[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
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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.]
A P P E N D I X
April 28, 2023
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