“I find it puzzling, after working so hard to pass a law that specifically caps rate increases and encourages FEMA to strive to keep flood insurance affordable, that we are still hearing about outrageous increases that threaten to do more economic damage to families than the storm itself,” Menendez testified.

Fugate testified that FEMA has already implemented its highest priority from the law, stopping the largest of the Biggert-Waters premium increases by restoring eligibility for subsidized premiums for certain policyholders. FEMA has also provided detailed guidance for the Write Your Own (WYO) insurance companies to begin issuing refunds to eligible policyholders.

The WYO companies will begin issuing refunds on October 1, 2014.

Fugate testified that key priorities for implementing the new law include providing refunds, revising rates and surcharges based on the new law, remapping, promoting mitigation and creating a flood insurance advocacy office.

“We are working to implement these provisions, as well as actively analyzing and prioritizing implementation of HFIAA,” Fugate said. He also noted, “At this point, we are ahead of the timelines set by Congress for refunds.”

He also said affordability is a key issue, and the new legislation will “provide us with the opportunity, through providing us with access to outside resources, to do a better job of dealing with this issue.” A study on affordability mandated by the law is due by next October or so, 18 months after enactment of the new law.

Templeton-Jones, testifying on behalf of the Property Casualty Insurers Association of America, which chairs the industry's WYO task force, said the March law, HFIAA, included several provisions allowing the WYOs to better partner with the NFIP to more efficiently and accurately implement the changes intended by 2012's Biggert-Waters Act. That law required FEMA to phase-in actuarial rates on flood insurance premiums, and prompted intense opposition from policyholders in more than 23 states.

As a result of the new atmosphere, Templeton-Jones said, “the rate revision and adjustment process required by HFIAA has gone extremely well, with as little confusion as can be expected, given the speed and volume of the changes involved.”

Templeton-Jones said that “this newfound cooperation has allowed the NFIP and the WYOs to move forward with HFIAA implementation significantly more quickly and more accurately than was possible under BW-12 and faster than was envisioned earlier this year when HFIAA was taking shape.”

Industry concerns

Templeton-Jones did use the occasion to raise other issues of concern to the insurance industry.

She noted, “Recent history tells us that preparation is a key factor in minimizing financial loss after a natural catastrophe,” and that “strong, uniform statewide building codes that are regularly updated play a significant role in reducing the risk of injury or death to homeowners during a natural catastrophe.”

She also said PCI supports increasing private sector involvement in flood insurance. She said the 2012 law included a provision expressly authorizing FEMA to obtain reinsurance from the private market. “PCI looks forward to working with companies and regulators to make certain consumers and other marketplace participants are properly educated and protected throughout developments in this area,” she said.

The National Association of Realtors' Smith said prompt FEMA action in implementing the new law's short-term rate provisions “have helped to stabilize and calm real estate markets where flood insurance is required for a mortgage. While this may change as refunds are issued this fall, since May 1, NAR has not received major complaints about flood insurance.”