    [Senate Hearing 118-591]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 118-591

                     REAUTHORIZATION OF THE NATIONAL FLOOD
                       INSURANCE PROGRAM: LOCAL PERSPECTIVES
                       ON CHALLENGES AND SOLUTIONS

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                       BANKING,HOUSING,AND URBAN AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED EIGHTEENTH CONGRESS

                                 SECOND SESSION

                                       ON

               EXAMINING THE REAUTHORIZATION OF THE NATIONAL FLOOD
                               INSURANCE PROGRAM

                                   __________

                                JANUARY 25, 2024
                                   __________

      Printed for the use of the Committee on Banking, Housing, and Urban Affairs

                    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                    Available at: https: //www.govinfo.gov /

                                  ______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    59-591 PDF                WASHINGTON : 2026

                COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                           SHERROD BROWN, Ohio, Chair

    JACK REED, Rhode Island              TIM SCOTT, South Carolina
    ROBERT MENENDEZ, New Jersey          MIKE CRAPO, Idaho
    JON TESTER, Montana                  MIKE ROUNDS, South Dakota
    MARK R. WARNER, Virginia             THOM TILLIS, North Carolina
    ELIZABETH WARREN, Massachusetts      JOHN KENNEDY, Louisiana
    CHRIS VAN HOLLEN, Maryland           BILL HAGERTY, Tennessee
    CATHERINE CORTEZ MASTO, Nevada       CYNTHIA M. LUMMIS, Wyoming
    TINA SMITH, Minnesota                J.D. VANCE, Ohio
    RAPHAEL G. WARNOCK, Georgia          KATIE BOYD BRITT, Alabama
    JOHN FETTERMAN, Pennsylvania         KEVIN CRAMER, North Dakota
    LAPHONZA R. BUTLER, California       STEVE DAINES, Montana

                         Laura Swanson, Staff Director
                   Lila Nieves-Lee, Republican Staff Director

                           Elisha Tuku, Chief Counsel

                      Amber Beck, Republican Chief Counsel

                          Cameron Ricker, Chief Clerk
                          Shelvin Simmons, IT Director
                           Pat Lally, Assistant Clerk

                                      (ii)

                                C O N T E N T S

                                  ----------

                           THURSDAY, JANUARY 25, 2024

                                                                       Page

    Opening statement of Chair Brown.................................     1
            Prepared statement.......................................    27

    Opening statements, comments, or prepared statements of:
        Senator Scott................................................     3
            Prepared statement.......................................    28

                                   WITNESSES

    Michael Hecht, President and CEO, Greater New Orleans, Inc.......     6
        Prepared statement...........................................    29
        Responses to written questions of:
            Senator Warnock..........................................    61
    Daniel Kaniewski, Managing Director, Public Sector, Marsh
      McLennan.......................................................     7
        Prepared statement...........................................    38
        Responses to written questions of:
            Senator Warnock..........................................    64
    Steve Patterson, Mayor, City of Athens, Ohio.....................     9
        Prepared statement...........................................    55
        Responses to written questions of:
            Senator Warnock..........................................    66

                  Additional Material Supplied for the Record

    Statement submitted by NAMIC.....................................    68
    Statement submitted by ICBA......................................    74
    Letter submitted by NAR..........................................    76
    Letter submitted by ACU..........................................    78
    Letter submitted by the Nooksack Indian Tribe....................    80
    Statement submitted by PIA.......................................    84
    Statement submitted by NRDC......................................    93
    Statement submitted by RAA.......................................    99

                                     (iii)

        REAUTHORIZATION OF THE NATIONAL FLOOD INSURANCE PROGRAM: LOCAL
                    PERSPECTIVES ON CHALLENGES AND SOLUTIONS

                                  ----------

                           THURSDAY, JANUARY 25, 2024

                                           U.S. Senate,
              Committee on Banking, Housing, and Urban Affairs,
                                                        Washington, DC.
        The Committee met at 10 a.m., in room 538, Dirksen Senate
    Office Building, Hon. Sherrod Brown, Chair of the Committee,
    presiding.

                OPENING STATEMENT OF CHAIR SHERROD BROWN

        Chair Brown. Good morning. The Senate Banking, Housing, and
    Urban Affairs Committee will come to order. I thank the
    witnesses for joining us. Senator Cassidy will join us in a
    moment.
        This hearing is a continuation of our efforts to enact a
    long-term reauthorization of the National Flood Insurance
    Program, NFIP. The program has been extended 28 times since
    September of 2017. The latest extension will expire on March
    8th of this year. We will discuss local leaders' perspectives
    on the NFIP and the challenges and potential solutions to the
    risks that flooding poses to communities across the country.
        Local leaders are on the front lines of so many issues:
    transportation, housing, the growing challenge of flooding.
    Each of these is a priority for this Committee. As these
    leaders know all too well, flooding is the most common and
    costly natural disaster facing the country. It is devastating
    to families, businesses, and communities in every State. That
    is one good reason that Mayor Patterson is with us from my
    State.
        The risk is increasing. Outdated flood maps, population
    growth in at-risk areas, land-use patterns, and over-stretched
    infrastructure all play a role. And whether people want to
    admit it or not, climate change is only making it worse. It is
    making extreme weather events more frequent and less
    predictable, and probably more extreme, all across the country.
        Just this month streams overflowed in our colleague,
    Senator Reed's, home State of Rhode Island; torrential rains
    poured through homes in San Diego neighborhoods represented by
    Senator Butler on this Committee; and flash floods have been
    threatening communities across Louisiana, which is well
    represented by two colleagues today in the room. And that is
    just this month.
        Flooding is not confined to communities on the coasts, or
    even on major bodies of water. As we saw in 2022, the same
    mountains and streams that make our Appalachian towns in Ohio
    and elsewhere beautiful also make family homes and local
    economies vulnerable to flooding in an era of more extreme
    rainfall. Often the only available land for development in
    Appalachia is in or near floodplains.
        And disasters often fall hardest on the families and the
    communities that have fewer resources to prepare and respond to
    them, often because of where they live. Smaller, rural
    communities often do not have easy access to resources to
    respond to the immediate effects of disasters, nor do they have
    access to the resources they need for long-term recovery and to
    prevent disasters in the first place.
        We need to ensure our families and communities can adapt
    and become more resilient both to the flooding we face and to
    the increases we know are coming in the next several decades.
    And whenever possible, we want to help communities avoid
    extreme flooding altogether, through pre-disaster flood
    mitigation, doing it better than we have.
        The NFIP is critical to that effort. Unlike a private
    insurance company, the NFIP does not just provide insurance.
    Its job is to prevent and minimize flood damage in the first
    place, not just help with very expensive recovery.
        The NFIP combats the overall threat of flooding through
    four related components: flood insurance, currently covering
    nearly 4.7 million homes and businesses, floodplain management,
    floodplain mapping and mitigation. We must reauthorize and
    strengthen the NFIP, and invest in mitigation and floodplain
    management obviously before disasters happen in communities.
        In recent hearings, we heard from a wide range of
    stakeholders who discussed the need for a long-term
    reauthorization to help communities and stakeholders plan; the
    importance of helping communities and property owners
    understand their risk, by both improving mapping and other risk
    communications, and through disclosure of flood hazards to
    prospective owners and tenants; and third, the importance of
    building State and local capacity to carry out our floodplain
    management and mitigation programs, especially for small and
    rural communities.
        We also heard FEMA's recommendations for strengthening the
    program, including forgiving the overhang of debt from previous
    disasters and providing means-tested assistance to help more
    families afford insurance.
        I am interested in hearing today's witnesses'
    recommendations on how we can help strengthen the NFIP so that
    it can help local communities meet these needs. I am pleased to
    welcome Mayor Steve Patterson of the City of Athens, Ohio, in
    southeast Ohio, here today to discuss some of the unique
    challenges faced by cities and towns in Appalachia.
        NFIP is a complex program, with multiple goals and
    implications for many of the things people care about most--
    their homes and their communities, often their small
    businesses. I believe it is possible for us to come together to
    reauthorize and improve this program. Today's hearing will help
    inform this effort.
        And this Committee, while sometimes partisan, often Senator
    Scott and I can work together on major pieces of legislation,
    as we have from fentanyl to holding banks accountable, to
    banking medicinal marijuana money, and the like. This
    Committee, particularly on flood insurance, is more regional an
    outlook, perhaps, than partisan, and that should help us
    someday, sooner rather than later I hope, come to some
    agreement on NFIP.
        Ranking Member Scott.

                 OPENING STATEMENT OF SENATOR TIM SCOTT

        Senator Scott. Thank you, Mr. Chairman. Before we get
    started, I would like to take the time to welcome a Charleston
    native, Mr. Kaniewski, as a witness today. I cannot think of a
    more helpful perspective in dissecting these issues that are
    really local in perspective. Although you now live in
    Minnesota--I have never met someone who left Charleston
    actually--full time. Please come home soon, we really need you
    back. We need all the smart-thinking individuals back in
    Charleston, South Carolina. But we thank you for being here
    today.
        The National Flood Insurance Program comes into play when
    we start thinking about how to mitigate the risks that are so
    impactful and negative to communities across the country. As we
    consider potential reforms to the NFIP, we must keep in mind
    local perspectives and not just those of Washington
    bureaucrats. Because we all know that the most effective
    policymaking typically happens closer to the problem, not
    farther away from that problem. So our Federal programs should
    foster local, innovative solutions, not regulatory red tape.
        You all have heard me say this before, that as a lifelong
    Charlestonian and South Carolina resident, as well as an
    insurance professional for more than 20 years, having sold
    flood insurance policies, it is really important for us to
    understand and appreciate the devastation caused by flooding.
    There is no doubt that if you are a Charlestonian and if you
    were around in 1989, Hurricane Hugo devastated our community in
    ways that very few natural disasters have before and frankly,
    since. The storm surge was so bad and so high that it literally
    left boats in the middle of downtown in the streets of
    Charleston.
        More recently, Hurricanes Matthew, as well as Florence
    devastated towns throughout my State, and left some towns
    submerged. As a matter of fact, the town of Nichols, South
    Carolina, a very small town, was hit by both storms so bad that
    more than half of the houses in that small community found
    themselves underwater.
        And the devastation of trying to rebuild 24 months later--
    again--was undeniably and frankly impossible. But the good news
    is when you are surrounded by your friends and your family, the
    impossible becomes possible. And they worked really hard to
    start the process of rebuilding very quickly, and frankly, very
    successfully.
        This type of repeated flooding makes recovery harder, and
    naturally, can even cause some residents to lose hope--and
    certainly a part of the town--residents that they left.
        It is one of the reasons why I have re-introduced my
    Repeatedly Flooded Communities Preparation Act, which would
    help communities suffering from frequent flooding plan for the
    next storm, and hopefully, lower the risk. It is my hope that
    by encouraging flood-prone areas to reduce the impact of future
    storms, residents will be able to focus on long-term recovery,
    long after the storm surge recedes.
        And recovery does not simply mean rebuilding. It also
    includes uplifting our communities. It includes making sure
    that families and neighbors learn to work together, that the
    synergy in the aftermath of a disaster is where community, and
    the glue of community, really manifests and reveals itself.
        South Carolinians who have lived through repeated flooding
    know this, and my home State has taken action to prevent this
    outcome. South Carolina's recent dedication of resources and
    strategic mitigation efforts are second to none.
        In 2023, the State's budget included significant funding
    for mitigation efforts that would reduce flood damage from
    future storms. Backing up that investment, the South Carolina
    Office of Resilience released a nationally praised ``Statewide
    Risk Reduction Plan'', identifying the communities most
    vulnerable to floods and targeting mitigation resources to
    protect those residents.
        These are local solutions to local challenges, and they
    will make a huge difference in the lives of South Carolinians.
        And while I recognize that what works in South Carolina may
    not work in places like Senator Cassidy's Louisiana or Chairman
    Brown's Ohio, I am confident that similar, locally based
    solutions and approaches could make a huge difference, not only
    in those communities, but to the National Flood Insurance
    Program itself.
        To support these levels, we must have substantial reform to
    the NFIP. The status quo is not an option. The program is
    financially insolvent, with over $20 billion--$20 billion--in
    debt. Instead of educating communities and homeowners on the
    risks they face, the program's outdated flood maps and lack of
    transparent data often obscures the risks. Without a well-
    functioning and financially solvent insurance system, the NFIP
    will fail to provide cities and towns with the tools they need
    to be resilient. And, if the NFIP is unable to provide local
    communities with improved mapping and mitigation resources, the
    financial health of the insurance program will continue to
    deteriorate.
        When I say that, especially with my legislation I have
    reintroduced, we have to recognize that the NFIP pays out 30
    percent of its resources to about 1 percent of the properties
    that consistently and repeatedly are flood victims again, and
    again, and again. So 1 percent of the exposure absorbs 30
    percent of the resources, and that is an opportunity for us to
    look to the local communities to create strategies to perhaps
    not rebuild there, and that will take a local engagement to
    mitigate that risk for the Nation, for the program, and frankly
    for the communities where they happen.
        Comprehensive reform of the program is essential.
        One final and important point before I close. Congress
    cannot allow the NFIP to lapse. Most often we talk about States
    like Florida, or South Carolina, or Louisiana, where they pay a
    disproportionate share of the premiums that go into the NFIP.
    The truth is that whether you are in Ohio, or California,
    whether you are in the New Jersey, New York area, where
    Hurricane Sandy--$8.8 billion--Hurricane Harvey--$9 billion--
    the number of flood insurance policies in place? Essentially
    nonexistent.
        So not only do we need to have a comprehensive reform of
    the program itself, we need to have a better education that
    floods do not simply happen when you live near the water.
    Floods today happen throughout the country.
        Chair Brown. Thank you, Senator Scott.
        Senator Cassidy, welcome. Senator Cassidy is not a Member
    of this Committee, but he and Senator Kennedy and Senator
    Menendez, especially, have been kind of leaning on this, and
    are particularly interested. Senator Cassidy will introduce his
    friend from Louisiana.
        Senator Cassidy. Thank you, Chairman Brown and Ranking
    Member Scott, and I just appreciate you all having this hearing
    and allowing me to introduce, which I think is not a little bit
    out of the ordinary, and I want to appreciate your staff. My
    staff says your staff has been fantastic to work with, and we
    thank you for that.
        Chair Brown. Thank you.
        Senator Cassidy. Today I have the privilege of introducing
    Greater New Orleans, or as we call it, GNO, Inc., President and
    CEO, Michael Hecht. Michael moved to New Orleans after
    Hurricane Katrina with the goal of helping the city rebuild.
    Previously, after 9/11, he had worked in New York in the
    Mayor's Office, running their Small Business Recovery Program.
    So when Katrina hit Louisiana, devastating tens of thousands of
    people and businesses, Mr. Hecht took action by running a
    similar, quarter-of-a-billion-dollar Katrina Small Business
    Recovery Program for the State government. He helps when
    communities have been struck.
        Now there are many lingering effects of Hurricane Katrina,
    which he is going to speak of, but one of the most obvious is
    the method to assess flood risk. And if I may add, NFIP's new
    risk assessment policy, called Risk Rating 2.0, has made flood
    insurance simply impossible to afford, and in some cases
    policies rising over 1,000 percent, in some cases, flood
    insurance premiums being higher than a person's mortgage.
        At this point we know that we are in an actuarial death
    spiral, where people will be dropping insurance because they
    can no longer afford, therefore, a smaller number of people for
    whom to put on the risk, therefore, more expensive premiums,
    and therefore, more people drop. Mr. Hecht will address this
    and the impact it is having upon families and businesses.
        And then, last, I thank you for having this hearing because
    of the solution that Senator Menendez and I and others have
    proposed, for which we would love your input, which we think
    could address this.
        So I look forward to hearing this testimony and the
    testimony of others. Once more, I thank you very much for
    having the hearing.
        Chair Brown. Thank you, Senator Cassidy. I cannot improve
    on the introduction offered by our friend from Louisiana. Mr.
    Hecht, welcome.
        Daniel Kaniewski is the Managing Director for Marsh
    McLennan, which he joined after serving as Deputy Administrator
    for Resilience and Acting Deputy Administrator for FEMA during
    the Trump administration. Dr. Kaniewski, welcome.
        Steve Patterson is the Mayor of Athens, Ohio, the largest
    city in Appalachia. He currently serves as the Second Vice
    President of the National League of Cities, President of the
    Mayors Partnership for Progress in Appalachian Ohio. I meet
    with him and other mayors frequently.
        First elected in 2015, after two terms on the City Council,
    Mayor Patterson is a former associate professor of psychology
    at Ohio University, former Air Force pilot, serving as a major
    from the District of Columbia Air National Guard, 1113th
    Fighter Wing, and a graduate of College in North Dakota.
        Mr. Hecht, if you would begin.

      STATEMENT OF MICHAEL HECHT, PRESIDENT AND CEO, GREATER NEW
                             ORLEANS, INC.

        Mr. Hecht. Great. Thank you so much, Committee Chairman
    Brown and Ranking Member Scott and the Members of the
    Committee, and Senator Cassidy, I want to thank him for his
    leadership on this issue, and so many others.
        My name is Michael Hecht. I am President and CEO of Greater
    New Orleans, Inc., and for the past decade we have led the
    Coalition for Sustainable Flood Insurance, which is a national
    alliance of approximately 250 organizations across 35 States.
    And today I am going to discuss the need to reauthorize NFIP,
    given its benefits to the country, the need to reform the
    program that has been discussed, and particularly given FEMA's
    administration of Risk Rating 2.0, its associated impacts.
        I want to be clear that, first and foremost, the Coalition
    for Sustainable Flood Insurance absolutely supports a long-
    term, multiyear reauthorization of NFIP to ensure program
    stability and to minimize the negative impact across the
    American economy. As Senator Scott mentioned, and as you said,
    Chairman, a lapse is something that we cannot allow to happen.
    This is destabilizing to the national housing market. We know,
    for example, that during a June 2010 lapse, that about 1,400
    home sale closings were canceled or delayed each day. And
    furthermore, the benefit that NFIP provides to our Nation is
    great and significant, and its five million policyholders.
        And I think two points I need to make here is that, one,
    they are often mischaracterized as being wealthy homeowners who
    are subsidizing their beachfront homes. This is just
    empirically, statistically not the case. In fact, a study that
    we ran found that 98.5 percent of all NFIP policies are in
    counties with a median household below $100,000, and 62 percent
    of all policies are in counties with a median household income
    below the national average of $54,000. The reality is that the
    NFIP program is about allowing the working coast and riverine
    parts of America to keep working.
        And moreover, and I think this is a very important point,
    we talk about the debt of the program and the cost of the
    program, which is estimated to be $36 billion over the past 50
    years, but on the other side of that, per FEMA's own analysis,
    the standards, the floodplain standards that have been
    implemented because of NFIP have saved the country $120 billion
    of losses over that period. So that is a net benefit for the
    American people of about $85 billion.
        In terms of Risk Rating 2.0, there are some dramatic
    impacts that I would like to talk about. On average, under Risk
    Rating 2.0 an NFIP policy will be $1,808, which is a 104
    percent increase over legacy rates, and rates will increase by
    over 50 percent in 41 States. To the point that has been made
    by the Senator about the death spiral, this is a major concern
    about the affordability. Participation peaked at NFIP at about
    5.7 million in 2009. On the day before Risk Rating in October
    2021, there were 4.9 million policies. Since then, NFIP has
    lost over 215,000 policyholders, and ultimately FEMA, through
    their own projections, projects losses of 900,000, 20 percent
    because of Risk Rating 2.0. This is not going to be good for
    the program or America.
        And there are also regional impacts. Our region, for
    example, Greater New Orleans, is essential for the national
    economy, and even global food and energy security. NFIP and
    Risk Rating does not take this into account.
        For example, 50 percent of all U.S. grain exports go
    through the Port of South Louisiana, which is in our region.
    The average increase under Risk Rating 2.0 is going to be 239
    percent in that region. If our workers cannot live there this
    is going to have impacts on our ability to supply America and
    the world with food.
        And finally, in conclusion, we do believe that NFIP should
    absolutely be reauthorized but also reformed. Congress did not
    cause the Risk Rating 2.0 problems but has the ability to
    impact them and to make them better.
        So some of our priorities, many of which are reflected in
    the National Flood Insurance Program Reauthorization and Reform
    Act of 2023 include requiring a peer review of Risk Rating 2.0
    methodology and a thorough and holistic analysis of economic
    impacts; mandating FEMA's transparency through the release of a
    usable, public-facing, risk calculator, and also a rating
    appeals process. We need to lower annual premiums from 18 to 9
    percent cap. We need to enact a means-tested assistance
    program, ideally looking at housing burden, which is a little
    bit more subtle than even just looking at percentage of AMI.
    And finally, the debt and interest payments should be frozen
    and redirected into mitigation because ultimately mitigation is
    how, as a Nation, we are going to work our way out of this
    challenge.
        These policies, which will resolve affordability,
    transparency, and accuracy concerns would serve to stabilize
    participation, sustain the program, and support communities
    across the country.
        Again, thank you for the opportunity to speak today, and
    thank you for your service, and I look forward to taking your
    questions.
        Chair Brown. Thank you, Mr. Hecht. Mr. Kaniewski.

       STATEMENT OF DANIEL KANIEWSKI, MANAGING DIRECTOR, PUBLIC
                         SECTOR, MARSH McLENNAN

        Mr. Kaniewski. Chairman Brown, Ranking Member Scott, my
    name is Daniel Kaniewski, and I focus on public sector
    challenges and solutions at Marsh McLennan, the world's leading
    professional services firm in the area of risk, strategy, and
    people. We are a U.S. company with more than 85,000 colleagues
    worldwide, advising public and private sector clients in 130
    countries. With more than 150 years of experience, we help
    individuals, businesses, communities, and Governments address
    the financial impacts of disasters through insurance and other
    risk management tools.
        Before coming to Marsh McLennan, I was the second-ranking
    official at the Federal Emergency Management Agency, FEMA,
    where, as the agency's first Deputy Administrator for
    Resilience I served alongside some great leaders of this
    Nation. As you can imagine, much of my work is focused on flood
    risk. I welcome the opportunity to speak to you today about
    that.
        Now as was said, flooding is the most common and most
    costly natural hazard, and yet communities often fail to
    protect themselves from the physical and financial impacts.
    Federal policies and programs, including the NFIP, are
    essential, but ultimately all disasters are local and so too
    are resilience investment decisions.
        To increase the resilience of communities against the
    pervasive risk of flooding, we believe that risk transfer--that
    includes the NFIP, private flood insurance, reinsurance, and
    parametric insurance--should be paired with risk reduction,
    hazard mitigation, and strong building codes.
        Now there are several ways to improve flood resilience, and
    for the NFIP, as we describe more fully in our written
    statement, those include strengthening the NFIP with a sound
    financial framework, protecting the NFIP with reinsurance
    solutions, growing the private flood insurance market,
    addressing gaps in NFIP coverage, embracing parametric
    insurance, promoting excess flood coverage to complement the
    NFIP, and leveraging existing NFIP incentive programs.
        On that final point I wish to elaborate.
        One existing NFIP incentive program is the Community Rating
    System. CRS is a voluntary incentive program that recognizes
    and encourages floodplain management practices that exceed
    NFIP's minimum requirements. It is an example of a Federal
    program that incentivizes community action on risk reduction
    and risk transfer.
        Tulsa, Oklahoma, is one of two communities nationwide that
    have achieved the CRS program's highest program rating. I
    recently spoke to the Oklahoma Floodplain Managers Association
    annual conference in Tulsa, and I saw firsthand how the city
    had transformed its approach to flooding. The conference host,
    Annie Mack Vest, helped Tulsa achieve its noteworthy status and
    NFIP policyholders there now enjoy a 45 percent discount off
    their flood premiums. Apparently I was not the only one to
    notice Annie's accomplishments. Oklahoma Governor Kevin Stitt
    recently appointed Annie to serve as the State's top emergency
    management official.
        In addition to FEMA grant programs, though, that
    incentivize these resilience investments, States have been
    launching their own innovative programs. Said by Russ
    Strickland--he is the Secretary of the Maryland Department of
    Emergency Management and recently elected to be the President
    of the National Emergency Management Association--his quote is,
    ``Hazard mitigation is the center of the universe.''
        To that end, South Carolina recently announced $200 million
    for flood resilience projects, while Florida, South Carolina,
    Alabama, and Louisiana, and others have programs aimed at
    incentivizing homeowners to strengthen their homes against
    hurricane risk. A recent academic study reviewing the Alabama
    program found that participating homeowners found their
    insurance premiums reduced and their home values increased,
    confirming our view that resilience pays.
        Beyond Government programs, the property and casualty
    insurance and reinsurance industries are developing innovative
    programs to protect communities and homeowners against floods.
    Community-based catastrophe insurance, or CBCI, is a parametric
    product pioneered by Marsh McLennan. It provides disaster
    insurance to local government entities that wish to cover a
    group of properties. The program enhances financial resilience
    by simultaneously providing affordable coverage and creating
    incentives for risk reduction. Our recent CBCI pilot in New
    York City was developed in partnership with the city of New
    York and several nonprofit and insurance industry partners and
    funded by the National Science Foundation. It provides a level
    of financial protection for low- to moderate-income households
    that previously lacked insurance.
        More broadly, other industries such as the financial and
    real estate industries, can incentivize flood resilience
    investments together with the insurance industry and all levels
    of Government. The National Institute of Building Sciences
    recently issued a roadmap for resilience incentives
    specifically highlighting how residential structures prone to
    flooding would benefit from these incentives. The report
    identified co-beneficiaries of mitigation investments and
    highlighted how these co-beneficiary industries can
    together help pay for these investments.
        Thank you for your time today and the opportunity to share
    how Federal, State, and local programs, together with
    innovations from industry, can help close America's flood
    resilience gap. I look forward to your questions.
        Chair Brown. Thank you, Dr. Kaniewski.
        Mayor Patterson, welcome.

             STATEMENT OF STEVE PATTERSON, MAYOR, CITY OF
                              ATHENS, OHIO

        Mr. Patterson. Thank you. Good morning, Chairman Brown,
    Ranking Member Scott, as well as the esteemed Members of this
    Committee. I appreciate the invitation to speak to you on
    behalf of the National Flood Insurance Program. I am Steve
    Patterson, the Mayor of the great City of Athens, Ohio, home to
    Ohio University. I am also the Second Vice President for the
    National League of Cities, representing 19,000 communities,
    cities, villages, and towns across the United States, and the
    President of the Mayors' Partnership for Progress, which
    represents 19 Appalachian counties and 120 communities and
    800,000 citizens across southeast Ohio.
        Cities, towns, and villages are experiencing a higher
    frequency of intensity of extreme weather events, including
    hurricanes, floods, wildfires, and heatwaves. These severe and
    unpredictable weather conditions are leading to large-scale
    disasters that can overwhelm existing infrastructure as well as
    emergency response capabilities.
        As we discuss the flood insurance, the recent devastation
    that we are seeing in San Diego highlights the reoccurrence of
    impacts of flooding on our cities and residents. My thoughts go
    out to Mayor Gloria and the San Diego residents during these
    tough times.
        Ohio University, like many cities, has also experienced
    floods, most notably the 1968 flood, at which we crested at
    more than 24 feet, 20-foot flood stage, which created a large
    problem for the City of Athens. Since then we have been working
    with the Corps of Engineers to mitigate a lot of those flood
    events that we see in our city.
        While Athens strives to reduce flood risk, concern persists
    about the potential for significant events like San Diego's.
    That is why NFIP is critical to offset these potential losses
    from such disasters and to protect our communities. NFIP
    ensures rapid access to funds for repair and restoration,
    minimizing the economic strains that affect our families and
    contribute to our communities' resilience. Recognizing the
    critical need for long-term reauthorization of the NFIP, NLC
    has endorsed the National Flood Insurance Program
    Reauthorization and Reform Act.
        Beyond individual homeowners, NFIP impact extends to
    economic stability at the community level. The program's
    commitment to prompt financial assistance prevents prolonged--
    and I mean prolonged--economic impacts, and financial
    assistance prevents these downturns, resulting in extensive
    property damage.
        This stability benefits not only homeowners but also the
    ripple effects on our local business economies, our schools,
    public services, supporting the overall well-being and vitality
    of our communities. NFIP further empowers comprehensive
    floodplain management, catalyzing local governments to
    establish long-term floodplain management strategies. This
    includes detailed maps, risk assessment, and mitigation plans.
    Through NFIP, municipalities gain access to resources and
    expertise, enabling proactive measures such as robust zoning
    regulations, integrated flood risk considerations into land-use
    planning, and critical infrastructure improvements.
        Cities such as Athens are implementing strategies like
    green infrastructure, resilient housing, community-based
    disaster preparedness, smart technologies, inclusive plannings,
    stakeholder collaborations, social infrastructure investment,
    and adoptive transportation. These efforts underscore cities'
    commitments and to thrive and adapt in a changing world.
        While State, Federal, and local investments from
    Infrastructure Investment and Jobs Act aims to minimize losses
    caused by extreme climate events, the allocation funds still
    fall significantly below the escalating demand to combat the
    increasing risks of extreme weather events. Local governments
    continue to need additional funding and resources to enhance
    our collaborative efforts to bolster resilience, protect
    communities, and ensure the long-term sustainability of our
    infrastructure.
        NFIP continues to provide flood insurance for property
    owners due to challenges in the private flood insurance
    covering in the many at-risk areas--concerns about cherry-
    picking by private insurers, leaving vulnerable communities for
    NFIP, raising equity issues and threatening the sustainability.
    NFIP's capacity to address challenges from catastrophic floods
    positions it as a vital player--and I mean a vital player--in
    providing financial protection to at-risk communities, a role
    elusive with the private sector.
        NLC's members are also concerned about the sluggish pace of
    the finding that is being disbursed in the Community
    Development Block Grant Disaster Recovery Program, the CDBG-DR,
    hindering long-term recovery efforts after disasters.
    Bureaucratic hurdles and lengthy processes delay the much-
    needed funds, impacting the ability to promptly address urgent
    needs and slowing down the overall recovery efforts. That is
    why NLC supports the bipartisan Reforming Disaster Recovery Act
    in the hopes that the legislation would significantly improve
    the CDBG-DR Program for faster community recovery from major
    disasters.
        In conclusion, the NFIP is a critical resource, offering
    financial protection for residents and aiding and building
    resilience and sustainable communities. The National League of
    Cities eagerly anticipates collaboration with this Committee to
    ensure NFIP remains an effective tool in safeguarding
    communities nationwide.
        Thank you for your attention. I am available for further
    information or for questions.
        Chair Brown. Thanks, Mayor Patterson. Thank you all for
    testifying.
        We are going a bit out of order. Senator Scott and I have
    agreed on that. At the request and the agreement of the Ranking
    Member, Senator Kennedy of Louisiana will be first to ask
    questions. I understand you have been called away for a
    constituent event related to D.C. Mardi Gras, and I would hope,
    Senator Kennedy, that I do not ask for much from you except to
    stay within your 5 minutes, but I hope that maybe there would
    be a king cake in it for Senator Scott and me. Senator Kennedy.
        Senator Kennedy. When you get back to your office you will
    have a surprise.
        Senator Scott. Senator Kennedy, if you go 7 minutes I will
    give you more.
        Senator Kennedy. OK.
        [Laughter.]
        Chair Brown. Sorry. That was not part of the agreement,
    ever.
        Senator Kennedy. I want to thank our esteemed Chairman and
    Ranking Member, Senator Tester, for accommodating my schedule.
        Thank you all for being here, especially to my friend,
    Michael Hecht. He is a very talented, able guy. Michael is head
    of the business community in New Orleans and the surrounding
    area. I can say some things that he cannot say.
        We have two problems in Louisiana in terms of flooding. We
    have hurricane flooding and we have nonhurricane flooding. I
    want to talk about the nonhurricane flooding first.
        When New Orleans gets 2 inches of rain in a short period of
    time, it floods. Why? Because New Orleans is below sea level,
    and it is in a bowl. It is in a bowl. That is why our founders
    in the city built first in the French Quarter, because it is
    the highest area.
        We have what is called a Sewage and Water Board, which has
    pumps when it rains a lot to pump the water out. We have had
    that for years and years and years and years. The taxpayers pay
    for it. And for years and years and years and years it has been
    a model of inefficiency. In fact, it has been a cesspool of
    political
    patronage and corruption.
        Now Michael cannot say that, and the business community
    does not want to say that because they are worried about
    retribution from the politicians. But it is the truth.
        Look at the headlines from our TV stations. ``Payroll fraud
    in a secret sex room''. ``Troubling allegations at New Orleans
    Sewage and Water Board''. ``Former New Orleans Sewage and Water
    Board employee sentenced for theft scheme''. ``New Orleans
    Sewage and Water Department raided by FBI''. ``Ex-Sewage and
    Water Board official has to pay back $100,000 he stole''. Next
    headline, ``We knew the Sewage and Water Board was
    dysfunctional. Now we know it's corrupt''.
        The people of New Orleans deserve better, and what we need
    to do is one of two things: the politicians have had their
    shot. They missed. We need to either turn the Sewage and Water
    Board over to the State of Louisiana and let somebody else run
    it, or we need to privatize it, because the Sewage and Water
    Board's plan right now, when it floods, when half of the pumps
    are broken, you know what their plan is? I kid you not. Move to
    higher ground. Where?
        Now the second problem is hurricane flooding, and this is
    the National Flood Insurance Program. We need a National Flood
    Insurance Program that looks like somebody designed it on
    purpose, because the one we have right now is not. The old one
    was not great, but at least it sort of worked.
        A few years ago FEMA decided they were going to reinvent
    it, and they hired an outside group of consultants, paid them
    bucket-loads of money, called Milliman, and Milliman came up
    with a new algorithm. And this algorithm is so good they say
    they can look in the future and look at each individual home
    and predict whether it will flood or not, 20 years from now.
    They made all kind of wild allegations.
        Any day now, I expect FEMA to say, ``This algorithm is so
    great it will grow hair,'' or ``it will cure ED.'' And I say,
    ``Man, I need to see this algorithm. Can I see it?'' ``No. If
    we show it to you, I'll have to kill you.'' And I am in charge
    of their budget. They lied. They lied. They have the
    credibility of Jussie Smollett and Michael Avenatti put
    together. They lied. They said a million people of the five
    million people will see their rates go down. I have not talked
    to a single person who has seen their rates go down. This is
    just an excuse to raise premiums, and they do not care.
        The whole purpose of a National Flood Insurance Program is
    to provide a product that people can afford. In my State, here
    is what the premiums have done. They said, ``Oh, a lot of your
    people, Kennedy, they will see decreases.'' Claiborne County--
    we call our counties parishes--a 305 percent increase. Another
    parish, 321 percent. Plaquemines Parish, 540 percent. FEMA
    lied, and they are not going to do any better.
        Now the best part of Senator Menendez's bill--it is a good
    bill; I am on it, he and Senator Cassidy. We have all worked
    hard--but it is going to cap the rate increases at 9 percent.
    Right now FEMA can raise the premiums 18 percent every single
    year, and they are going to keep doing it because they do not
    care. They lied to the American people and my people, and they
    ought to hide their heads in a bag, along with all the
    politicians that have allowed the Sewage and Water Board to
    steal money for all these years.
        Thank you.
        Chair Brown. Thank you, Senator Kennedy.
        Senator Tester is recognized for 5 minutes, from Montana.
        Senator Tester. Yes, thank you, Mr. Chairman, and Mr.
    Kaniewski said that he heard another person saying hazard
    mitigation is the center of the universe now. I always thought
    it was Cleveland, but maybe not. Enough of that.
        So look, we are on our 28th straight short-term extension
    of the National Flood Insurance. Beyond ridiculous, quite
    honestly. My question is for all three of you, but I only want
    you to use it for 30 seconds because you could all talk on it
    for 10 minutes, and that is, from this Committee's standpoint,
    what would you prioritize, besides the extension baloney, what
    would you prioritize in an NFIP bill as the most important
    qualities?
        Go ahead. We will start with you, Mr. Hecht.
        Mr. Hecht. Thank you, Senator. First would be affordability
    because we want to make sure that people stay in the program
    and it does not go into a death spiral. The second would be
    comprehensibility so people understand what they can do to make
    improvements and what they are paying for. And the third most
    fundamentally would be money for mitigation because hazard
    avoidance, reducing exposure is the center of the universe, and
    it is how we are going to improve this for our Nation, over
    time. Thank you.
        Senator Tester. OK. Go ahead, Mr. Kaniewski.
        Mr. Kaniewski. My answer is going to be hazard mitigation.
    Hazard mitigation because not only does it protect existing
    homeowners against their existing risk, it helps protect
    homeowners in the future, and anyone else who purchases that
    home in the future against future risk. It also gets at the
    affordability issue, because if you have reduced your risk you
    should also be able to reduce your rates.
        Senator Tester. OK. Mayor Patterson.
        Mr. Patterson. I would have to echo the affordability. I
    would also recommend looking hard at the CDBG-DR to streamline
    that. I come from one of the three chronically distressed
    counties in the State of Ohio, and when I look at affordability
    and look at my residents and my constituents it is a big
    challenge when you live the chronically distressed part of the
    State. And it is not just in our State. I look at all of
    Appalachia and see the exact same thing, and see affordability
    and streamlining access to CDBG-DR to where it is getting out
    more quickly and more effectively.
        Senator Tester. Thank you for that. I am going to go back
    to you, Mr. Hecht, because you talked about sustainability. All
    three of you talked about affordability with the last answer,
    and I agree, it does not do any good to have insurance if it is
    not attainable. But you also talked about sustainability, which
    is pretty damn important. We are $30 billion in the hole on the
    National Flood Insurance Program right now. I worked with
    Senator Vitter, Senator Kennedy's predecessor, and Senator
    Heller from a different angle on flood insurance. Affordability
    is always the issue, and sustainability means it is paid for,
    right? At least that is my definition of it.
        So how do we do this? Because when you are comparing the
    premium to risk, it is, well, you correct me if I am wrong, the
    risk is pretty significant.
        Mr. Hecht. Yes, thank you. So I think that there are two
    ways of looking at this. One is on the cost and efficiency
    side, and I think that Senator Scott spoke to this. The fact
    that 1 percent of claims are accounting for 30 percent of the
    payouts is something that clearly needs to be addressed.
        Senator Tester. And how would you address that?
        Mr. Hecht. Well, I think that you are going to have
    programs that basically that if you are a repetitive-loss
    building that at some point you do not qualify for new payouts.
    You basically need to be remediated, and you cannot build there
    any longer. There has to be a recognition to being smart about
    this program going forward.
        Senator Tester. So let's put this in plain talk. In other
    words, what you are saying is if you have an event that is
    expensive, unless you do some pretty significant mitigation you
    are not going to be eligible for the policy anymore.
        Mr. Hecht. I would say there is a little bit of a subtlety
    to that, because I think we have to define what is the
    appropriate definition of ``repetitive.'' If you have one event
    then you should not be taken out of the program. And I cannot
    say here today what the exact level should be, but there should
    be some point, after two or three events, that if you have not
    mitigated it, reduced exposure on your own, or are using public
    assistance then you do not get to continue to be a bad penny.
        Senator Tester. And I hate to keep going down this road,
    but look, Senator Kennedy talked about being below sea level.
    That is a problem. Building in the floodplains of rivers is a
    problem. We see the same thing, by the way, with fires. You
    build in the middle of the forest; the forest is going to burn.
        So the question is, and yet we have taxpayer subsidy of
    this program. We have taxpayer subsidy of a lot of programs, by
    the way. But we have taxpayer subsidy of this program. So how
    do we really get it to a point, because I do think
    sustainability is important. How do we get it to a point where
    it is a sustainable program, so that we are not dependent upon
    the U.S. taxpayer, for people who make bad decisions? Yes, go
    ahead.
        Mr. Hecht. No, no. It is a very complicated issue. One is
    efficiency. I think the other question we have to look at is
    the write-your-own programs are critical to us. They work for
    us. But should you get 30 percent continually as the rates
    continue to go up, that is a question.
        On the other side of it, we were able to be in Amsterdam
    over the holidays. When you arrive in Amsterdam Airport,
    Schiphol, there is a sign there that says, ``Welcome to below
    sea level.'' They have mitigated so well that it is actually a
    positive for them. So we do have the ability to design
    structures that protect communities and homes in a way that
    ultimately will reduce the exposure to the taxpayer.
        And finally, flood insurance, I would argue, is really a
    social good. We need to live and work near water as a Nation,
    so we have to have programs that maybe provide some level of,
    as you said, cross-subsidization.
        Senator Tester. Thank you, all three, for your testimony. I
    appreciate it.
        Chair Brown. Thank you. Senator Scott, of South Carolina.
        Senator Scott. Thank you. My good friend, Tester, asked a
    really good question about the impact of all of these
    challenges, repeated losses, but one of the things that at some
    point we are going to have to have a conversation, as a Nation,
    about a comprehensive catastrophic occurrence approach. The
    truth of the matter is that if you live in inland, name your
    State, your exposure and education on flood insurance, or the
    necessity of flood insurance, or NFIP is probably just absent.
    If you live in Charleston, we may have a tornado every now and
    then, but not a big deal. If you live in Colorado or
    California, your exposure to fires is a totally different
    experience.
        But if you live in America, the fact is simple. We, the
    taxpayers, have paid out hundreds of billions of dollars over
    the last 10 years because of catastrophic occurrences. It
    matters where you live to what the occurrence is, but it is
    occurring everywhere.
        And so while we are here today to talk about the National
    Flood Insurance Program and the importance of understanding how
    to mitigate that risk, the truth of the matter is that we, at
    some point, need to have a serious conversation about the
    comprehensive nature of catastrophic occurrences, that an
    insurance company cannot create a probably maximum loss, which
    means that that experience or that occurrence will not be
    insured at some point because you cannot figure out how to have
    an actuary sit at a table and figure it out. So without that
    comprehensive approach we really are missing the target by a
    mile.
        That said, if a home floods and the owner does not have
    coverage, Mr. Kaniewski, what are the options?
        Mr. Kaniewski. Well, if I can back up a second and say if
    they do not have flood insurance the first time they may learn
    about that will be when the flooding happens. Far too many
    Americans believe that flood insurance is included in homeowner
    policies. It is not.
        Senator Scott. That was my second question.
        Mr. Kaniewski. And then they also may believe that the
    Federal Government will be there to help them.
        Now again, in my role at FEMA, absolutely, if there was a
    Presidentially declared disaster FEMA was there to help. But
    the amount of assistance that FEMA is legally able to provide
    to a homeowner who has experienced a loss of any kind,
    including a flood, pales in comparison to what insurance would
    pay.
        Senator Scott. And I am not sure if the number is $39,000
    from FEMA or $40,000, but it is not $400,000.
        Mr. Kaniewski. Correct.
        Senator Scott. It is not $50,000. It is actually around
    $39,000 or $40,000, last time I checked, and I have not checked
    for this hearing.
        But I will say this, that the fact of the matter is that
    the floods that are occurring in different places every year,
    and the places where we are seeing floods occur--as an example,
    we had, I think it was 2015 or so, we had a 1,000-year flood in
    South Carolina. Not in Charleston, not in Myrtle Beach, not in
    Hilton Head. In Columbia. The community could not have been
    prepared for that because it is not supposed to flood in
    Columbia, South Carolina. But that actual experience is
    happening throughout the country in places where they do not
    expect it to flood.
        So having a conversation about the necessity of flood
    insurance is very difficult. Having sold it as an agent on the
    coast, it is very difficult to tell someone who is 100 yards or
    1,000 feet away from the water that you need flood insurance.
    Oh, it will not happen to us. We will just build high enough.
    Well, sometimes ``high enough'' is a relative definition. So we
    do need to have a different marketing strategy and approach as
    it relates to preparing for floods in places where we just do
    not think it is going to flood.
        During my opening statement I mentioned some recent actions
    taken by home State of South Carolina, providing communities
    with tools they need to protect their residents. Combining
    significant State investment in flood mitigation for a variety
    of mitigation strategies seems like a recipe for success at the
    local level. It has positive impacts at the national level.
        Mr. Kaniewski, could you provide us with any thoughts you
    may have, in about 30 seconds, on this approach?
        Mr. Kaniewski. Well first I, too, applaud the State of
    South Carolina. I mean, it is really a rare event where you see
    a State stepping up and saying, we are going to commit hundreds
    of millions of dollars to address this risk in our State. We
    are going to protect our citizens. We are going to protect our
    municipal infrastructure. We see it as a societal benefit.
        And I just want to pause for a moment and say what a big
    deal that is, because not only will that protect the citizens
    of South Carolina, it will protect the American taxpayer.
        Senator Scott. Thank you for that. And, Mr. Chairman, with
    my last 2 seconds left just quickly, when I think about the
    hundreds of billions of dollars paid out because of natural,
    catastrophic occurrences, the one thing I did not think about
    until you just mentioned it is that the public sector for
    public infrastructure pays out on top of that expense. So I
    would imagine in the last 10 years we have exceeded $1 trillion
    of payout, for the residents and the public infrastructure
    around this country, for an occurrence that is going to happen
    again and again and again.
        Chair Brown. Thank you, Senator Scott.
        Senator Menendez, of New Jersey, has probably put more
    thought into this issue than anybody on the panel. Thank you.
        Senator Menendez. Thank you, Mr. Chairman. Thank you and
    the Ranking Member for holding this hearing. I am not as
    colorful as Senator Kennedy but I agree with a lot of what he
    had to say.
        Since FEMA recently changed its rating methodology, the
    program has lost 150,000 policyholders. FEMA itself has
    estimated that it will lose 1 million policyholders by the end
    of the decade due to the premium increases.
        In Patterson, New Jersey, where the medium household income
    is $50,000 a year, policyholders will see their premiums
    increase from an average of $1,500 a year to an average of
    $4,000 a year. In Keansburg, New Jersey, where the medium
    household income is $76,000, 1,000 policyholders will go from
    an average of $1,300 to $3,500. And the list goes on.
        So, Mr. Hecht and Mayor Patterson, can working families
    handle these types of increases?
        Mr. Hecht. Thank you, Senator, and thank you for your
    leadership on this issue over many years. One of my notes here
    I just looked at, which I think is important to say, is that
    the challenges of flood insurance, which would be difficult for
    a working-class family to handle on their own are being
    compounded now by inflation, which is making groceries and
    gasoline more expensive, and then homeowners insurance, which
    is being driven by reinsurance, which has gone up, I know in
    Louisiana, about 65 percent, I think nationwide between 15 and
    20 percent.
        So we really have a middle-class, working-class
    affordability crisis throughout the country, where flood
    insurance is just one of the vectors.
        Senator Menendez. Mayor.
        Mr. Patterson. Yes, I would add to that, in Athens, in
    Athens County, the median household income is around $42,000,
    so it is much lower than the national average. It is a
    challenge, you know, to have that added burden, especially
    those who are living within the floodplains, within the city
    and throughout the county. It is going to be an exceptional
    burden on them. And to echo the already existing cost-of-living
    increases that we are all experiencing. But again, my default
    becomes the distressed counties in Appalachia.
        Senator Menendez. What happen is that families who are
    forced to drop their flood insurance coverage due to rising
    costs and later suffer damage in future disasters, that is the
    ultimate disaster to them.
        And look, insurance is about spreading risk, right? The
    wider the pool, you know, the less the cost. The smaller the
    pool, the higher the cost, and that drives people out at the
    end of the day. And so if we think about how much money
    taxpayers are paid when there is a disaster declaration, true,
    not as much as an insurance company will pay, but still that is
    the taxpayer dollars, and I have not seen too many Presidents
    when there is a natural disaster somewhere in the country say,
    ``Sorry. Not going to give you a declaration.'' They give
    declarations, which means the taxpayers' monies are being
    spent. So we should put that in as part of the equation,
    understanding that.
        And then if the private sector could do this, and do it at
    a reasonable cost, I would be all for it, but we have seen that
    the private sector just really is not going to go and do this,
    in a way, without a backstop that ultimately creates that
    opportunity.
        So, you know, the NFIP RE Act that I introduced, myself,
    Senator Cassidy, Senator Kennedy, and a whole bunch of others,
    on a bipartisan basis, lowers the statutory cap to 9 percent,
    the average annual increase that policyholders have seen since
    the Homeowner Flood Insurance Affordability Act of 2014 was
    signed into law. It also creates a voucher program to help
    families buy into the program. And endless increases help no
    one remain in their homes if there are unmitigated and
    uninsured consequences.
        A long-term reauthorization of the program must include
    robust funding of, as I think you have all talked about,
    mitigation, to
    decrease the risk profile of the program and provide a sound
    financial future. If we know right now which homes are most at
    risk we should not wait until a flood to step in and help. For
    every dollar of mitigation the Federal Government saves $7 in
    disaster relief payments.
        But there is one critical mitigation financial tool of the
    NFIP, the increased cost of compliance coverage that has grown
    obsolete. Mr. Kaniewski, how much does it cost to raze a home,
    in general?
        Mr. Kaniewski. Unfortunately, flood mitigation measures,
    especially one that you just described, are among the most
    expensive hazard mitigation measures.
        Senator Menendez. Probably anywhere between $100,000 and
    $150,000. We did this in New Jersey after Superstorm Sandy. And
    currently the ICC coverage only provides $30,000 to raze a
    home, which is no longer sufficient to get a home in
    compliance. That is why our NFIP RE Act modernizes increased
    cost of compliance by increasing the amount of coverage
    available to $120,000, and making it accessible the moment
    homes are out of compliance with building codes.
        And so in my mind there is a series of things that we can
    do, but if we believe that sustainability is going to be driven
    purely--purely--by rates and payment, then we are going to
    drive not a million, we are going to drive a lot more people
    out of the National Flood Insurance Program. That will
    collapse, and then we will be in a set of circumstances when a
    disaster takes place that we will have disaster declarations,
    we will spend the taxpayers' money, but we will have no
    mitigation from the private sector side and from the individual
    citizens' participation, not to mention that the value of their
    home, Mr. Chairman, goes through the basement, because if you
    are in a flood zone and you do not have flood insurance, and
    your mortgage requires it, or if you want to sell and someone
    needs to get flood insurance and cannot afford it in order to
    buy for the new mortgage that may require it on that home, that
    home is virtually worthless.
        And so these are all parts of the equation that we have to
    think about, and that is what we try to do in our legislation,
    and we look forward to working with the Chair and others to see
    if we can make something happen. Thank you.
        Chair Brown. Thank you, Senator Menendez.
        Senator Britt, of Alabama, is recognized.
        Senator Britt. Thank you to the witnesses for being here. I
    certainly appreciate you taking time to be in front of us and
    let us ask important questions.
        I want to first echo some concerns that I previously
    highlighted before this Committee, related to Government
    overreach and over-regulation.
        We have seen it across the board in all financial
    institutions, the regulators are bringing, under this
    Administration, more regulation, more overreach, more burden,
    and unfortunately the Federal Insurance Office is no different.
        In November, the Treasury Department announced that it is
    moving forward with FIO's climate data call, and this is just
    yet another blatant effort to overstep into the State-regulated
    insurance industry and collect incredibly detailed information
    from our communities. The effort completely undermines our
    well-functioning State regulatory system and is an effort to
    pursue this
    Administration's climate agenda at the cost of both taxpayers
    and industry.
        That is why I introduced the Insurance Data Protection Act
    with 16 of my Senate colleagues, including all of the
    Republican Banking Committee Members. The bill would rein in
    the overreach we have seen from the Federal Insurance Office
    and keep the office as it was intended to be, an informational
    body that supports the efforts of our State insurance
    regulators. State insurance regulators understand the unique
    needs, including the weather challenges, faced by their
    communities, and they help drive solutions.
        Unfortunately, Alabama is no stranger to the impacts of our
    natural disasters. We have experienced the devastation of
    everything from tornadoes to hurricanes to major weather
    events, and everything in between, the effects that those have
    on families, homeowners, and communities. Even this week we are
    preparing for strong storms and flash flooding across southern
    Alabama.
        It is imperative we are forward thinking in our disaster
    mitigation, disaster preparedness, and resiliency efforts. The
    Alabama Department of Insurance, in particular, has been a
    champion in this space. In 2011, Alabama established the
    Strengthen Alabama Homes Program, designed to aid and
    incentivize Alabama homeowners to improve their homes and to
    minimize property loss due to weather events.
        Mr. Kaniewski, I appreciate you highlighting these efforts
    in your written testimony. You specifically touched on the
    Fortified Roof Program that we have in Alabama and a report by
    three universities that studied the demonstrated benefits of
    the program. In short, the study found that the program
    directly resulted in (1) lower insurance premiums, and (2)
    higher home resale values.
        For those that may not be aware of the efforts in Alabama,
    can you further describe them and touch on the proven benefits
    that they have to homeowners?
        Mr. Kaniewski. Well, thank you, Senator, and I have got to
    say, in many forums I often laud Alabama. Alabama has three
    really notable things that you touched on. One, they have a
    Resilience Council. They created a council, and you say, oh,
    council, big deal. No, it is a big deal, because it meant the
    Governor is prioritizing resilience. Moreover, the cochairs of
    that council are the State emergency manager and the State
    insurance commissioner. In some States those two do not even
    speak. In Alabama, they sit together and they work on these
    resilience issues jointly. So kudos number one.
        Kudos number two, Strengthen Alabama Homes, as you
    mentioned. That program has been so successful that other
    States are now replicating it. Louisiana is now putting it into
    place, a virtual carbon copy of what Alabama put in place. And
    your State insurance office is working very closely with the
    State of Alabama to help them implement that program.
        So again, kudos number three, the study you mentioned. You
    are lucky to have a researcher named Lars Powell at the
    University of Alabama, who did that study. I thank Lars any
    opportunity I have
    because that is the first study that I have seen that gives
    empirical data, real evidence, that mitigation pays.
        Senator Britt. Thank you. And so how do these types of
    efforts play into the larger discussion that we are having
    today, I mean, around reforms to the National Flood Insurance
    Program, and particularly on incentivizing communities to focus
    on disaster mitigation, preparedness, resiliency? Can each of
    you just speak to that quickly?
        Mr. Hecht. Yes, thank you, Senator. Actually, Louisiana
    competes with Alabama, or tries to, on many things like
    football.
        Senator Britt. Roll Tide.
        Mr. Hecht. In this case the Fortified Roofs Program that
    you all have put out there is the one that we model on. We were
    recently in London, meeting with Lloyd's, talking about that
    program. And what we love about that is that we are going to
    debate affordability and how we make this work. Ultimately, it
    is going to be community-based resilience, which prevents the
    damage from happening, that reduces exposure. That is the
    answer for our States and our country.
        Senator Britt. Thank you.
        Mr. Kaniewski. Well, we certainly have studies that are out
    there, like the National Institute of Building Sciences that
    puts out great work on the 6-to-1 number. It is 7-to-1, even
    11-to-1 in building codes. But rarely do you see an opportunity
    where a State is a living laboratory, puts those ideas into
    action, and shows, with real data, with real homes, that
    resilience pays.
        Senator Britt. Thank you.
        Mr. Patterson. I think what I would add, and when you are
    speaking of test cases, the City of Athens is, in earnest,
    taking on flood mitigation, given that we have the Hocking
    River that runs right through the center of the city. And as I
    mentioned earlier, we are home to Ohio University, where back
    in 1968, and before that, the campus was completely split it
    have during high-water events, with flooding that was taking
    place. We have since worked with the Corps of Engineers to
    basically reroute the Hocking River, move it to where it was no
    longer as significant a flood threat, but it is still a flood
    threat in the City of Athens.
        And so we have, in earnest, gone to great lengths to remove
    a lot of the invasives along the banks of the river itself, and
    in doing so we are reintroducing native trees that are high-
    volume suckers, if you will, with sycamore trees, black
    willows, and swamp oak that are lining that now, which really
    helps when we do have high-water events that we are able to
    clear that watershed more quickly with absorption, but also
    creating a more laminar flow through the City of Athens by
    removing the invasives, which basically acted as snags to catch
    deadheads and other debris, therefore creating basically
    artificial fast-moving flash flood dams. So that has been
    effective. We have seen that that has been very effective with
    reducing the flooding that we are seeing in different
    neighborhoods throughout the city. And we are going to continue
    on that mission.
        We are currently working with the Corps of Engineers under
    Section 206 as well as 1135 to help work with them to explore
    different ways to where the tributaries coming into the Hocking
    River are also reduced. We have had significant flooding on
    some of the tributaries.
        But I guess my point being is that there are a lot of
    things that cities can do, villages can do. Now I will also add
    this, that when it comes to cities and villages, capacity
    becomes a real concern. Do they have the capacity? Do they have
    the financial wherewithal to be able to address some of these
    things? And I would say in the cities and villages that I
    engage with, that are small, the answer is no.
        Senator Britt. Thank you very much. We have got to empower
    homeowners and communities to be resilient against these storms
    and other conditions. I appreciate it.
        Chair Brown. Thank you, Senator Britt. I will continue to
    waive my questions. Senator Warren.
        Senator Warren. Oh, thank you, Mr. Chairman.
        So climate change is wreaking havoc on our communities, and
    with global temperatures on the rise natural disasters are
    coming more often, and they are doing more damage. And with
    floods accounting for about two-thirds of the costs of all
    natural disasters our Nation's flood insurance program is
    feeling the strain. In just the past decade, the National Flood
    Insurance Program has been hit by 4 of its top 10 costliest
    events in history. More floods, more intense floods, mean more
    families and businesses need flood insurance more than ever
    before.
        Last year, parts of Massachusetts were devastated by
    historic flooding, causing millions of dollars in damage to
    homes, to businesses, to farms. Modeling shows that over
    100,000 properties in the commonwealth that are not in FEMA's
    flood zones and do not have flood insurance are at serious risk
    of experiencing a flooding event.
        Mr. Hecht, you are an expert on flood insurance market.
    With climate change on the rise, more people need flood
    insurance. Does that mean that everyone who needs flood
    insurance today gets that insurance?
        Mr. Hecht. Absolutely not. Only about 4 percent of U.S.
    homeowners have flood insurance. That number should be much,
    much greater.
        Senator Warren. In short, our flood insurance system is not
    working right now. The best and most important thing we can do
    is tackle the root of the problem. We should be making big,
    bold investments to stop climate change in its tracks and to
    reduce the risks that floods pose to our Nation's communities.
    But at the same time we need to make sure that we understand
    exactly how the ongoing climate crisis is affecting our
    insurance market.
        So Mr. Hecht, let me come back to you. We know a few things
    about how climate change is changing access to insurance. We
    know that premiums are up by hundreds of dollars a year in many
    areas. We know that private insurers have pulled out of flood-
    prone States like Florida and your home State of Louisiana. But
    if we wanted to know exactly why an insurance company was
    pulling out of Leominster, Massachusetts, for example, and what
    insurance options were available to people in Leominster, at
    what premium levels, do we currently have data available to be
    able to do that?
        Mr. Hecht. Senator, no. So NAIC collects data that is at a
    State level, policies in force, and so forth, but I do not
    believe we have that level of granularity.
        Senator Warren. OK. So down at the homeowner level, at the
    town level, at the area that is flooding level, we just do not
    have that information.
        You know, the Federal Insurance Office at the Treasury
    Department is now working to try to fill that gap. In November,
    FIO proposed a plan to collect data from insurers on how
    climate change is affecting Americans' access to insurance and
    to the affordability of that insurance, including information
    on premiums, coverage, and claims.
        Mr. Hecht, FIO has proposed gathering data about the
    effects of climate change on one type of home insurance. Would
    it be helpful if the Administration gathered data on more types
    of insurance, like flood insurance, and about more categories
    of information, like the reasons for policy cancellations?
        Mr. Hecht. I have two quick answers to that. One is that as
    a homeowner you are looking at the cost of staying in your
    home, which is all types of insurance plus your mortgage note
    and your car payments and so forth. So the answer is yes.
        And then second, I think data, good data, is power.
        Senator Warren. So we are in the same place. I always want
    more information, and particularly in an area like this we have
    to understand the problem in order to fix the problem. The
    Biden administration should finalize its data call about the
    effects of climate change on the insurance market as soon as
    possible, and the Administration should collect all of the data
    necessary to understand our gaps in insurance coverage and to
    work out the right regulatory response.
        Good. Thank you all very much. Thank you for being with us
    today.
        Chair Brown. Thank you, Senator Warren.
        I want to go back to your talk, Mayor Patterson, your talk
    about what you did in Athens. I was in high school and I
    remember, I did not know much about that part of the State but
    I was maybe a sophomore in high school and I remember that
    flood, and it was the first time I really thought about
    something happening relatively close to home.
        Talk about opportunities beyond what you did to encourage
    collaboration between universities and communities. OU, for
    those not familiar--I mean, you all know about Ohio University,
    but it is a big university in a relatively small town, and has
    a huge impact on the town, 95 percent positive impact, I would
    say, not discussing the other 5 percent of the difficulty with
    [inaudible] relations. But if you would comment on that.
        Mr. Patterson. Senator, Thanks for the question. There is a
    lot that we are doing. We are blessed in that we have Ohio
    University and great partners with the city, not just the City
    of Athens but also the regional campus cities. You know, by
    having the Voinovich School of Leadership and Public Service
    they have got a strong GIS mapping arm. So that school in
    itself is a resource that has been made available to the
    Mayor's Partnership of Progress, which I already mentioned. So
    they play well with us to scrape the data that is necessary for
    us to understand the flood risks as well as better understand
    those with the greatest need when it comes to the impacts of
    flooding in our region. So they have been a great partner.
        I would say that having a workforce, a volunteer workforce
    at that, of the 19,000 students at Ohio University, they take
    part in doing a lot of the tree plantings that I had just
    mentioned. You know, we planted, over the last 8 years, more
    than 411 trees, both along the river and inland as well, to not
    only protect us and mitigate for flooding issues but also our
    decarbonization mission that we have in the City of Athens,
    with a pretty strong, with a 4 percent sequestration of carbon.
    But it is the students who come and help us work with that, the
    river sweeps that take place. They are engaged in that effort
    as well.
        But for me to have the ability--and it does not hurt that I
    taught at Ohio University for 18 years of my life--I know the
    schools and the departments to go to, to use those resources.
    But again, as I had mentioned, we are using them now in the
    cities of Zanesville, in the city of Ironton, in the city of
    Saint Clairsville, where there are regional campuses, and it
    has become a real force multiplier to have access to some of
    these resources to where, again, the capacity in some of the
    smaller cities and villages to be able to get this type of work
    done is insurmountable to them. They will not even think about
    it. They are thinking about having someone who is going to be
    hired to drive the snowplow versus someone who is going to be
    their GIS tech.
        Chair Brown. Few campuses have the reputation of activism
    the way yours does, the way OU does, and I appreciate you
    talking about the branch campuses. I have introduced a bill,
    the Neighborhood Tree Act, to help communities plant more
    trees. My thinking on that was informed about a book I read
    some time ago called ``Urban Forests'' or ``Urban Trees'', I
    think. And I remember one of the things that this book pointed
    out was an aerial picture of Los Angeles County showed that
    Beverly Hills was 55 percent tree covered and south central,
    one of the poorest parts of the city, was something like 13
    percent. I was also informed by the work you did because of the
    Hocking River flooding. So this legislation surely could make a
    difference in helping, in a significant, not a hugely
    consequential way but significant in some communities.
        Let me go, Mr. Hecht, to you for a moment, and if I have
    time I will come back to you, Mayor. FEMA reports it cannot pay
    back debts stemming from previous disasters. It will have to
    pay nearly $8 billion in debt interest, as you know, over the
    next 10 years. In 2017, at the request of the Trump
    administration, we forgave $16 billion of the program's debts,
    debt following Hurricane Harvey. I am glad to hear you agree
    that forgiveness is important.
        Would you like to comment on the benefit of using NFIP's
    resources for things other than interest?
        Mr. Hecht. Yes. Thank you, Mr. Chairman, and I agree with
    the doctor that if we can use those funds to invest in
    mitigation at the community level, things like levees, at the
    individual levels, providing for better roofs or elevating
    homes we are going to reduce our exposure over time.
        So if you think about exposure and costs, kind of like net
    present value like a stock, it is going to improve our stock
    price by making these investments today. So it does not seem
    like it is wise to just pay back the Treasury when that money
    can be going to actually reduce costs to the Treasury over
    time.
        Chair Brown. OK. Thank you. And Mr. Kaniewski, I know that
    you played a role in that, as I think you said number two at
    FEMA. Thank you for that.
        Back to the Mayor, we have heard support from each of you
    for investments in mitigation. Talk about the barriers in
    smaller communities, not just Appalachia but other places where
    they are more likely to have natural disasters of any kind.
    Talk about the barriers accessing Federal resources and
    managing floodplains and other kinds of natural disaster
    preparation.
        Mr. Patterson. Thank you, Mr. Chair. You know, as I had
    mentioned earlier, the barriers become capacity, and some of
    the barriers become education. I look at my colleagues not just
    across the State of Ohio but across the Nation, who come from
    small cities, villages, and a lot of them do not know where to
    turn to seek insurance funding. A lot of them do not know about
    the funding. You know, it becomes capacity. So there is a
    disconnect, I think, in a lot of the smaller cities and
    villages. So that is of real concern to me.
        We were talking earlier, you know--and thank you for your
    work on SSI and SSDI with Senator Cassidy--our individuals who
    are living on fixed incomes, you know, from a financial
    standpoint, especially as I have mentioned, and I have said it
    three times now, being in a distressed county where we have a
    lot of individuals living on significant fixed incomes, helping
    them understand how they can be able to access insurance if at
    all possible, it becomes a real issue.
        Chair Brown. Thank you. Senator Cortez Masto, from Nevada,
    is recognized.
        Senator Cortez Masto. Thank you, Mr. Chairman, and thank
    you, all three of you, for this important discussion. I am from
    Nevada. Flooding looks a little different in the desert, and I
    will tell you we do have challenges with flooding from heavy
    rains, flash floods--I grew up with those in southern Nevada--
    new land development that changes the natural drainage, and
    really the spring thaw of winter snow. So the questions I have
    for you are kind of based on the inland challenges that we have
    for flooding.
        I guess my first question is I know the Department of
    Homeland Security developed 17 legislative proposals to reform
    the NFIP. One of those was a recommendation at the agency that
    FEMA differentiate between coastal and inland locations when
    determining premium rates for policies. Mr. Hecht, would you
    agree with that?
        Mr. Hecht. Thank you, Senator. To the degree that making
    that differentiation allows for better data, more granularity,
    and for people to have more appropriate coverage, yes.
        Senator Cortez Masto. Good. Does anybody disagree with
    that? I would be curious.
        [No response.]
        Senator Cortez Masto. OK. Thank you.
        The next question, Dr. Kaniewski, let me ask you this.
    Unfortunately we are seeing a lot of wildfires now in the West,
    and that literally has an impact after the fire on the
    geography, and when a big rain comes then we see horrific
    flooding after the fire. So I guess my question to you is has
    the NFIP made any changes to maps or policies in response to
    devastating fires, because this is my concern, Bureau of Land
    Management (BLM), local ranchers, we all have this concern that
    there is a challenge after a fire that we do not get mitigation
    dollars for, we are not able to address, when actually that is
    probably the worst flooding that can occur.
        Mr. Kaniewski. I agree with you that this is a risk that
    many are not aware of, and unfortunately it adds additional
    pain and suffering. After one disaster it creates another. So
    yes, it makes a lot of sense to mitigate that flood risk,
    whether it be before or certainly after that fire, to prevent
    anything like a landslide or any other kind of devastating
    effect. It affects, obviously, all of the living organisms,
    including those that could prevent, you know, the grass and
    such, that could prevent future wildfires. So it is really a
    disaster onto another disaster.
        Senator Cortez Masto. Yes, and that is something I am
    hopeful that we try to address at many levels because it is
    devasting throughout the West, and anybody that has these
    devastating wildfires, there has to be remediation afterwards,
    appropriate remediation.
        Mayor, thank you for being here. I really appreciate it.
    One of the challenges in Nevada is affordable housing, and I
    suspect it is a challenge of yours as well. I am curious. What
    are some strategies that you are dealing with to enable
    affordable housing developments to actually remain operational
    when insurance costs increase by 20 percent or more?
        Mr. Patterson. It is a national problem. I think we all
    recognize that. It is certainly an issue that the National
    League of Cities has taken up and working through in earnest.
        You know, one of the things that I have been working really
    hard on is there are levers that a mayor can pull to help with
    affordable housing being developed. We can use things like tax
    incremental financing for neighborhood revitalization, which is
    basically a 75/10, 75 percent capture of the new valuation with
    having houses that are either renovated or new housing that
    goes in, over the course of 10 years, and use that money to
    help pay for the infrastructure that has to go in place to
    support those new homes, whether it is new street surface or
    new street, period, water, sewer, storm. We have been using
    that to some effect in the City of Athens.
        There are also some programs that I know that we are
    helping with some developers who want to build more affordable
    housing, with the single-family housing tax credit that we are
    encouraging them to use to build more housing.
        And then the other thing that we have been looking at, and
    there is a challenge here as well, is looking at LIHTC housing
    within our community. We are fortunate that we are able to get
    to 9 percent LIHTC projects.
        Senator Cortez Masto. That is great.
        Mr. Patterson. We have created 192 workforce housing units.
    The unfortunate with that is that we were told that there was a
    4 percent LIHTC that was going to create 36 senior housing
    units in the City of Athens, and unfortunately the gap was too
    large for that developer to come in and cover that gap. They
    did come to the city and ask if we had $1.5 million in our
    bankroll somewhere to be able to fill that gap. If I had it I
    would certainly consider it, of course, predicated upon City
    Council.
        But it is those gaps that become a real challenge. There
    are a lot of different financial gaps that we are experiencing
    when it comes to affordable housing. But we are working through
    and doing the best that we can.
        Senator Cortez Masto. Yes, and I think that is what I hear
    in my community, and that is the biggest challenge, and that is
    why I have to thank the Chairman, because this is an issue--
    there is legislation, and his focus is on how we address the
    affordable housing crisis in this country. One of them is
    addressing LIHTC. There are other ways that we can figure out
    how we help cobble together the financing to keep the costs
    low. There is legislation that he is supporting and introduced,
    and I think we need to get it done. This is not a partisan
    issue. This is bipartisan. We should be focused on how we
    address communities like yours, homeowners, individuals,
    renters, the like, to have a roof over their head, and it is
    affordable, and they can keep it.
        Thank you.
        Chair Brown. Thank you, Senator Cortez Masto. Mayor, I
    liked how you said, ``predicated on City Council.'' Well said.
    As the only elected--we do not have a lot of elected officials
    at this table. I mean, last week we had Jelly Roll, who is
    decidedly not an elected official. But anyway, thank you.
        Thanks. This is a very good hearing, and thanks for the
    wise, reflective, illuminating way that you explained this
    very, very complicated issue that this body, for years and
    years, has not been able to work its way through. And as
    Senator Cortez Masto said, it is certainly not a partisan
    issue. Almost half this Committee represents a coastal State
    and deals with these, but so does Nevada deal with them, so
    does Ohio deal with them, and so do other States. Thanks for
    being here.
        For Senators who wish to submit questions for the record
    they are due 1 week from today, Thursday, February 1st. To the
    witnesses, you have 45 days to respond to any questions.
        Thank you. The hearing is adjourned.
        [Whereupon, at 11:27 a.m., the hearing was adjourned.]
        [Prepared statements, responses to written questions, and
    additional material supplied for the record follow:]
                   PREPARED STATEMENT OF CHAIR SHERROD BROWN
        This hearing is a continuation of our efforts to enact a long-term
    reauthorization of the National Flood Insurance Program or NFIP. The
    program has been extended 28 times since September of 2017. The latest
    extension will expire on March 8th of this year.
        Today, we will discuss local leaders' perspectives on the National
    Flood Insurance Program, and the challenges and potential solutions to
    the risks that flooding poses to communities across the country.
        Local leaders are on the front lines of so many issues:
    transportation, how expensive housing is, the growing challenge of
    flooding. Each of these is a priority for this Committee.
        As these leaders know all too well, flooding is the most common and
    costly natural disaster facing the country. It's devastating to
    families, businesses, and communities in every State.
        And unfortunately, the risk is increasing.
        Outdated flood maps, population growth in at-risk areas, land-use
    patterns, and over-stretched infrastructure all play a role.
        And whether people want to admit it or not, climate change is only
    making it worse. It's making extreme weather events more frequent and
    less predictable--all across the country.
        Just this month:

        Streams overflowed in our colleague Senator Reed's home
            State of Rhode Island;

        Torrential rains poured through homes in San Diego
            neighborhoods represented by Senator Butler; and

        Flash floods have been threatening communities across
            Louisiana, which is well represented by our colleagues in the
            room today.

        Flooding isn't confined to communities on the coasts, or even on
    major bodies of water.
        As we saw in 2022, the same mountains and streams that make our
    Appalachian towns beautiful also make family homes and local economies
    vulnerable to flooding in an era of more extreme rainfall. Often the
    only available land for development in Appalachia is in or near
    floodplains.
        And disasters often fall hardest on the families and the
    communities that have fewer resources to prepare and respond to them.
    Smaller, rural communities often do not have easy access to resources
    to respond to the immediate effects of disasters, nor do they have
    access to the resources they need for long-term recovery and to prevent
    disasters in the first place.
        We need to ensure our families and communities can adapt and become
    more resilient both to the flooding we face now, and to the increases
    we know are coming in the next several decades.
        And whenever possible, we want to help communities avoid extreme
    flooding altogether, through pre-disaster flood mitigation.
        The NFIP is critical to that effort.
        Unlike a private insurance company, the NFIP does not just provide
    insurance. Its job is to prevent and minimize flood damage in the first
    place, not just help with recovery.
        The NFIP combats the overall threat of flooding through four
    related components:

        Flood insurance, currently covering nearly 4.7 million
            homes and businesses;

        Floodplain management;

        Floodplain mapping; and

        Mitigation.

        We must reauthorize and strengthen the NFIP, and invest in
    mitigation and floodplain management before disasters happen in
    communities.
        In recent hearings, we heard from a wide range of stakeholders who
    discussed:

        The need for a long-term reauthorization to help
            communities and stakeholders plan for the future,

        The importance of helping communities and property owners
            understand their risk--by both improving mapping and other risk
            communications, and through disclosure of flood hazards to
            prospective owners and tenants, and

        The importance of building State and local capacity to
            carry out our floodplain management and mitigation programs,
            especially for small and rural communities.

        We also heard FEMA's recommendations for strengthening the program,
    including forgiving the overhang of debt from previous disasters and
    providing means-tested assistance to help more families afford
    insurance.
        I am interested in hearing today's witnesses' recommendations on
    how we can help strengthen the NFIP, so that it can help local
    communities meet their needs.
        I am pleased to welcome Mayor Steve Patterson of the City of
    Athens, Ohio, here today to discuss some of the unique challenges faced
    by cities and towns in Appalachian Ohio.
        NFIP is a complex program, with multiple goals and implications for
    many of the things people care about most--their homes and their
    communities.
        However, I believe it is possible for us to come together to
    reauthorize and improve this program.
        Today's hearing will help inform this effort.
        I look forward to working with Ranking Member Scott and the Members
    of the Committee to strengthen the NFIP and the country's comprehensive
    approach to mitigating flood risk through a long-term reauthorization
    bill this Congress.
                                     ______

                    PREPARED STATEMENT OF SENATOR TIM SCOTT
        Before we get started, I'd like to take the time to welcome a
    Charleston native, Mr. Kaniewski, as a witness today.
        I can't think of a more helpful perspective in dissecting these
    issues that are really local in perspective.
        Although you now live in Minnesota--I've never met someone who left
    Charleston actually--full time. Please come home soon, we really need
    you back. We need all the smart-thinking individuals back in
    Charleston, South Carolina. But we thank you for being here today.
        The National Flood Insurance Program (NFIP) comes into play when we
    start thinking about how to mitigate the risks that are so impactful
    and negative to communities across the country.
        As we consider potential reforms to the NFIP, we must keep in mind
    local perspectives and not just those of Washington bureaucrats.
        Because we all know that the most effective policymaking typically
    happens closer to the problem, not farther away from that problem.
        So our Federal programs should foster local, innovative solutions--
    not regulatory red tape.
        Y'all have heard me say this before, that as a lifelong
    Charlestonian and South Carolina resident, as well as an insurance
    professional for more than 20 years--having sold flood insurance
    policies--it's really important for us to understand and appreciate the
    devastation caused by flooding.
        There's no doubt that if you're a Charlestonian and if you were
    around in 1989, Hurricane Hugo devastated our community in ways that
    very few natural disaster have before and frankly, since. The storm
    surge was so bad and so high, that it literally left boats in the
    middle of downtown in the streets of Charleston.
        More recently, Hurricanes Matthew, as well as Florence devastated
    towns throughout my State, and left some towns submerged.
        As a matter of fact, the town of Nichols, South Carolina--a very
    small town--was hit by both storms so bad that more than half of the
    houses in that small community found themselves underwater.
        And the devastation of trying to rebuild 24 months later--again--
    was undeniably and frankly impossible. But the good news is when you're
    surrounded by your friends and your family, the impossible becomes
    possible. And they worked really hard to start the process of
    rebuilding very quickly, and frankly, very successfully.
        This type of repeated flooding makes recovery harder, and
    naturally, can even cause some residents to lose hope--and certainly a
    part of the town--residents left.
        It's one of the reasons why I've re-introduced the Repeatedly
    Flooded Communities Preparation Act, which would help communities
    suffering from frequent flooding plan for the next storm, and
    hopefully, lower the risk.
        It's my hope that by encouraging flood-prone areas to reduce the
    impact of future storms, residents will be able to focus on long-term
    recovery--long after the storm surge recedes.
        And recovery doesn't simply mean rebuilding, it also includes
    uplifting our communities. It includes making sure that families and
    neighbors learn to work together--that the synergy in the aftermath of
    a disaster is where community, and the glue of community, really
    manifests and reveals itself.
        South Carolinians who have lived through repeated flooding know
    this, and my home State has taken action to prevent this outcome.
        South Carolina's recent dedication of resources and strategic
    mitigation efforts are second to none.
        In 2023, the State's budget included significant funding for
    mitigation efforts that would reduce flood damage from future storms.
        Backing up that investment, the South Carolina Office of Resilience
    released a nationally praised ``Statewide Risk Reduction Plan'',
    identifying the communities most vulnerable to floods and targeting
    mitigation resources to protect those residents.
        These are local solutions to local challenges--and they will make a
    huge difference in the lives of South Carolinians.
        And while I recognize that what works in South Carolina may not
    work in places like Senator Cassidy's Louisiana or Chairman Brown's
    Ohio, I'm confident that similar, locally based solutions and
    approaches could make a huge difference, not only in those communities,
    but to the National Flood Insurance Program itself.
        To support these levels, we must have substantial reform to the
    NFIP.
        The status quo is not an option. The program is financially
    insolvent, with over $20 billion--$20 billion in debt.
        Instead of educating communities and homeowners on the risks they
    face, the program's outdated flood maps and lack of transparent data
    often obscures the risks.
        Without a well-functioning and financially solvent insurance
    system, the NFIP will fail to provide cities and towns with the tools
    they need to be resilient.
        And, if the NFIP is unable to provide local communities with
    improved mapping and mitigation resources, the financial health of the
    insurance program will continue to deteriorate.
        When I say that--especially with my legislation I've reintroduced--
    we have to recognize that the NFIP pays out 30 percent of its resources
    to about 1 percent of the properties that consistently and repeatedly
    are flood victims again, and again, and again.
        One percent of the exposure absorbs 30 percent of the resources--
    and that's an opportunity for us to look to the local communities to
    create strategies to perhaps not rebuild there, and that will take a
    local engagement to mitigate that risk for the Nation, for the program,
    and frankly for the communities where they happen.
        Comprehensive reform of the program is essential.
        One final and important point before I close: Congress cannot allow
    the NFIP to lapse.
        Most often we talk about States like Florida, or South Carolina, or
    Louisiana--where they pay a disproportionate share of the premiums that
    go into the NFIP. The truth is that whether you're in Ohio, or
    California, whether you're in the New Jersey, New York area, where
    Hurricane Sandy--$8.8 billion--Hurricane Harvey--$9 billion.
        The number of flood insurance policies in place? Essentially
    nonexistent. So not only do we need to have a comprehensive reform of
    the program itself, we need to have a better education that floods
    don't simply happen when you live near the water. Floods today happen
    throughout the country.
                                     ______

                      PREPARED STATEMENT OF MICHAEL HECHT
                  President and CEO, Greater New Orleans, Inc.
                                January 25, 2024
        Good morning, Chairman Brown, Ranking Member Scott, and Members of
    the Committee. I am honored to speak to you today about reauthorizing
    and reforming the National Flood Insurance Program (NFIP).
        My name is Michael Hecht, and I am the President and CEO of Greater
    New Orleans, Inc. (GNO, Inc.), the 10-parish economic development
    organization for Southeast Louisiana. Since April 2013, GNO, Inc. has
    led the Coalition for Sustainable Flood Insurance (CSFI), a national
    alliance of approximately 250 organizations across 35 States. The
    Coalition for Sustainable Flood Insurance sees NFIP as a critical
    program that allows critical communities across our country to keep
    working.
        GNO, Inc. originally created CSFI to support NFIP reform as a
    Federal priority. Thus, we appreciate your longstanding leadership, as
    demonstrated today, and your continued recognition of the importance of
    available, affordable, and transparent flood insurance coverage for
    your respective districts and constituents. As you know, flood risk
    affects us all, and flood events have occurred in all 50 States and 99
    percent of counties in the United States since 1996. Your work this
    Congress to address insurance challenges will shape the future of our
    Nation's environment and economy, and make for a more prosperous and
    resilient country.
        Today, I will discuss the need to reauthorize NFIP--given its
    benefits to our Nation--and the need to reform the program--given
    FEMA's administration of Risk Rating 2.0 and its associated impacts.
    I. Reauthorization
        First and foremost, CSFI aims to ensure the availability of flood
    insurance through a reauthorized NFIP. CSFI supports a long-term,
    multiyear reauthorization of NFIP to ensure program stability and to
    minimize ripple effects across the American economy. Since September
    2017, NFIP has been operating under a series of short-term
    reauthorizations without comprehensive reform. Since then, NFIP has
    been extended on a short-term basis 28 times and has briefly lapsed
    three times. On March 8, 2024, NFIP's current authorization will
    expire.
    a. Effects of a Lapse
        If NFIP lapses, NFIP will lose the authority to provide new flood
    insurance contracts, and existing policies will not be renewed. NFIP's
    authority to provide new flood insurance contracts is a particular
    necessity based on the mandatory purchase requirement (MPR). This
    requires property owners to purchase flood insurance as a condition of
    mortgages made or guaranteed by Federal agencies, federally regulated
    lending institutions, and Government-sponsored enterprises. Property
    owners, both residential and commercial, are required to purchase flood
    insurance if their property is identified as being in a Special Flood
    Hazard Area (SFHA) and is in a community that participates in the NFIP.
    While private flood insurance coverage can now satisfy the mandatory
    purchase requirement, private flood insurance availability varies
    nationwide and is limited in many States, and can be prohibitively
    expensive.
        Thus, NFIP's reauthorization is consequential to the national
    housing market and real estate transactions. During a June 2010 lapse,
    about 1,400 home sale closings were canceled or delayed each day,
    representing over 40,000 sales per month. There are approximately six
    million homes located in SFHAs and subject to the MPR nationwide.
        A lapse also jeopardizes NFIP's ability to satisfy claims. NFIP can
    still process and pay claims on flood insurance policies as long as
    funds are available; however, NFIP's borrowing limit would be decreased
    from $30.425 billion to $1 billion.
    b. NFIP's Success
        NFIP covers nearly five million policyholders with an annual
    premium of $3.5 billion and $1.3 trillion insurance in force. NFIP's
    policyholders are often misperceived as rich, second-homeowners in
    beachfront communities. However, in 2017, a CSFI study found that that
    98.5 percent of all NFIP policies are in counties with a median
    household income below $100,000, and 62 percent of all NFIP policies
    are in counties with a median household income below the national
    average of $53,889. According to FEMA, incomes are higher outside the
    SFHA than they are inside the SFHA. 26 percent of policyholders inside
    of the SFHA are low income, compared to 21 percent of policyholders
    outside of the SFHA. Despite the MPR, 51 percent of nonpolicyholders in
    the SFHA are low income, compared to 41 percent of nonpolicyholders
    outside the SFHA. Thus, NFIP works to serve working Americans in need
    of sustainable, reasonable flood insurance.
        David Maurstad, Deputy Associate Administrator for Insurance and
    Mitigation, said, ``over the last 50 years, NFIP has collected $60
    billion in NFIP premiums, but has paid $96 billion in costs (including
    losses, operating expenses, and interest).'' That said, a difference of
    $36 billion to assist about 5 million American property owners today--
    and many millions more over the course of the program--is a good
    financial deal for the American public. According to FEMA, NFIP's flood
    management standards save the Nation almost $2.4 billion annually in
    flood losses avoided. Thus, over a 50-year period, these savings total
    $120 billion in flood losses avoided--for a net benefit to the American
    public of nearly $85 billion.
        NFIP should be reauthorized to fulfill its original objectives, and
    administered in a manner that respects these objectives. Congress, in
    the National Flood Insurance Act of 1968, declared the purpose of NFIP:
    ``a reasonable method of sharing the risk of flood losses is through a
    program of flood insurance which can complement and encourage
    preventive and protective measures . . . if such a program is initiated
    and carried out gradually, it can be expanded as knowledge is gained
    and experience is appraised, thus eventually making flood insurance
    coverage available on reasonable terms and conditions to persons who
    have need for such protection.''
        Congress, in 1968, did not create NFIP to charge full-risk rates,
    if those premiums were onerous and exacerbated risk exposure. Rates
    were supposed to be ``adequate, on the basis of accepted actuarial
    principles, to provide reserves for anticipated losses, or, if less
    than such amount, consistent with the objective of making flood
    insurance available where necessary at reasonable rates so as to
    encourage prospective insureds to purchase such insurance and with the
    purposes of this chapter.'' Yet, only 4 percent of structures in the
    United States are covered today, and more policyholders are being
    priced out of the program as we speak.
        NFIP was given the authority to borrow money from the U.S. Treasury
    from the beginning, with Congress foreseeing the possibility of
    collecting less in premiums than claims paid. The Congressional
    Research Service (CRS) affirms that, ``The NFIP was not designed to
    retain funding to cover claims for truly extreme events; instead, the
    National Flood Insurance Act of 1968 allows the program to borrow money
    from the Treasury for such events.''
        For most of the NFIP's history, the program--exclusively on the
    backs of policyholders, without any other support from taxpayers--has
    been able to cover its costs. Prior to Hurricane Katrina in 2005,
    NFIP's largest level of debt was $917 million in 1997, which was
    reduced to zero by the end of FY 2003. Since 2005, the NFIP--through
    premiums collected from its policyholders--has made six principal
    repayments totaling $2.82 billion and has paid $6.17 billion in
    interest. NFIP has not borrowed from the Treasury since 2016.
        Unless debt is forgiven, only current and future participants in
    the NFIP--via premium revenues--are responsible for repaying NFIP's
    debt and accruing interest. The October 2017 cancellation of $16
    billion of NFIP debt represents the first time NFIP debt has been
    cancelled. The outstanding $20.525 billion in debt--and $619 million in
    interest paid by policyholders annually to Treasury--continues to
    hamper NFIP policyholders, and NFIP's success as both an insurance
    company and a Federal program. This $619 million in interest would be
    much better invested in mitigation.
        Recent administrative changes by FEMA further threaten NFIP's
    success. This change--Risk Rating 2.0--further diverts the program from
    its original dual purposes of providing flood insurance and reducing
    the Nation's flood risk.
    II. Risk Rating 2.0
        CSFI was formed in the wake of the implementation of the Biggert-
    Waters Act, when homeowners across the county were facing skyrocketing
    rate increases through a combination of the removal of grandfathering
    and new maps, which often times were inaccurate. CSFI was a driving
    force behind the passage of the Homeowner Flood Insurance Affordability
    Act (HFIAA), which was signed into law in March 2014.
        Today, we find ourselves in a similar position. As we did a decade
    ago, CSFI will work with all partners--coalition members, members of
    Congress, FEMA's public servants, and all other interested
    stakeholders--to successfully address challenges with Risk Rating 2.0.
    a. Transparency and Accuracy Concerns
        Risk Rating 2.0 is a ``deja vu'' of sorts, although this time
    around, Congress did not pass legislation to cause this change to NFIP,
    nor has Congress had any substantial input in its development. FEMA,
    through what they claim is their administrative authority, has removed
    historical processes and replaced them--without a rulemaking process,
    an economic impact analysis, or even requested Congressional briefings.
    In short, transparency has been an issue in Risk Rating 2.0's rollout.
        Risk Rating 2.0 represents the largest change to NFIP's premium
    calculations since the program began in 1968. Risk Rating 2.0 was
    implemented on October 1, 2021 for new policies, and April 1, 2022, for
    existing policies. FEMA, in April 2023, finally released average full-
    risk rates for States, counties, and ZIP Codes. Beforehand, FEMA had
    only released an analysis of premium increases per month (ex:
    policyholders on average see premium increases of $8 per month). This
    is ironic, as FEMA doesn't yet allow for payments in monthly
    installments, despite having the statutory directive from HFIAA in 2014
    to provide policyholders with the option of paying premiums monthly.
    FEMA's former demonstration of premium cost changes in terms of per-
    month increases also hid full-risk rates, given HFIAA's annual premium
    increase limit for existing policies.
        With Risk Rating 2.0, FEMA has ``moved the goalline'' for
    policyholders and communities who have historically followed the rules
    by maintaining flood insurance coverage and satisfying floodplain
    management requirements. For example, past recipients of FEMA Flood
    Mitigation Assistance (FMA) grant assistance for home elevations agreed
    to maintain flood insurance coverage in perpetuity, expecting large
    premium discounts for mitigation, and not expecting Risk Rating 2.0 to
    change their premiums. Now, they cannot drop coverage, despite current
    conditions that they did not accept. CSFI's floodplain manager members
    have reported cases of property owners eligible for elevations denying
    FMA assistance. These property owners feel as though Risk Rating 2.0
    discounts for mitigation are unclear or insufficient to make even
    subsidized costs of elevation financially prudent. Thus, Risk Rating
    2.0 is confounding and undermining FEMA's own programs, intended to
    mitigate risk.
        Contrary to common misconception, FEMA has released the Risk Rating
    2.0 methodology through a ``Risk Rating 2.0 Methodology and Data
    Sources'' document and appendixes. One appendix is the ``premium
    calculation worksheet,'' an Excel document of four example properties
    in California, South Carolina, and Michigan to demonstrate the
    methodology's interaction of rating factors at the property-level. The
    ``Appendix D Rating Factor'' spreadsheet shows tables and scores for
    Risk Rating 2.0's dozens of rating factors--including State base rates,
    distance to water bodies, levee quality, drainage area, concentration
    risk, foundation type, first floor height, floors of interest, and much
    more. Flood zones from Flood Insurance Rate Maps (FIRMs) are not a
    rating factor. CSFI members and congressional staffers have questioned
    some factors, like why there are base rates by State, since NFIP is a
    national program and the new methodology intends to reflect an
    individual property's specific flood risk, as opposed to general risk.
        Unfortunately, policyholders do not have access to their property-
    level rating factor inputs, beyond the few listed on their declaration
    pages, which is made available only after purchasing coverage.
    Furthermore, there is no public-facing, interactive Risk Rating 2.0
    premium calculator. So, it still isn't clear to policyholders how
    modifying each of these factors (like elevation / first floor height)
    may affect their premium at the property level. With Risk Rating 2.0,
    FEMA is communicating flood risk through price of flood insurance
    coverage. Alternatively, FEMA could now use its wealth of rating
    factors--procured through many vendors--to demonstrate how, where, and
    why policyholders are at risk, and how policyholders can most cost-
    effectively mitigate this risk.
        Recently, FEMA has taken additional strides towards transparency,
    like through the release of a ``Flood Insurance Discount Tool.'' FEMA
    also commits to future transparency improvements, in response to the
    July 2023 Government Accountability Office (GAO) report on Risk Rating
    2.0 (GAO-23-105977). For example, FEMA says that they will ``enhance
    policyholder communication productions and public-facing websites'' by
    April 30, 2024; ``pilot online quoting tool'' by April 30, 2025; and
    ``publish final draft'' of an annual actuarial report by September 30,
    2025. FEMA should be encouraged, if not legislatively required, to
    honor their commitments.
        To date, FEMA's communications, materials, and tools still leave
    much to be desired by policyholders, stakeholders, and local
    communities. FEMA's Office of the Flood Insurance Advocate (OFIA), in
    its latest annual report, underscores concerns about Risk Rating 2.0's
    transparency and accuracy. For example, ``Policyholders, insurance
    agents and community officials expressed to OFIA that premiums rates do
    not seem to adequately reflect mitigation activities. For instance,
    they have indicated that they believe insufficient credit is given for
    certain mitigation techniques . . . This makes it harder for homeowners
    to take action to reduce their flood premiums, and harder for OFIA to
    advise customers of their mitigation options.''
        Amongst other suggestions, OFIA recommends that:

        ``FEMA's Federal Insurance Directorate (FID) should make
            information about premium rates more accessible to the public
            and should update language on NFIP's Pricing Approach /
            FEMA.gov to describe in further detail how risks are aggregated
            and tailor new materials to wider audiences.''

        ``FID should make information available about who
            policyholders, agents, insurers, and other stakeholders can go
            to within FEMA when questions arise about premium rates that
            are not addressed in the public material.''

        ``FID should require standardized information on quotes and
            declarations pages to include a description of a property's
            flood risk, including the types of flood risk and other
            specific rating factors that most influence the individual
            premium so that customers can understand their risk of
            flooding.''

        ``FID should ensure that deductible discounts are applied
            in a manner that meaningfully reflects the financial risk
            assumed by either the insurer or the insured.''

        OFIA also expresses accuracy concerns of Risk Rating 2.0's
    methodology and data sources, suggesting that:

        ``FID should update the rating engine to allow agents and
            insurance companies to provide more accurate geographic
            coordinate data.''

        ``FID should consider establishing a process to allow
            agents and policyholders an opportunity to provide other
            sources of information to demonstrate replacement cost value
            used for flood insurance rating.''

        ``FID should explore ways to incorporate more data from
            communities into the catastrophe models.''

        In further detail, OFIA explains issues with geolocation in Risk
    Rating 2.0: ``Policyholders want to provide additional detail to FEMA
    to refine the flood insurance price including correctly identifying
    latitude and longitude for geolocating the structure. To determine
    elevations and distance to flood sources, FEMA geolocates the address
    provided and determines the latitude and longitude. For almost all
    existing construction, the latitude and longitude are correct. However,
    in newer developments and very rural areas, the geolocation may be off
    enough to raise concerns about rating accuracy. Currently, there is not
    a mechanism for agents or policyholders to correct inaccurate latitudes
    and longitudes.''
        Risk Rating 2.0 intends to calculate flood insurance premiums for
    individual properties based on actual flood risk. But, as explained by
    OFIA, there are cases where Risk Rating 2.0 incorrectly identifies
    latitude and longitude for the structure.
        There are other known issues with data granularity across rating
    factors, from distance to coast to levee quality. Yet, there is no
    appeals process--for policyholders or communities--to ensure that
    FEMA's data is accurate and that rating factors are refined at the
    property-, community-, or State-level. Furthermore, there is no
    disputes process for policyholders to challenge the accuracy, or
    fairness, of chargeable premiums.
        In the ``Risk Rating 2.0 Methodology and Data Sources'' document,
    FEMA's contractor speaks to data reliability: ``In performing the
    services, we relied on data and other information provided to us by
    FEMA and other sources. We did not audit, verify or review the data and
    other information for reasonableness and consistency. Such a review is
    beyond the scope of our assignment. If the underlying data or
    information is inaccurate or incomplete, the results of our analysis
    may likewise be inaccurate or incomplete. In that event, the results of
    our analysis may not be suitable for the intended purpose.''
        It also appears that there has never been an independent third-
    party peer review of the Risk Rating 2.0 methodology. GAO has conducted
    a review of Risk Rating 2.0; however, it was not a technical review nor
    an audit for accuracy. GAO said, ``In performing this analysis, we
    relied on actuarial reports and documentation provided by FEMA. We
    reviewed the documents for reasonableness but did not audit them for
    accuracy. To the extent that there are material deficiencies in
    completeness and accuracy in FEMA's actuarial reports, the actuarial
    premium estimates may be materially different from those shown in the
    reports had these deficiencies not been present. This review is not a
    technical review, and we did not verify the accuracy of the
    calculations performed by the actuaries who developed the full-risk
    premiums.''
        Proper programmatic improvements to address data accuracy and
    methodology development are outstanding. To address this, FEMA can
    arrange for a third-party review of the methodology and data sources.
    FEMA can accept more input from agents, policyholders, floodplain
    managers, and technical experts. This will refine Risk Rating 2.0 based
    on specific, local, or technical knowledge. Furthermore, this can
    empowering policyholders and communities, making them more likely to
    reduce their flood risk exposure and take on mitigation activities.
    Until then, identified frustrations above, and their impacts identified
    below, are expected to continue.
    b. National Impact of Risk Rating 2.0
        On average, under Risk Rating 2.0, an NFIP policy will be $1,808,
    which represents a 103.6 percent increase over legacy rates. Although
    much of the public outcry about Risk Rating 2.0 has been from
    Louisiana, Louisiana is far from the most affected State. In terms of
    full-risk rates, there are 17 States with higher average rates than
    Louisiana. Rates will increase by over 50 percent in 41 States. States
    with the highest average full-risk rates are:

        1. Hawai`i: $3,653 (+154.1 percent)

        2. West Virginia: $3,074 (+171.2 percent)

        3. Connecticut: $3,000 (+88.6 percent)

        4. Maine: $2,700 (+183.2 percent)

        5. New Hampshire: $2,545 (+109.2 percent)

        6. Vermont: $2,248 (+87.7 percent)

        7. Florida: $2,213 (+131.1 percent)

        8. Kentucky: $2,201 (+107.6 percent)

        9. New York: $2,197 (+85.5 percent)

        10. Mississippi: $2,137 (+149.1 percent)

        In CSFI's 2022 white paper, ``An Evaluation of Risk Rating 2.0 on
    NFIP Affordability'', a literature review of NFIP price elasticity
    found that a price increase of 1 percent causes a decreased demand of
    0.11 percent to 0.87 percent for flood insurance policies. Before Risk
    Rating 2.0 was implemented, an internal FEMA study estimated that that
    20 percent of policyholders nationwide would ultimately leave the
    program due to premium increases. We are watching this prediction
    unfold.
        NFIP's participation peaked around 5,700,235 in 2009. On the day
    before Risk Rating 2.0's implementation in October 2021, there were
    4,899,114 policies in force nationally. As of December 2023, there are
    now 4,683,971 policies in force nationally. Thus, NFIP has lost over
    215,000 policyholders, or 4.39 percent of all policyholders, since Risk
    Rating 2.0's implementation. 121,739 policies have been lost in Texas
    alone. Participation has already fallen by over 5 percent in 26 States
    and by over 10 percent in 14 States. These 14 States with the greatest
    declines in policies in force, by percentage of policies, are:

        1. West Virginia: -2,428 (-19.44 percent)

        2. Oklahoma: -2,050 (-17.74 percent)

        3. Texas: -121,739 (-15.50 percent)

        4. North Dakota: -1,198 (-14.55 percent)

        5. Iowa: -1,602 (-14.10 percent)

        6. Minnesota: -919 (-11.29 percent)

        7. South Dakota: -327 (-10.89 percent)

        8. Missouri: -1,933 (-10.64 percent)

        9. Louisiana: -53,558 (-10.54 percent)

        10. Nebraska -886 (-10.54 percent)

        11. Kansas: -848 (-10.35 percent)

        12. Arkansas: -1,354 (-10.15 percent)

        13. Ohio: -2,665 (-10.07 percent)

        14. Mississippi: -6,086 (-10.00 percent)

        Clearly, Americans are not yet benefitting from Risk Rating 2.0.
    Risk Rating 2.0 is proving cost prohibitive to policyholders and is
    posing a burden to FEMA itself. David Maurstad said that, ``Since 2017,
    hundreds of FEMA staff, over a dozen contractors pursuant to over two
    dozen different contracts, thousands of staff and insurance agents from
    the 47 WYO companies participating in the NFIP, and 5 vendors have
    worked on the development and implementation of Risk Rating 2.0. This
    effort has cost the Federal Government over 80 million dollars, all of
    which would be wasted if the implementation of the current rates were
    permanently enjoined.''
        CSFI supports congressionally proposed, FEMA-supported, and private
    market-backed provisions that can provide coverage. For example, CSFI
    supports allowing for private flood coverage to satisfy continuous
    coverage requirements, which would allow policyholders to switch
    between public and private coverage without permanently sacrificing
    benefits of NFIP's annual rate increase limit. This priority is more
    urgent with a growing private market and a less affordable NFIP.
    c. Regional Impact of Risk Rating 2.0
        Across the country, NFIP allows working communities to continue
    working. Our region--Greater New Orleans--is essential to the national
    economy, and even global food and energy security. NFIP simply does not
    take these factors into account. NFIP has not conducted a comprehensive
    assessment of the economic and social impacts of implementing Risk
    Rating 2.0, which would demonstration ripple effects on Government
    revenues, property values, national security, and more.
        Illustrating the importance of Greater New Orleans, over 50 percent
    of all U.S. grain exports travels through the Port of South Louisiana.
    Under Risk Rating 2.0, flood insurance premiums are increasing by 239.2
    percent in St. Charles Parish, where many of the port's workers reside.
    While many Federal levees in the National Levee Database are considered
    by Risk Rating 2.0--like the $14.5B Hurricane & Storm Damage Risk
    Reduction System surrounding our region. However, St. Charles Parish
    has invested in local levees and pump stations which are not accounted
    for in ratemaking. For example, near a local flood control structure
    that FEMA doesn't recognize, an X-Zone home in Des Allemandes, LA, will
    see premiums increase from $572 to $6,131.
        Higher costs of living and higher costs to employ logistics and
    trade workers will be passed on to consumers nationwide. Eventually, by
    pricing out workers within our region, farmers in Nebraska and
    agricultural workers across the Midwest won't be able to export grain
    produced. Moreover, the United States would lose competitive advantages
    in logistics and trade. The United States would also sacrifice the
    agility to stabilize global markets, as seen in recent years, when
    Ukraine's grain exports are constricted.
        The largest private investment human history--a $21B LNG export
    facility--is currently under construction in Plaquemines Parish, near
    the mouth of the Mississippi, for the benefit of the American economy,
    global security, and global climate (switching Asia from coal to gas).
    In Plaquemines Parish, the average full-risk premium is $5,431 per
    year, an increase of 545.3 percent compared to legacy rates. A property
    in Belle Chasse, LA is seeing an increase from $572 to $8,828. This is
    a parish with a poverty rate of 16.4 percent, 5 percentage points above
    the national average. The median value of owned-occupied homes is
    $253,300, compared to $281,900 nationally. And, due to NFIP floodplain
    management requirements, in some parts of the parish, a new home (or a
    substantially damaged property) must be built or elevated to a base
    flood elevation of 18 feet. NFIP is wreaking havoc on critical
    communities like this, which will inevitable have cascading
    consequences, without congressional intervention.
        Meanwhile in Plaquemines Parish, in addition to historic industry
    investment, there is historic environmental investment. The largest
    ecosystem restoration in the Nation's history has broken ground. The
    $2.9B Mid-Barataria Sediment Diversion will harness the land-building
    power of the Mississippi River to build and sustain up to 26,000 acres
    of wetlands in the Barataria Basin. This project is part of
    Louisiana's' 50-year, $50B Coastal Master Plan, which is not clearly
    factored into rates. Since 2016, Louisiana has restored and maintained
    26,000 acres of coastal land and improved 83 miles of levees. The
    projects identified in the 2023 Coastal Master Plan will restore and
    maintain over 300 square miles of Louisiana's coastal wetlands and
    reduce expected annual damage by up to $15 billion. Instead, through
    catastrophe modeling and Risk Rating 2.0's ``disaster to coast''
    factor, Louisiana may be being punished for a century of coastal land
    loss, largely due to Federal management of the Mississippi River and
    largely out of communities' control.
        Implementing all projects in Louisiana's Coastal Master Plan over
    50-year period could reduce risk from tropical storms and hurricanes to
    coastal communities to less than what the current risk level is today,
    even considering sea level rise projections. But, communities--and
    entire States--are not necessarily being given credit for their
    investments in resilience nor incentivized to do so. Thus, considering
    residents' cost-prohibitive premiums, communities could be left with
    fleeing populations and cratering tax bases. They will be unable to pay
    for necessary adaptations from their self-generated revenues, and they
    will have to rely more heavily Federal funding, both for public
    improvements and for residents' flood losses.
        Still, the city of New Orleans is wisely investing in green
    infrastructure and smarter storm water management practices, as advised
    by GNO, Inc.'s 2013 Greater New Orleans Urban Water Plan. The Mirabeau
    Water Garden is converting the site of a former convent, flooded by
    Hurricane Katrina, into a 10 million gallon detention pond and an urban
    water management educational center. Despite being funded through
    FEMA's own Hazard Mitigation Grant Program (HMGP), this project won't
    necessarily reduce neighbors' NFIP premiums, although it will reduce
    flooding by up to 14 inches. Moreover, when neighbors drop NFIP
    coverage or move due to heighted premiums, this can affect a projects'
    benefit cost analysis (BCA) of projects and impact their eligibility
    for Federal funding.
        Throughout the Gentilly neighborhood where Mirabeau lies, through a
    ``community adaptation program,'' approximately 200 households have
    installed various property-level retrofits to reduce their flood risk.
    These property-level flood adaptations--permeable pavement, stormwater
    planter boxes, tree plantings, infiltration trenches, rain barrels, and
    rain gardens--are also not considered in Risk Rating 2.0. While these
    property owners have reduced flood risk for themselves and their
    neighbors, they are not being credited by NFIP for doing so.
        Across the State, we're also adapting by installing FORTIFIED
    roofs, a construction method that reduces the chance of wind-related
    losses through stronger roofs. The FORTIFIED Program, a program of the
    Insurance Institute for Business & Home Safety (IBHS), is a strong
    model for resilient building practices and relevant incentivization. In
    Louisiana, State law requires actuarially sound premium discounts to be
    provided to policyholders who install FORTIFIED roofs. Similarly, NFIP
    policyholders could be incentivized to install floodproofing
    adaptations, from permeable pavements to rain gardens, in exchange for
    appropriate NFIP premium discounts.
        Oddly, rates in our region are being treated as an anomaly,
    according to FEMA's ``Risk Rating 2.0 Methodology and Data Sources''
    technical document. With no further explanation, the document reads,
    ``As in the nonleveed analysis, GLMs were used to develop geographic
    rating factors for leveed areas. For the nonleveed analysis, separate
    models were fit by segments that consisted of groups of States. For the
    leveed analysis, there was a smaller volume of data that was more
    highly geographically concentrated. Using the same segments as the
    nonleveed analysis would have produced policy counts that were too low
    within a segment. Instead, the GLMs were fit on the countrywide data.
    Upon reviewing the residuals, Milliman created an interaction term in
    the Inland Flood model to allow for elevation as a rating variable in
    Louisiana. Without this rating variable, AALs were underpredicted in
    low elevation areas, especially areas with negative elevation in New
    Orleans. Milliman also found it necessary to create separate GLMs for
    Louisiana Storm Surge.''
        Maybe regions like ours--communities that are economically
    important to protect, and imperative for the national economy to exist
    near water--should be treated differently in ratemaking than some
    second-home, vacation communities. This differentiation is seen in some
    parts of NFIP. For example, the HFIAA surcharge is $25 for primary
    residences and $250 for second homes. Annual premium increases are
    capped at 18 percent for primary residences but at 25 percent for
    secondary home and severe repetitive loss properties. A future
    affordability program to help working Americans could be only open to
    primary residences that are not severe repetitive loss properties.
        Our community is like many of the 22,500+ in NFIP--a hardworking
    community that serves America through water resources. Over half of
    America's population lives in a coastal county, and over half of all
    jobs are located in coastal counties. Moreover, 57 percent of the
    country's GDP is produced from counties by the coast (Emsi). A flood
    insurance program should allow coastal economies to not only exist, but
    provide for rest of our country through trade, logistics, agriculture,
    advanced manufacturing, energy production, and all industries that are
    dependent on proximity to water.
        And beyond the coast, flooding still occurs--as you'll remember 99
    percent of U.S. counties have been impacted by a flooding event since
    1996; in 2019, of the 10 States with the most flooding events, only
    three were coastal States (FEMA). Fairly priced flood insurance--and
    complementary investments in mitigating flood risk--is essential to the
    American economy, in Greater New Orleans, and everywhere.
    III. Reform Priorities
        With this understanding of NFIP's importance and current concerns,
    NFIP should be reauthorized and reformed. Although Congress did not
    cause the Risk Rating 2.0 predicament, fortunately, it can take action
    to address it in a manner that improves economies, empower communities,
    and protects policyholders.
        We underscore the following reform priorities for consideration by
    the 118th Congress. These priorities are informed by legislation
    introduced this Congress, like the National Flood Insurance Program
    Reauthorization and Reform Act (NFIP-RE) of 2023, as well as CSFI's
    white paper on affordability and our coalition members' insight.

      1.  Require a peer-review of the Risk Rating 2.0 methodology and an
            analysis of Risk Rating 2.0's economic impacts--An independent
            actuarial review performed on an ongoing basis by a team of
            experts could heed improvements to the Risk Rating 2.0
            methodology, while establishing insight into Risk Rating 2.0.
            This review may work to improve data resolution issues and a
            perceived undervaluation of certain factors, like first floor
            height and other mitigation measures. Congress can
            simultaneously require FEMA to review national impacts of Risk
            Rating 2.0. For example, the Risk Rating 2.0 Transparency Act
            would mandate FEMA that ``complete and publish a comprehensive
            assessment of the economic and social impacts of implementing
            Risk Rating 2.0'' over a 20-year period.

      2.  Mandate FEMA's transparency through the release of a public-
            facing rate calculator and establishment of rating factor
            appeals process--Policyholders demand a way to review rating
            factors, validate property-level inputs, understand their
            comprehensive risks, and see the impact on premiums from
            undertaking mitigation measures. The NFIP-RE Act would mandate
            that FEMA ``establish a tool that allows members of the public
            to estimate premium rates for covered properties under the Risk
            Rating 2.0 program (or any similar methodology) within a
            reasonable margin of error based on user inputs.'' Furthermore,
            the NFIP-RE Act would ``establish a fair, transparent, and
            streamlined process to manage disputes regarding chargeable
            premium rates
            prescribed.'' This appeals process is necessary so that
            policyholders can ensure Risk Rating 2.0's data accuracy at the
            property level.

      3.  Lower annual premium increases to nine percent--Cutting the
            annual rate hike cap in half, from 18 percent to 9 percent,
            cuts anticipated NFIP participation decreases in half,
            according to statistical models of NFIP price elasticity. NFIP
            participation has already decreased by over 4 percent since
            Risk Rating 2.0's implementation. Congress should cap single-
            family primary residential annual premium increases to a
            maximum of 9 percent each year, to stabilize program
            participation and serve as a bridge to a permanent
            affordability program. The Flood Insurance Affordability Act
            would accomplish this.

      4.  Enact a means-tested assistance program with housing burden as a
            targeting factor--Under Risk Rating 2.0, the median percentage
            of household income represented by the full-risk premium will
            exceed 1 percent in 45 States and will equal or exceed 2
            percent in 10 States. FEMA has proposed to administer an
            affordability program for certain NFIP policyholders, but this
            requires congressional authorization. This program should be
            authorized and made available to both current and prospective
            policyholders, with scaled discounts to assist those most in
            need, in order to encourage NFIP participation growth. The
            NFIP-RE Act proposes eligibility for policyholders earning up
            to 140 percent of AMI, which CSFI supports. However, in lower-
            income areas with higher costs of living, 140 percent of AMI
            may still be insufficient to reach homeowners in need. Beyond
            AMI, there are other cost of living measures--most relevantly
            housing burden--that can be used to determine eligibility or
            discount distribution.

      5.  Forgive NFIP's debt or freeze interest payments--Congress should
            forgive NFIP's debt, given that it was accumulated under a
            legacy pricing system. FEMA will pay the U.S. Treasury $619M
            this year to service $20.5B of NFIP debt, much from
            policyholders who have left the program or mitigated their
            properties. According to FEMA, approximately 11 percent of each
            current policyholder's premium is applied towards these
            payments, equating to about $132 per policyholder per year. At
            the least, Congress should grant forbearance for interest
            payments over a defined period of time. The NFIP-RE Act would
            pause interest payments for 5 years, and deposit these savings
            into a National Flood Mitigation Fund.

        The policies above--intended to resolve common equity,
    affordability, transparency, and accuracy concerns--would serve to
    stabilize participation, sustain the program, and support communities
    across the country.
        These policies are just the beginning. Other reforms called for by
    NFIP stakeholders include Increased Cost of Compliance modernization,
    flood mapping modernization, claims process reform, among many more.
    Furthermore, Congress could work to address global insurance challenges
    that put pressure on NFIP, such as skyrocketing reinsurance costs. For
    example, a Federal reinsurance commission could be established to study
    options for Federal intervention, as well as associated savings to FEMA
    and other Federal agencies, and then propose solutions.
        Again, thank you for the opportunity to testify today about the
    reauthorizing and reforming the National Flood Insurance Program. We
    appreciate your recognition of NFIP's value to local communities and
    the American economy.
        All stakeholders across the country interested in sustainable flood
    insurance are welcomed to join our coalition. CSFI stands ready and
    willing to assist the Committee as we work to reauthorize the NFIP by
    March 8, and as we pursue long-term solutions that improve NFIP and our
    country's sustainability.
                     PREPARED STATEMENT OF DANIEL KANIEWSKI
                Managing Director, Public Sector, Marsh McLennan
                                January 25, 2024

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                     PREPARED STATEMENT OF STEVE PATTERSON
                          Mayor, City of Athens, Ohio
                                January 25, 2024
        Good morning. I express my gratitude to Chairman Brown, Ranking
    Member Scott, and the esteemed Committee Members for extending the
    invitation to address you today. I also appreciate the Committee's
    ongoing support and dedication to the National Flood Insurance Program
    (NFIP) and their commitment to enhancing the resilience of our
    communities.
        I'm Steve Patterson, the Mayor of the City of Athens, OH, and the
    2nd Vice President of the National League of Cities (NLC), which
    advocates for 19,000 cities, towns, and villages across the Nation. I
    am honored to present testimony today on the critical significance of
    the National Flood Insurance Program for mayors, local officials, and
    all members of the National League of Cities.
        Since the conclusion of the fiscal year 2017, the NFIP has
    undergone a series of 28 short-term extensions. This prolonged reliance
    on short-term measures underscores the pressing need for a more
    enduring solution. Recognizing the inherent challenges and
    uncertainties associated with recurring short-term extensions, the NLC
    believes that a sustained and well-defined reauthorization is
    imperative for ensuring the stability, effectiveness and resilience of
    the NFIP. The complexity of flood insurance issues demands a forward-
    looking legislative approach that addresses long-term sustainability
    and the evolving nature of flood risks.
        In alignment with its commitment to fostering robust and enduring
    solutions, the NLC has officially endorsed the National Flood Insurance
    Program Reauthorization and Reform Act of 2023 (S. 2142). This
    legislative initiative is seen as a pivotal step toward providing the
    NFIP with the stability and resources needed to fulfill its crucial
    role in protecting communities against the financial devastation caused
    by flooding.
        A long-term reauthorization not only ensures the program's
    continued functionality but also fosters confidence among local
    governments and residents who rely on the NFIP for financial protection
    in the face of flooding events.
    Local Government Support for NFIP
        NFIP serves as a critical tool in protecting homeowners,
    businesses, and municipalities from the devastating financial
    consequences of flooding. Flooding events have become increasingly
    frequent and severe, posing a significant threat to the stability and
    well-being of communities across the Nation. Without the support and
    provisions offered by NFIP, the financial burden on our residents would
    be overwhelming, hindering our ability to recover and rebuild in the
    aftermath of such disasters.
        Here are key facts highlighting the importance of NFIP for local
    governments and residents:
        1. Financial Protection for Homeowners:

          NFIP stands as a cornerstone in providing homeowners
            residing in flood-prone areas with comprehensive and essential
            insurance coverage. This coverage extends beyond the mere
            compensation for property damages; it encompasses the broader
            financial landscape affected by flooding events.

          One of the distinctive features of NFIP is its commitment
            to ensuring that affected homeowners can access funds promptly.
            This rapid disbursement is instrumental in expediting the
            recovery process and mitigating the economic strain experienced
            by individuals and families.

          Prompt access to funds enables homeowners to initiate
            immediate repairs and restoration efforts, preventing further
            damage and minimizing the duration of displacement. This, in
            turn, contributes to the overall resilience of the community by
            facilitating a swifter return to normalcy for residents.

          It is important that the NFIP recognizes the diverse
            needs of homeowners and offers flexible financial assistance
            tailored to individual circumstances. This can include
            temporary housing assistance for those displaced, funds for
            necessary living expenses, and additional financial support to
            address specific challenges faced by homeowners during the
            recovery period.

          The program's flexibility should extend to accommodating
            various property types, from single-family homes to
            condominiums, ensuring that a wide spectrum of homeowners can
            benefit from the financial protection and support provided by
            NFIP.

        2. Economic Stability for Communities:

          Flood-related damage can have a cascading effect on the
            local economy. By ensuring that homeowners can promptly access
            funds, NFIP contributes to the maintenance of economic
            stability at the community level. Swift recovery translates to
            a quicker resumption of economic activities, preventing a
            prolonged downturn that could result from extensive property
            damage.

          The economic stability fostered by NFIP not only aids
            individual homeowners but also has a ripple effect on local
            businesses, schools, and public services. By preventing a
            protracted economic downturn, NFIP supports the overall well-
            being and vitality of the community.

          In essence, NFIP's commitment to providing financial
            protection goes beyond the immediate compensation for property
            damage. It encompasses a comprehensive approach that considers
            the broader financial needs of homeowners, ensuring swift and
            flexible assistance that fosters both individual and community-
            wide economic stability in the wake of flooding events.

        3. Empowering Comprehensive Floodplain Management:

          Having a sustainable NFIP can serve as a catalyst for
            local governments to establish and implement comprehensive,
            long-term floodplain management strategies. This includes the
            development of detailed floodplain maps, risk assessments and
            mitigation plans tailored to the unique characteristics of the
            region.

          Through NFIP, local authorities gain access to resources
            and technical expertise, enabling them to create and update
            floodplain maps regularly. This proactive approach aids in
            identifying high-risk areas and implementing targeted measures
            to reduce vulnerabilities.

          NFIP helps municipalities to not merely be reactive to
            flood events; but to actively engage in proactive measures to
            enhance community resilience such as:

            Zoning Regulations: Local governments are working to
            establish and enforce robust zoning regulations, ensuring that
            new developments and constructions adhere to flood-resistant
            standards. This proactive zoning approach minimizes exposure to
            flood risks and prevents the creation of vulnerable structures.

            Land-Use Planning: Local governments are working to
            integrate flood risk considerations into our land-use planning
            processes. This involves designating appropriate land uses in
            flood-prone areas, avoiding high-risk zones for critical
            infrastructure, and promoting sustainable development practices
            that mitigate the impact of flooding.

            Infrastructure Improvements: Municipalities are also
            investing in critical infrastructure projects that enhance
            resilience. This includes the construction of flood barriers,
            upgrading stormwater management systems, and implementing green
            infrastructure solutions. These improvements not only protect
            against flood-related losses but also contribute to the overall
            sustainability and livability of the community.

            In essence, NFIP's support for local governments
            extends beyond mere risk transfer through insurance. It
            actively facilitates a culture of proactive risk reduction,
            enabling communities to withstand and recover from flood events
            with greater efficacy. Through collaboration, local authorities
            can implement a suite of measures that collectively build a
            more resilient and sustainable foundation for the well-being of
            their residents and the long-term prosperity of the region.
    Investment in Flood Mitigation
        In addition to the NFIP, unprecedented investments from Federal,
    State, and local sources are dedicated to minimizing losses caused by
    extreme climate events. Local governments express gratitude for the
    financial support allocated in the Infrastructure Investment and Jobs
    Act. This legislation includes a substantial commitment, with $3.5
    billion directed toward the Flood Mitigation Assistance Program and an
    additional $2.3 billion allocated for the Building Resilient
    Infrastructure in Communities (BRIC) grant program.
        These significant financial allocations present crucial
    opportunities for States and local governments to channel resources
    into strategic flood mitigation initiatives. By leveraging these funds,
    communities can enhance household and community resilience,
    implementing measures that fortify infrastructure against the impact of
    extreme weather events. The investments provided by the Infrastructure
    Investment and Jobs Act are pivotal in empowering local entities to
    proactively address and mitigate the challenges posed by flooding,
    thereby fostering a more resilient and secure future.
        While the increased Federal investment is greatly appreciated, it
    is crucial to acknowledge that it still falls significantly below the
    burgeoning demand for resources to combat the escalating risks of
    extreme weather events. The pressing need for additional resources is
    underscored by the alarming rise in the frequency and severity of
    weather-related incidents. The increased number of severe weather
    events makes it increasingly urgent to invest additional resources in
    fortifying communities against the escalating impacts of climate
    change.
        The growing frequency and intensity of extreme weather events
    underscore the urgency of bolstering Federal, State, and local efforts
    to enhance resilience, protect communities, and ensure the long-term
    sustainability of our infrastructure.
    Extreme Weather Events
        Cities, towns, and villages are experiencing higher frequency and
    intensity of extreme weather events, including hurricanes, floods,
    heatwaves, and wildfires. These more severe and unpredictable weather
    conditions are leading to a heightened risk of disasters that can
    overwhelm existing infrastructure and emergency response
    capabilities.
        Coastal communities are facing an increased risk of storm surges
    and flooding, with low-lying areas becoming more susceptible to
    inundation. This poses a threat to infrastructure, property, and the
    livelihoods of coastal communities.
        Climate change is also exacerbating the urban heat island effect,
    where cities experience higher temperatures compared to surrounding
    rural areas. This can lead to heatwaves with adverse impacts on public
    health, particularly among vulnerable populations. Heat-related
    illnesses and stresses on energy and water resources become more
    prevalent challenges for cities.
        Changes in precipitation patterns and increased evaporation
    contribute to water scarcity and drought conditions in many regions.
    Cities dependent on local water sources face challenges in meeting the
    demands of growing populations, agricultural needs, and industrial
    processes, leading to potential conflicts and disruptions.
        Extreme weather events, including intense storms and flooding, can
    damage or destroy infrastructure such as roads, bridges, and utilities,
    disrupting essential services and posing risks to public safety.
        We are also seeing that climate change influences the spread of
    infectious diseases, increases the risk of heat-related illnesses, and
    poses challenges to air and water quality. Cities must address these
    public health concerns, particularly in densely populated urban areas
    where the impacts can be more pronounced.
        Vulnerable communities within cities, often characterized by lower
    socioeconomic status, may bear a disproportionate burden of climate-
    related risks. These communities may have limited resources and
    capacity to prepare in advance or recover from extreme weather events,
    exacerbating existing social and economic disparities.
        Addressing the risks posed by climate change requires proactive
    measures at the local, national, and global levels. Cities play a
    crucial role in implementing resilient urban planning, sustainable
    infrastructure and community engagement strategies to mitigate the
    impacts of climate change and enhance overall resilience. Collaboration
    among stakeholders, innovative solutions, and a commitment to
    sustainable practices are essential for building climate-resilient
    cities that can withstand and adapt to the challenges of a changing
    climate.
    Resilience Planning
        Cities, towns, and villages are implementing a variety of
    initiatives to enhance their resilience and adaptability to various
    challenges, including climate change, natural disasters, and
    socioeconomic shifts. Here are some examples of how cities are working
    to make their communities more resilient:

        Green Infrastructure and Urban Planning--Many cities are
            investing in green infrastructure, including parks, green
            roofs, and permeable surfaces, to manage stormwater, reduce
            flooding, and enhance overall resilience. Strategic urban
            planning focuses on sustainable development practices that
            prioritize resilience to climate-related impacts.

        Climate-Resilient Housing and Infrastructure--Cities are
            incorporating climate-resilient design principles into the
            construction of housing and infrastructure. This includes
            building structures that can withstand extreme weather events,
            such as hurricanes or floods, and implementing technologies to
            enhance the overall durability and adaptability of buildings.

        Community-Based Disaster Preparedness Programs--Cities are
            engaging in community-based disaster preparedness programs that
            empower residents to be more resilient in the face of
            emergencies. These initiatives involve community training,
            early warning systems, and the establishment of local response
            teams to ensure swift and effective action during crises.

        Renewable Energy and Sustainable Practices--Transitioning
            to renewable energy sources and adopting sustainable practices
            are key components of building resilient cities. Cities are
            investing in renewable energy infrastructure, such as solar and
            wind power, to reduce dependence on vulnerable energy systems
            and decrease their carbon footprint.

        Smart City Technologies--The integration of smart city
            technologies, including sensors, data analytics, and IoT
            devices, allows cities to monitor and respond to various
            challenges in real-time. This includes early detection of
            environmental changes, traffic management, and improved
            emergency response capabilities.

        Diverse and Inclusive Planning--Resilient cities prioritize
            diversity and inclusivity in their planning processes. This
            involves ensuring that all community members, including
            vulnerable populations, have equal access to resources,
            information, and services, thereby building a more cohesive and
            resilient society.

        Collaboration and Partnerships--Cities are forming
            partnerships with various stakeholders, including Government
            agencies, nonprofit organizations, businesses, and academic
            institutions. Collaborative efforts enable cities to leverage a
            diverse set of skills, resources, and expertise to address
            complex challenges and enhance overall resilience.

        Investment in Social Infrastructure--Resilient cities
            recognize the importance of social infrastructure, such as
            health care, education, and social services. Investing in
            robust social systems ensures that communities can better
            withstand and recover from shocks, including pandemics and
            economic downturns.

        Adaptive Transportation Planning--Cities are adopting
            adaptive transportation planning to address the challenges
            posed by climate change and natural disasters. This includes
            the development of resilient transportation networks,
            incorporating alternative modes of transportation, and
            designing infrastructure to withstand extreme weather events.

        Circular Economy Initiatives--Embracing circular economy
            principles, cities are exploring ways to minimize waste,
            promote recycling, and reduce environmental impact. By moving
            away from a linear consumption model, cities enhance their
            sustainability and resilience in the face of resource
            constraints.

        These examples illustrate the diverse strategies and approaches
    that cities are employing to enhance their resilience, ensuring that
    they can thrive and adapt in the face of a rapidly changing world.
    Mapping
        Acknowledging the importance of accurate floodplain mapping in
    determining flood risk and insurance rates, it is crucial to recognize
    that the current criticism of inadequate mapping and outdated data
    underscores the need for closer collaboration between the Federal
    Emergency Management Agency (FEMA) and local governments. The outdated
    and inaccurate nature of the existing floodplain maps highlights the
    necessity for FEMA to actively engage with local authorities during the
    mapping process.
        To address this concern, FEMA should work more closely with local
    governments, taking into consideration any recent actions or future
    plans implemented by cities to mitigate flood risk in designated flood
    zones. By incorporating local insights and initiatives into the mapping
    process, FEMA can enhance the accuracy of floodplain maps. This
    collaborative approach not only ensures that policyholders are more
    informed about their true flood risk but also contributes to setting
    more appropriate and reflective insurance premiums. Improved
    communication and coordination between FEMA and local governments are
    essential to maintaining up-to-date, reliable, and comprehensive
    floodplain mapping systems.
    Communicating Flood Risk
        Effectively communicating flood risks to the public is a
    multifaceted challenge that requires comprehensive attention and
    action. One of the primary issues lies in the widespread lack of
    awareness among individuals regarding the specific flood risks they
    face and the crucial importance of obtaining flood insurance. To
    address this, a concerted effort is needed to enhance public awareness
    and education about flood risks and available insurance options.
        Many individuals residing in flood-prone areas may not fully grasp
    the extent of the flood risks associated with their locations. This
    lack of awareness can lead to a false sense of security, with property
    owners underestimating the potential impact of flooding on their homes
    and communities.
        Communicating the importance of obtaining flood insurance is
    critical. There may be a misconception that standard homeowners'
    insurance policies cover flood-related damages, leading property owners
    to neglect securing specific flood insurance. Emphasizing the unique
    benefits of flood insurance and its role in safeguarding against
    financial losses is crucial.
        Implementing educational initiatives at the community level is
    essential. This can include workshops, seminars, and informational
    campaigns aimed at providing residents with a comprehensive
    understanding of flood risks, potential consequences, and the
    protective measures offered by flood insurance.
        Engaging with local communities and leveraging community leaders
    can enhance the effectiveness of awareness campaigns. Establishing
    partnerships with local organizations, schools, and neighborhood
    associations can facilitate targeted outreach efforts to ensure that
    information about flood risks and insurance options reaches a broader
    audience.
        Recognizing the diversity of communities and property owners,
    tailored communication strategies are necessary. Information should be
    presented in a clear, accessible manner, considering cultural,
    linguistic, and socioeconomic factors to ensure it resonates with a
    broad spectrum of residents.
        Exploring incentives to encourage property owners to enroll in
    flood insurance is a proactive approach. This could involve creating
    awareness about potential financial assistance, reduced premiums for
    proactive mitigation measures, or other benefits associated with having
    flood insurance coverage.
        Despite the efforts to improve awareness, there is still a
    considerable number of properties at risk of flooding that remain
    uninsured. Addressing this issue requires a comprehensive strategy
    involving regulatory measures, financial incentives, and community
    engagement to encourage property owners to prioritize flood insurance
    as a vital component of their risk management.
        Enhancing public awareness and education about flood risks and
    insurance options is not only a critical aspect of building a
    sustainable flood insurance program but is also a shared responsibility
    that involves collaboration between Government agencies, insurers,
    communities, and individuals. Through a concerted effort to inform and
    empower property owners, we can work towards reducing the number of at-
    risk properties that remain uninsured, ultimately fostering greater
    resilience in the face of potential flooding events.
    Private Insurance Market
        While private flood insurance policies offer consumers a range of
    options, including potential cost savings and broader coverage, the
    feasibility of the private sector providing flood insurance for a
    significant portion of those at risk remains doubtful. This skepticism
    arises from the inherent challenge of insuring against catastrophic
    risks at a price point that remains affordable for the general
    populace, as previously discussed. This challenge is expected to
    intensify with the escalating impacts of climate change and ongoing
    development, heightening flood risks in numerous regions across the
    country.
        Moreover, local governments express valid concerns that private
    insurance providers may engage in cherry-picking, selecting lower-risk
    properties, and leaving the more vulnerable ones to be covered by the
    NFIP. Such a scenario not only raises equity issues but also poses a
    threat to the sustainability of the NFIP. If private insurers avoid
    high-risk properties, the NFIP may bear the brunt of covering the most
    vulnerable areas, potentially straining its resources and diminishing
    its overall sustainability.
        The looming threat of climate change and increased development
    renders private flood insurance potentially unattainable for many
    households at risk. The severity of flood losses, coupled with their
    potential to jeopardize insurer solvency, dissuades many private
    insurers from assuming such risks at any reasonable price point. This
    cautious approach is evident in the retreat of private insurers from
    various climate-related perils. For instance, insurers in States like
    Louisiana and Florida are reducing their willingness to provide
    homeowner's insurance, while some in California are scaling back their
    presence in high wildfire-risk areas of the State.
        In light of these challenges, including the concern of cherry-
    picking by private insurers, and the reluctance of private insurers to
    cover high-risk properties, the NFIP is poised to maintain a dominant
    role in offering comprehensive indemnity flood insurance for the
    foreseeable future. The NFIP's capacity to address the unique
    challenges associated with catastrophic flood events positions it as a
    crucial player in providing financial protection to communities at
    risk, ensuring a level of coverage that may prove elusive in the
    private sector.
    CDBG-DR Reform
        One major concern for local governments is with the Community
    Development Block Grant Disaster Recovery (CDBG-DR) Program. While the
    purpose of the program is for long-term recovery efforts after a
    disaster the sluggish pace of funding disbursement is very problematic
    to local governments. The bureaucratic hurdles and lengthy processes
    associated with the program often mean that much-needed funds take too
    long to reach our community in the aftermath of a disaster. This delay
    hampers our ability to address the urgent needs of our residents and
    businesses promptly, slowing down our recovery efforts and impacting
    the well-being of our residents.
        Additionally, the complexity of the CDBG-DR application and
    approval procedures is a significant challenge. Navigating the
    intricate requirements can be daunting, especially for communities with
    limited resources. Simplifying these processes is crucial to ensure
    that all eligible communities can access the funds efficiently. We need
    a more straightforward and accessible application system that aligns
    with the urgency of post-disaster recovery.
        Moreover, the lack of flexibility in fund utilization poses another
    obstacle. Communities vary in their recovery needs, and rigid
    guidelines limit our ability to tailor the use of funds to our specific
    circumstances. We advocate for a more adaptable framework that empowers
    us to allocate funds in ways that best address the unique challenges
    faced by our community, fostering a more effective and responsive
    recovery process.
        That is why NLC supports the bipartisan Reforming Disaster Recovery
    Act (S. 1686). We are encouraged that this important legislation would
    make significant improvements to the CDBG-DR program to help our
    communities recover faster from major disasters.
    Conclusion
        In conclusion, the National Flood Insurance Program is an
    invaluable resource for our community, providing financial protection
    for our residents and supporting our efforts to build a more resilient
    and sustainable future. I urge the Senate Banking Committee to continue
    its commitment to the NFIP and consider enhancements that will further
    strengthen the program's effectiveness in safeguarding communities
    across the Nation.
        Thank you for your attention to this matter, and I am available to
    provide any additional information or answer any questions you may
    have.
           RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                           FROM MICHAEL HECHT

    Q.1. In your testimony, you cite data from the Coalition for
    Sustainable Flood Insurance (CSFI) that denotes that 98.5
    percent of National Flood Insurance Program (NFIP) policies are
    in counties with a median household income below $100,000. \1\
    You also note that 62 percent of all policy holders are in an
    area with an annual income below the national average. Given
    the rise in property and casualty insurance premiums nationally
    and inflationary costs, \2\ many working families are already
    struggling to maintain existing levels of insurance coverage,
    let alone federally backed coverage through the NFIP.
    ---------------------------------------------------------------------------
         \1\ Coalition for Sustainable Flood Insurance (CSFI), https://
    csfi.info.
         \2\ Arthur Fliegelman, ``Wind, Fire, Water, Hail: What Is Going on
    in the Property Insurance Market and Why Does It Matter?'', Office of
    Financial Research (Dec. 14, 2023), https://www.financialresearch.gov/
    the-ofr-blog/2023/12/14/property-insurance-market.
    ---------------------------------------------------------------------------
        How can we ensure that homeowners, specifically those from
    lower- and middle-income communities and communities of color,
    are aware of the importance of flood insurance coverage?

    A.1. Thank you, Senator Warnock, for your question, ``how can
    we ensure that homeowners, specifically those from lower- and
    middle-income communities and communities of color, are aware
    of the importance of flood insurance coverage?'' As put forward
    in my testimony, NFIP works to protect working communities--
    coastal and inland--across our country. Higher-income
    households are more likely to have flood insurance than lower-
    income households, yet household incomes are lower within
    Special Flood Hazard Areas. This means that those who are more
    prone to flooding, according to Flood Insurance Rate Maps
    (FIRMs), are less able to pay for flood insurance coverage.
        Communicating flood risk through price, rather than
    geographic factors, actual loss, and anticipated loss
    assessments, widens the insurance gap, since price is the key
    variable identified as depressing flood insurance purchases.
    Currently, under Risk Rating 2.0, FEMA is using premium as its
    primary means of communication flood risk, which is not
    effective in communicating the importance of flood insurance
    coverage. This is actively evidenced by significant decreases
    in participation nationwide, including a decrease of 7 percent
    in Georgia, since Risk Rating 2.0's implementation.
        Higher premiums and fees lead to fewer policies in force
    and less coverage in force, creating greater risk exposure.
    FEMA should consider communication through employing other data
    points and publicizing the dozens of rating factors unique to
    individual properties--like distance to coast or levee
    quality--that are factored into the Risk Rating 2.0 methodology
    ``black box,'' ultimately generating premiums seen.
        As outlined in our ``An Evaluation of Risk Rating 2.0
    Impacts on National Flood Insurance Program'' white paper, from
    past studies, a price increase of 1 percent causes a decreased
    demand of 0.11 percent to 0.87 percent for flood insurance
    policies, while causing a larger decrease in demand for
    coverage in force. Conversely, recent flood damage, distance to
    coast, and higher incomes--affecting ability to afford
    insurance--increase demand.
        There is also a misperception that those outside of Special
    Flood Hazard Areas are safe from flooding. FEMA has stated that
    ``between 2015 and 2019 policyholders outside to high-risk
    areas filed more than 40 percent of all NFIP flood insurance
    claims'' and ``one-third of disaster assistance for flooding''
    are outside of high-risk areas. These losses, and the
    associated miscommunication, place a burden on homeowners,
    lenders, and the general public who carry the tax burden for
    federally funded disaster recovery.
        Discussion around the expansion of flood zones and purchase
    requirements may spread awareness of flood risk and improve
    coverage. For example, according to their Draft 2023 Annual
    Report, FEMA's Technical Mapping Advisory Committee (TMAC) is
    recommending use of the 95 percent confidence value for
    identifying the area in which the mandatory purchase will
    apply. TMAC says this ``will reduce risk (and surprise) to
    homeowners, lenders, and the general taxpayer in areas just
    above the current mean 1-percent-annual-chance.''
        Following flood events of Hurricane Katrina and Hurricane
    Rita in 2005, Congress considered legislation, H.R. 4320,
    ``National Flood Insurance Program Commitment to Policyholders
    and Reform Act of 2005''. This bill would have expanded the
    definition of the Special Flood Hazard Area to the ``500-year
    floodplain.'' The bill, which did not pass, was eventually
    amended to instead require ``a study regarding the impact,
    effectiveness, and feasibility of amending the . . . mandatory
    flood insurance coverage purchase requirements . . . to all
    properties located in the 500-year floodplain.'' Congress could
    consider advancing a study like this one proposed nearly two
    decades ago.
        To make flood insurance important, it has to be attainable.
    Thus, Congress must prioritize authorization of an
    affordability program. Housing burden is high in many markets
    with high NFIP participation; thus, a means-tested
    affordability program, involving housing burden as a factor,
    can offset and more equitably address rising costs of flood
    insurance relative to a program based on Area Median Income
    (AMI) alone. Considering housing burden in affordability
    program qualifications will prevent communities with a lower
    AMI from being unduly disadvantaged by short-sighted
    policymaking. Rather, it would particularly benefit cost-
    burdened communities, which may now be able to purchase or
    renew NFIP coverage.
        We appreciate all outreach efforts of FEMA as well as
    elected officials, insurance agents, floodplain managers, and
    more interest groups involved in our Coalition for Sustainable
    Flood Insurance (CSFI). Their work is essential in spreading
    awareness of the importance of flood insurance within
    communities, while uplifting it as a Federal priority.

    Q.2. Many homeowners do not realize that their standard home
    insurance policy does not cover flood damage. \3\ Flood
    insurance differs from other insurance products in that,
    provided their community is enrolled, a homeowner may purchase
    coverage at any time.
    ---------------------------------------------------------------------------
         \3\ National Flood Insurance Program, ``Am I Required To Have
    Flood Insurance?'', https://www.floodsmart.gov/am-i-required-have-
    flood-insurance.
    ---------------------------------------------------------------------------
        What have been the most effective ways you have articulated
    and messaged the importance of purchasing flood insurance
    coverage?

    A.2. Thank you again, Senator Warnock, for your question,
    ``What have been the most effective ways you have articulated
    and messaged the importance of purchasing flood insurance
    coverage?''
        Louisiana has the highest per capita uptake of flood
    insurance largely because of cultural awareness of flooding,
    not necessarily because of higher inherent risk. In Louisiana,
    we talk often about flooding, and we know friends and family
    who, in current or past generations, have experienced flood
    events. Louisiana also has high coverage due to the
    availability heuristic--we have had some of the largest-profile
    flood events in the Nation's history. Even though this risk has
    been largely mitigated through investments in flood protection,
    immediately available examples of a hazard influence purchase
    of coverage. However, as seen with recent NFIP participation
    decreases of over 10 percent in Louisiana, recent flood events
    only temporarily increase purchases. According to literature,
    this effect fades after 3 years.
        Studies have found that publicly funded mitigation
    assistance has a positive effect on the decision to purchase
    flood insurance. This contradicts assumptions that insurance
    and mitigation are substitutes. So, Congress's prioritization
    of appropriations for U.S. Army Corps of Engineers and
    community-level flood protection projects may actually increase
    flood insurance purchase. Key Federal grant programs, like
    FEMA's Building Resilience in Communities (BRIC) and Flood
    Mitigation Assistance (FMA) programs, should reduce risk while
    improving coverage.
        The glidepath of 18 percent for most residential
    policyholders helps policyholders understand the importance of
    renewing coverage. As policyholders may face higher prices for
    flood insurance in the future if they do not maintain coverage,
    they are more likely to stay in the NFIP, especially if they
    understand glidepath benefits. According to participation
    projections based on flood insurance price elasticity research,
    authorizing a rate hike cap of 9 percent, compared to 18
    percent, may cut expected long-term NFIP participation
    decreases, due to Risk Rating 2.0, in half. According to NFIP,
    only about 4 percent of homeowners nationwide have flood
    insurance, so we cannot afford to lose more policies and
    further expose the country to risk.
        Meanwhile, two-thirds of Americans incorrectly believe that
    their homeowners or renters policy will provide coverage for
    flood damage, according to a study by Neptune Flood. Federal
    all-peril solutions would subvert this misunderstanding. For
    example, the recently introduced ``Incorporating National
    Support for Unprecedented Risks and Emergencies (INSURE) Act'',
    H.R. 6944, would stabilize the home insurance market while
    ensuring vulnerable communities are not excluded from coverage.
    The INSURE Act would offer a Federal reinsurance backstop,
    while requiring participating insurers to cover all natural
    disasters, so policyholders would indeed have flood insurance
    coverage.
        We appreciate your consideration of all-perils solutions,
    annual premium increase limitations, and Federal investments in
    mitigation, which should all serve to improve flood insurance
    understanding and uptake.
                                    ------

           RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                         FROM DANIEL KANIEWSKI

    Q.1. According to the Financial Stability Oversight Council
    (FSOC), ``Climate risk might increase the costs associated with
    housing such as insurance premiums and the frequency and cost
    of repairs, further exacerbating the home-ownership challenges
    for low-income and majority-minority communities.'' \1\ In your
    testimony, you discuss a comprehensive flood resilience
    strategy, that includes Federal, State, and local officials
    engaging with stakeholders.
    ---------------------------------------------------------------------------
         \1\ Financial Stability Oversight Council, ``Financial Stability
    Oversight Council Annual Report 2023'' (Dec. 14, 2023), https://
    home.treasury.gov/policy-issues/financial-markets-financial-
    institutions-and-fiscal-service/fsoc/studies-and-reports/annual-
    reports.
    ---------------------------------------------------------------------------
        Can you detail what an effective model of Federal, State,
    and local government officials coordinating with stakeholders,
    like insurance companies, to improve resilience efforts could
    look like? What type of Federal resources and authorities would
    be needed to support such an effort?

    A.1. An innovative approach to boosting insurance purchasing
    that Marsh McLennan is involved in is known as community-based
    catastrophe insurance (CBCI). Essentially, CBCI provides
    disaster insurance arranged by a local government, quasi-
    governmental body, or community group to cover a group of
    properties.
        The benefits of CBCI fall into three main areas: enhancing
    financial resilience; providing affordable coverage; and
    creating incentives for risk reduction at the community and
    individual levels.
        This type of program is flexible and can be created to
    cover a single hazard or a range of natural disasters for a
    given community, including flood, but also wildfire,
    earthquake, and others. Such broad applications can further
    incentivize a community's risk management efforts--risk
    reduction, risk communication, and risk transfer--across
    multiple perils. For flood risk, this could mean levee
    improvements and/or ecosystem-based interventions, including
    wetlands enhancements, and more.
        Within broad parameters, CBCI has much flexibility in its
    structure and design, with varying degrees of community
    responsibilities possible. These range from a facilitator
    model, where the community members contract with insurers, to a
    captive insurer, in which the community establishes and
    operates its own risk-bearing entity.
        Federal resources and authorities could help facilitate
    CBCI transactions. For example, if communities were permitted
    to purchase insurance (CBCI or otherwise) through various
    Federal grant programs, such as FEMA's Building Resilient
    Infrastructure and Communities (BRIC) grant program,
    communities would be better able to protect themselves from the
    financial impacts of disasters. We recommend FEMA include
    insurance premiums as an eligible type of assistance in its
    BRIC grant guidance and consider doing so for its other
    preparedness and hazard mitigation grant programs as well.
        Additionally, FEMA has existing authorities to incentivize
    State and local governments to reduce their risks and to better
    protect Federal taxpayers from disaster losses. One such
    authority was granted to FEMA in the 2018 Balanced Budget Act
    (https://www.nibs.org/blog/disaster-resilience-trillion-dollar-
    challenge-heres-what-fema-can-do-help.) This authority amends
    Section 406(b) of the Stafford Act to increase the Federal cost
    share of its Public Assistance programs for communities that
    take proactive steps to reduce hazards. The resilience measures
    identified in the statute--mitigation plans, insurance,
    emergency management programs, building codes, risk ratings,
    State/local mitigation funding, and tax incentives--aim to
    reduce financial losses and human suffering and get communities
    up and running faster after a disaster. By raising the Federal
    cost share for FEMA Public Assistance on a sliding scale from
    75 percent to up to 85 percent, a community that takes
    proactive steps could receive millions of dollars more in post-
    disaster funding.
        We see the implementation of this provision as a
    significant opportunity to remove existing barriers to
    resilience investments and a strong incentive for communities
    to do the right thing before disaster strikes. However, FEMA
    has not yet implemented this authority. We strongly encourage
    the full implementation of this provision.

    Q.2. How would such an effort help mitigate increasing
    insurance costs on low-income and communities of color?

    A.2. Such an effort would help mitigate insurance costs on low-
    income communities of color by providing a financial safety net
    that largely does not exist today. Marsh McLennan is currently
    involved with a project in New York City, which is the Nation's
    first community-based catastrophe insurance (CBCI). The
    project's goal is to increase the financial resilience of low-
    and moderate-income households to flood risk. These communities
    are increasingly vulnerable to flooding and are, in many
    instances, underinsured or uninsured.
        Guy Carpenter, a business of Marsh McLennan, is working
    with the City of New York and the nonprofit Center for NYC
    Neighborhoods (CNYCN) https://climate.cityofnewyork.us/mocej-
    and-cnycn-launch-innovative-pilot-to-address-flooding-2/, as
    well as the nonprofits Environmental Defense Fund and SBP,
    reinsurer Swiss Re, and insurtech ICEYE, to pilot the program
    in designated neighborhoods. The pilot was jointly funded by
    the National Science Foundation and the Department of Homeland
    Security through a Civic Innovation Challenge award.
        In the NYC program, payouts will be made to CNYCN for
    qualifying flood events based on a mix of satellite data; on-
    the-ground, real-time sensors; and social media images. Once a
    qualified event triggers the payment, homeowners will be able
    to apply for assistance--on their own or with help from CNYCN's
    network partners. Qualified applicants can then receive a grant
    up to $15,000 from CNYCN quickly following a major flood.
        The intent of these payments is to support residents and
    their broader communities in getting back to normal faster. It
    also will allow them to avoid having to make such tough
    decisions as whether to pay for home flood repairs versus other
    critical family needs, like health care, food, and saving for
    education.
        We are proud to have helped kickstart this innovative
    program and hope it will cause other communities to establish
    their own CBCI program. Federal grant funding could be a
    catalyst here.
                                    ------

           RESPONSES TO WRITTEN QUESTIONS OF SENATOR WARNOCK
                          FROM STEVE PATTERSON

    Q.1. Given the rise in property and casualty insurance premiums
    nationally and inflationary costs, \1\ many working families
    are already struggling to maintain existing levels of insurance
    coverage, let alone federally backed coverage through the NFIP.
    ---------------------------------------------------------------------------
         \1\ Id.
    ---------------------------------------------------------------------------
        How can we ensure that homeowners, specifically those from
    lower- and middle-income communities and communities of color,
    are aware of the importance of flood insurance coverage?

    A.1. Addressing the rising costs of flood insurance amidst
    national premium hikes and inflation requires a focused
    approach on education and financial support, particularly for
    lower- and middle-income families and communities of color.
    Initiating community engagement and education programs,
    utilizing multiple languages for information dissemination, and
    forming partnerships with local businesses and nonprofits for
    financial assistance are key strategies. It's vital to make
    flood insurance information accessible and comprehensible to
    everyone, ensuring materials are available in various languages
    and formats, and leveraging technology and social media to
    reach a wider audience.
        Furthermore, advocating for policy changes at State and
    Federal levels to make flood insurance more affordable is
    essential. This includes seeking reforms within the National
    Flood Insurance Program to ensure equity and pushing for
    investments in resilient infrastructure to reduce flood risks.
    By combining education with actionable support and
    infrastructure improvements, we can ensure that all community
    members understand the importance of flood insurance and have
    the means to protect their homes and families against the
    increasing threat of flooding.

    Q.2. In your testimony, you discuss the importance of
    resilience planning, specifically as it comes to addressing the
    effects of climate change, natural disasters, and socioeconomic
    shifts.
        Are there currently cost-based or other barriers to
    homeowners' ability to access mitigation incentives? What needs
    to be done to raise awareness of and increase access to
    mitigation incentives?

    A.2. One of the primary barriers hindering homeowners' access
    to mitigation incentives is the upfront cost associated with
    implementing mitigation measures, such as retrofitting homes to
    be more flood-resistant. These costs can be prohibitive,
    especially for low- and middle-income families, despite the
    long-term savings and environmental benefits.
        Additionally, there is a significant information gap
    regarding the availability and benefits of these incentives.
    Many homeowners are simply unaware of the programs available to
    them or find the
    application process overly complex and discouraging. To
    overcome these barriers, a multipronged approach is necessary.
        First, the application process for mitigation incentives
    should be simplified and streamlined. This can involve creating
    a centralized online portal where homeowners can easily find
    information and apply for all relevant incentives. Secondly,
    there needs to be increased funding for these programs to
    reduce the initial cost
    burden on homeowners. This could include direct subsidies, low-
    interest loans, or tax incentives.
        Addressing the barriers to accessing mitigation incentives
    requires a combination of reducing financial burdens,
    simplifying the application processes, and engaging in robust
    community outreach to ensure homeowners are informed and
    empowered to protect their properties against the effects of
    climate change and natural disasters.
                  Additional Material Supplied for the Record

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