work with 
me on the bill that I have introduced, H.R. 702, the Housing 
Oversight and Mitigating Exploitation Act (HOME Act), to 
protect the limited supply of housing that we have and to 
protect everyday Nevadans from being exploited by out-of-State 
corporate speculators who are driving up the cost of housing.
    These massive corporations and investors have been 
outbidding my constituents everywhere we look, and far too 
often the homes these non-occupant investors purchase will 
never resurface on the housing market. That is unconscionable. 
These homes should be going to the individuals who live in our 
communities, and, instead, they are taken off the market to pad 
the pockets of wealthy Wall Street hedge funds.
    While reports continue to come in that these corporate 
speculators predominantly target neighborhoods of color and 
single moms, my bill, the HOME Act, will give HUD the tools 
necessary to investigate these allegations. Not only will HUD 
be able to collect the necessary data on who these speculators 
are targeting, but it also gives HUD the tools necessary to 
ensure that we have a level playing field in the housing 
market.
    So, I would encourage my colleagues on this committee to 
look at this bill, H.R. 702, so that we can advance serious 
policy on a serious issue.
    I would also encourage everyone to come to my district and 
to hear from my constituents about the pain associated with the 
lack of affordable housing options. Actually, this issue is so 
pressing in my district, I am bringing together the Tri-Caucus, 
the Black, Hispanic, and Asian Pacific American Caucuses for a 
housing summit in my district on May 8th.
    We are working hard every day to address the issues that 
matter most to our communities. And if anyone wants to deliver 
real results for our communities, then I welcome you to join us 
in this work.
    This is the priority that this Subcommittee and the Full 
Committee should be focused on. I would ask the Majority to 
please make housing affordability the priority that it deserves 
to be. That is what this subcommittee should be charged with 
while we reauthorize flood insurance for the next 10 years.
    With that, I yield back.
    Chairman Davidson. The gentleman's time has expired.
    We are going to make a change in the Chair, and then we are 
going to go vote.
    We are going to have the committee recess, and then we will 
reconvene immediately once we have Members in place.
    [Brief recess.]
    Mrs. Houchin. [presiding]. The committee will come to 
order.
    I would now like to recognize myself for 5 minutes. Thank 
you.
    Thank you, Mr. Maurstad, for being here today.
    Flood insurance is an issue that has an important impact on 
my district in Indiana. While we are firmly in America's 
heartland and have no risk of flooding from hurricanes, much of 
Indiana's Ninth District sits along the Ohio River, running 
from Aurora in Dearborn County, to New Albany in Floyd County, 
and along the river in Harrison County.
    Indiana's Ninth District is also home to many creeks, 
ponds, and lakes, each of which can have a flooding impact on 
properties, businesses, and homes during times of heavy 
rainfall, causing property damage and sometimes death.
    Just last September, I was on the ground with the Indiana 
Department of Homeland Security for flooding that occurred in 
Switzerland, Jefferson, and Ohio counties in my district. 
Several years ago, I worked for U.S. Senator Dan Coats and we 
worked with stakeholders during the last map update.
    I want to say, first, I really appreciate the work of FEMA. 
Also, when I was working for Senator Coats, I was on the ground 
for the tornado that hit Henryville, Indiana, and I worked with 
FEMA for about 6 months and they provided excellent service 
during that time. So, thank you.
    Many Hoosiers face the threat of flooding. The vast 
majority of properties in Indiana lack flood insurance 
coverage. Approximately 2.5 million properties currently don't 
have NFIP coverage. The number of homes and businesses covered 
has also dropped in recent years. In March 2021, there were 
20,100 NFIP policies in place in Indiana. As of last October, 
there were less than 17,400 policies, a drop of more than 13 
percent, or over 2,700 policies, from just a year-and-a-half 
prior.
    One reason why Indiana has been dropping NFIP policies is 
due to cost. Between 1978 and 2017, Hoosiers paid over $440 
million in NFIP premiums, while they received less than $290 
million back. So they paid $150 million more than they 
received. With inflation forcing Americans to tighten their 
belts, many can't afford to pay these high premiums, which in 
Indiana, as of 2018, averaged $993.
    It is not an unique issue to Indiana, and I have recently 
said that I appreciate that we are looking at a modernization 
of the flood insurance program because, if it is not working in 
Louisiana, and it is not working in Indiana, we probably need 
to find a way to fix some of the issues.
    My question is: While the implementation of Risk Rating 2.0 
reflects an attempt to more-accurately measure risk within the 
NFIP, Congress will still need to work further on NFIP reforms 
to maximize the efficiency and the potential of the program. It 
is likely that NFIP will never be able to provide protection 
against all floods and flood risks nationwide by itself.
    Do you support efforts to encourage more private insurers 
to enter the flood market to help lighten the flood risk for 
NFIP?
    Mr. Maurstad. First of all, the area in Indiana you 
describe sounds a lot like my home in southeast Nebraska. So, I 
certainly understand what you are talking about.
    When the National Flood Insurance Program began, the first 
government reinsurance program, part of the thinking there was 
that it would allow the private insurance industry to better 
understand flood risks so that more companies on the private 
side would come in and help us close the flood insurance gap.
    And one of the provisions, as I mentioned earlier, of our 
recommendations is to let concurrent coverage come back, so 
that somebody who leaves can come back. We think that will 
certainly be helpful. I think the other reforms that we are 
making also are beneficial for the private sector, which many 
times mirrors how the NFIP handles flood.
    Mrs. Houchin. I know Indiana isn't unique to this issue. 
Americans across the country face a risk of flooding. I look 
forward to working on meaningful solutions to address this. 
Thank you.
    I yield back.
    The gentlewoman from Georgia, Ms. Williams, is now 
recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you.
    We are in the middle of a housing crisis, and I have 
constituents who can't afford their mortgage or rent payments. 
But today, we are going to have another hearing on flood 
insurance, for the second time in 2 months, instead of 
discussing how we can lower housing costs in our districts and 
across the country.
    In the fourth quarter of 2022, rent in the Atlanta metro 
area increased by 6.4 percent, compared to the fourth quarter 
of 2021. Since we have yet to focus any of our time in the 
subcommittee on housing, community development, and insurance, 
figuring out how to increase the supply of affordable housing, 
or drive down home prices for our constituents, I am happy to 
have this conversation again today about the needed reforms to 
the National Flood Insurance Program that would help those who 
manage to buy a house or rent an apartment keep their home, 
should it flood.
    Atlanta is a city with the largest racial wealth gap in the 
country. And as I mentioned, Atlantans face skyrocketing 
housing costs. In Georgia's Fifth Congressional District, 
people who need flood insurance might not be able to afford it. 
But if their home floods, like so many did in the catastrophic 
flooding in 2009, which caused $500 million worth of damage, 
they simply can't afford to not have it.
    Mr. Maurstad, I am very supportive of the Administration's 
recommendation to create a means-tested assistance program that 
will help low- and moderate-income families afford flood 
insurance by offering them a graduated discount benefit.
    Has FEMA fleshed out what the particulars of this program 
could be, for example, what the discount percentages or the 
amounts would look like and how much money people could save?
    Mr. Maurstad. Thank you for your support and for the 
question.
    To date, we have not actually developed the program. What 
we have outlined is a framework for the direction that we 
believe the program should be instructed to go by Congress in 
developing this affordability framework. So the details, we 
have not--
    Ms. Williams of Georgia. Still working on it.
    Mr. Maurstad. Still working on it.
    Ms. Williams of Georgia. In our March 10th hearing, I asked 
once of our witnesses about legislative solutions for 
addressing racial disparities that people of color face. 
Communities of color are more likely to be susceptible to 
flooding but are not designated as Special Flood Hazard Areas. 
Additionally, the Urban Institute found that people of color 
are less likely to have flood insurance, and if they do have 
insurance, they experience a higher rate of unpaid claims.
    Is the NFIP aware of and proactively collecting data on 
these disparities?
    Mr. Maurstad. There is no question that what you describe 
should not occur. We are working on making sure that all of our 
programs are based in equity. It is a priority of the 
Administration.
    As I had mentioned, answering an earlier question, as we 
look at how we can provide the data that is necessary for you 
to make policy decisions, if you have any suggestions for us, 
we will take those. And we will try to do a better job of 
providing the data that would be helpful.
    So, I would like to get back to you and work on exactly 
what information that you are looking for to see if we can 
deliver that.
    Ms. Williams of Georgia. I would love to hear more on the 
data collection.
    Also, are there any additional steps that NFIP can take to 
reduce these disparities? And do you have any thoughts on what 
they are?
    Mr. Maurstad. We are working with our adjustors to make 
sure that they understand unconscious bias and that they make 
sure they treat every policyholder fairly. That is critical. 
When I talk with adjustors, I suggest to them that they should 
handle that claim as though it was my mother's claim, because 
if it is not handled well and comes onto my desk, we are going 
to have a discussion about it. And that also goes for making 
sure we treat everyone fairly.
    So if there are circumstances where that is not happening, 
I want to know about it, because we will correct it.
    Ms. Williams of Georgia. Thank you.
    Last Congress, we took steps to improve stormwater 
infrastructure, a vital step in protecting our most-
marginalized communities, and addressing the threat posed by 
more-frequent extreme weather events caused by climate change. 
While much more needs to be done, this is an important step in 
the mitigation.
    Since mitigation efforts are included in risk assessment, 
have these efforts affected rates?
    Mr. Maurstad. They are affected in a couple of different 
ways. One, as they are reflected in the communities' Flood 
Insurance Rate Maps, they are reflected there. As they are 
picked up in the CAT Modeling, in the experience of the 
catastrophe modelers, when mitigation activity occurs, those 
benefits are a part of the catastrophe models.
    So, we are looking at making sure that mitigation efforts 
are and continue to be recognized in the program, because when 
we talk about what property owners need, we talk about the need 
for insurance and we talk about the need for mitigation. It is 
a two-pronged approach that we need to take.
    Ms. Williams of Georgia. Thank you.
    My time has expired, and I yield back.
    Mrs. Houchin. Thank you, Ms. Williams.
    The gentleman from New York, Mr. Lawler, is now recognized 
for 5 minutes.
    Mr. Lawler. Thank you, Madam Chairwoman.
    And thank you, Mr. Maurstad, for being here today and 
addressing our questions and concerns.
    As you mentioned in your opening statement, my district, 
like many across the nation, has seen more frequent and intense 
flood events occurring in recent years. And this is likely to 
continue. These are threats that will cost American homeowners, 
renters, and businesses billions of dollars in the near future.
    And it is an important topic. Despite that fact, this 
hearing will mark the first appearance by FEMA before this 
committee in over 6 years, going back to March of 2017. So, I 
want to commend Chairman Davidson for having this hearing and 
making an effort to restore the committee's oversight of the 
NFIP program and see that these important issues are being 
examined.
    Mr. Maurstad, the Government Accountability Office has 
observed that the NFIP has two competing goals: keeping flood 
insurance affordable; and keeping the program fiscally solvent. 
The balance between these two goals would appear to be 
especially difficult at the moment. While inflation is at a 41-
year high and Americans are dealing with an affordability 
crisis, the implementation of Risk Rating 2.0 has led to 
increases in premiums for millions of Americans. We have heard 
reports of premiums in New York nearly doubling, increasing 
from $1,184 to $2,197, on average.
    When contemplating those two objectives, how does FEMA 
attempt to strike a balance between them?
    Mr. Maurstad. First of all, thank you for the question.
    And certainly, there are competing interests within the 
program that we are working hard to make sure we balance. 
Making premiums reasonable and making premiums be risk-based 
and actuarially sound can happen. And that is what our program 
has done.
    There is some misconception out there that the new pricing 
methodology increased the amount of premium dollars the program 
needs, and that is not the case. First, we would have needed to 
collect the same amount from all of our policyholders in the 
old legacy system that we now collect under the new rating 
methodology. Now, we base that premium on actual risk 
characteristics of the property instead of the zone in which 
that property happens to be located.
    Second, another piece of the new methodology that is not 
well-recognized is that new policyholders come into the program 
at full risk rates. They no longer come into the program with a 
discount or a subsidy. So, the doubling of the insurance costs 
that you mentioned is not for a current policyholder. A current 
policyholder's premium can only go up the statutorily-required 
18 percent. But new property owners have to pay the full risk 
rate.
    The third point that I would make is that for the first 
time, the program is actually able to tell policyholders and 
property owners what their full risk is; we couldn't do that 
before. So now, folks understand that at some point, their 
rates are going to go from $1,500 to $3,000, but they are going 
to go there on an 18-percent glide path. But that number of 
knowing what it is has people concerned, rightfully, because 
now they know what their full risk is and they can take steps 
to mitigate.
    Mr. Lawler. Can you speak to what reforms would help grow 
awareness of the need for flood insurance and would encourage 
more Americans to be covered either through the NFIP or through 
the private market? We have seen over in Europe, certain 
programs and advertisements to try and encourage that. But what 
are we doing here in the United States to encourage people?
    Mr. Maurstad. Yes, there's no question that flood risk is 
underappreciated across the country. We can all do a better job 
of making sure people understand the peril associated with 
floods and the reason why that financial security of a flood 
insurance policy is so important.
    But we don't work on this alone. It is not just FEMA. We 
work with the 48 write-your-own insurance companies that 
administer the program on behalf of us. We rely on them to do 
their part to make sure people understand flood risks. We work 
with community members, the 22,400 communities that participate 
in the program. We try to provide them the information, and 
many of them do their own campaigns. Many State insurance 
commissioners do their own campaigns, trying to raise flood 
awareness.
    So, there is no question that we need to do a better job of 
making sure people appreciate the true flood risk the nation 
faces.
    Mrs. Houchin. The gentleman's time has expired.
    Thank you, Mr. Lawler.
    The gentlewoman from Texas, Ms. Garcia, is now recognized 
for 5 minutes.
    Ms. Garcia. Thank you, Madam Chairwoman.
    And thank you to Mr. Maurstad for being here with us today 
to bring us an update on the flood insurance program.
    I represent the Houston area. And as our ranking member has 
mentioned, we have a lot of flood-prone areas and have had 
numerous 500-year events, both flooding and just rainy events. 
And the biggest priority for me is, of course, accessibility 
and affordability.
    The area itself was hit by Hurricane Harvey in 2017, which 
caused about $125 billion in damages and over 100 deaths. That 
is, what, about 4 times your authorization of $30 billion. In 
the greater Houston area alone, there are over 332,000 
residential properties in FEMA-designated floodplains, and one 
out of seven projects has sustained substantial risk of 
flooding, or will by 2050.
    Research also shows that low-income and non-White 
communities are more at risk for flooding in the Houston area 
as a result of longstanding discriminatory housing policies.
    For many people in my district, they really cannot afford 
the insurance. That is really the biggest, biggest barrier. And 
that is also true for most minority communities. In fact, some 
of the distribution of our dollars has been challenged as 
unfair and with a disparate impact on our minorities.
    Because my district is 77-percent Latino and largely 
working-class, we have found that the biggest challenge we have 
is lots of rentals, and a lot of older populations who own 
their homes and can't afford the insurance.
    I heard you respond to my colleague, Ms. Williams, that you 
are still working on it. And I just want to implore; I heard 
the same answer last time. It has been over a year at least 
since I have been here to ask some of these questions.
    What is it that is keeping you going from using this new 
modeling to make it more affordable and accessible? I just 
don't understand why we keep getting the same answers.
    Mr. Maurstad. We do not have the statutory authority to 
develop a program that bases the premium on one's income, which 
is why it is one of our 17 recommendations and is so important 
with not only making sure people who need the coverage in the 
areas that you describe but that we can develop a program that 
works for all Americans.
    So, it is simply that we don't have the authority right now 
to develop that program.
    Ms. Garcia. But if you could, what would it look like? I 
think that was--
    Mr. Maurstad. If we could--
    Ms. Garcia. --the question, and your answer was, ``We are 
still looking at it.''
    Mr. Maurstad. If I said we are still looking at it, then I 
misspoke.
    What we don't have is the details. We haven't written the 
regulation. We don't have all of the I's dotted and the T's 
crossed. So, what we have said is we are proposing to develop 
an affordability program that, if you are at 120 percent of the 
average mean income in your area, you would start to receive 
premium assistance, not your whole premium paid but premium 
assistance. And then, as your income goes down to 60 percent of 
the average mean income in your area, you would receive more of 
a discount than the moderate-income individual at the beginning 
of our program.
    Ms. Garcia. It would be--you are looking at a means-based, 
but will it be based on household? For example, we are flood-
prone, but Montana may not be. So, will you look at regional 
considerations and considerations for--as the ranking member 
mentioned, California gets hit by fires and floods. For us, it 
is mostly floods and rain.
    Mr. Maurstad. Sure.
    Ms. Garcia. And hurricanes.
    Mr. Maurstad. The flood risk in every State is certainly 
different, and we recognize that now. But 98 percent of 
counties across the country have had a flood event. So, 
flooding can happen anywhere that it can rain.
    And so, we want to work with you to make sure that we have 
the awareness needed to make sure that renters, and low-income 
people, understand they need the protection, but then also work 
with you to get our proposal in place so that we can design the 
program that is going do so much good.
    Ms. Garcia. I would hope, sir, with all due respect, that 
the next time we have you here, we don't hear again that you're 
looking at--
    Chairman Davidson. The gentlewoman's time has expired.
    Ms. Garcia. Thank you.
    And I yield back.
    Chairman Davidson. The gentleman from New York, Mr. Torres, 
is now recognized for 5 minutes.
    Mr. Torres. Thank you, Mr. Chairman.
    I represent the lowest-income congressional district in 
America. The lowest-income Americans are hit the hardest by the 
crippling costs of the National Flood Insurance Program. Under 
Rating 2.0, FEMA is intent on raising premiums by as much as 18 
percent a year for as long as 10 years. And FEMA would be 
raising premiums even higher than 18 percent, were it not for 
the statutory cap that Congress put in place several years ago. 
And an even stronger cap is needed to protect the lowest-income 
families from rapidly-rising flood insurance payments.
    You brought up earlier the notion of calculating premiums 
in light of income. And when it comes to housing, the threshold 
for affordability is 30 percent, right? No one should pay more 
than 30 percent of their income toward their rent. What would 
be the threshold when it comes to a flood insurance policy?
    Mr. Maurstad. The program that we designed, and the 
Administration supports, that we recommended, looks at it from 
the average mean income of the property owner.
    The affordability framework that we developed actually 
outlined a number of ways that you could develop an 
affordability program. So, we are certainly willing to look and 
have a conversation with you if there is a different manner in 
which we could provide this much-needed--
    Mr. Torres. Is that something you would study, what would 
constitute an affordable percentage of one's income with 
respect to flood insurance?
    Mr. Maurstad. My sense would be--I am not an expert in 
that--
    Mr. Torres. Because that is the approach we take with 
student debt, and with affordable housing. So, why approach it 
differently with respect to flood insurance?
    Mr. Maurstad. We looked at the most-effective way, in our 
opinion, and that is what we have proposed. We certainly will 
look at different ideas if you have them.
    Mr. Torres. I want to move on. If you live in a Special 
Flood Hazard Area and have a federally-backed mortgage, you are 
required to have flood insurance. But not every person who 
lives in a Special Flood Hazard Area with a federally-backed 
mortgage has flood insurance. Do you track noncompliance? And 
if so, what is the number of people who fall into that 
category?
    Mr. Maurstad. We do not. That is actually a lender 
requirement, not an NFIP requirement, so we don't track those 
numbers. I think there has been some study done on it. We could 
provide you the information that we have, but the lenders would 
have that information.
    Mr. Torres. I am assuming the more participants in the 
program, the more financially-sustainable the program?
    Mr. Maurstad. Actually, from an insurance perspective, it 
depends where those policyholders are. So, it is not as 
simple--
    Mr. Torres. Do you have a sense of where the enforcement is 
breaking down as far as the--
    Mr. Maurstad. I don't know that the enhancement has broken 
down. So, I can't comment on that.
    Mr. Torres. Just judging by the noncompliance, that would 
seem to suggest that there is a breakdown in enhancement.
    FEMA has a new methodology, Rating 2.0. I have heard 
complaints that the new methodology for calculating premiums is 
largely known only to insiders, and it is opaque to the rest of 
us, particularly State and local governments.
    Does FEMA have any plans to make its methodology for 
calculating premiums more accessible and available to the 
public and pertinent stakeholders?
    Mr. Maurstad. The rating methodology that we developed, 
that for the first time reduced a million policyholders' 
premiums an average $60 a month--we have provided that 
methodology publicly already. We have also provided premium 
calculation worksheets and a number of other tools on our 
website that agents and companies have.
    Mr. Torres. Do you feel like there is sufficient 
transparency?
    Mr. Maurstad. I believe we have been very, very 
transparent.
    Mr. Torres. We have heard otherwise from New York State. Do 
you know why people are under the impression that your method 
is insufficiently transparent?
    Mr. Maurstad. Sir, I think that we have done a good job of 
providing all of the information someone needs--
    Mr. Torres. So, where is the misunderstanding?
    Mr. Maurstad. --to assess the program, and GAO will be 
issuing their--
    Mr. Torres. Do you have a sense of where the 
misunderstanding is?
    Mr. Maurstad. --report. Excuse me?
    Mr. Torres. Where is the misunderstanding? Because there 
seems to be--there is a common complaint I have heard that 
there is a lack of transparency around your methodology. You 
seem to be claiming otherwise. So, I want to understand, where 
is the breakdown in communication? Where is the 
misunderstanding?
    Mr. Maurstad. I don't know the answer to that.
    Mr. Torres. It is something I would want to explore.
    Would the program be solvent if the Federal Government paid 
the debt associated with FEMA--with Katrina?
    Mr. Maurstad. The program is backed by the full faith of 
the U.S. Treasury, so, solvency--
    Mr. Torres. But apart from the full faith, the program 
historically has been self-sustaining, and self-financing. 
Would you be--
    Mr. Maurstad. Actually, it has not been self-sustaining. 
And the very nature of a catastrophic insurance program 
indicates that it would be very challenging, if not impossible, 
for it to ever be self-sufficient.
    Mrs. Houchin. The gentleman's time has expired.
    I would like to thank the witness for his testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, 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 this witness and to place his 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.
    This hearing is adjourned.
    [Whereupon, at 10:49 a.m., the hearing was adjourned.]

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