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FEMA delays start of major change in flood insurance program

Homes by Southold Town Beach in Southold are

Homes by Southold Town Beach in Southold are pounded by surging waves caused by superstorm Sandy on Oct. 29, 2012. Credit: Randee Daddona

The Federal Emergency Management Agency has delayed by one year the implementation of a major change to the National Flood Insurance Program that lawmakers contend would soak Long Island coastal homeowners with unaffordable premiums while sending their property values underwater.

FEMA announced Thursday that it would postpone launching its Risk Rating 2.0 program from Oct. 1, 2020, to Oct. 1, 2021. The new system uses private-sector data to more accurately determine a homeowner's risk of experiencing a flood.

The program would calculate a homeowner's flood insurance premiums based on a number of factors, including the distance from a home to the coast or water source, different types of potential flooding and the cost to rebuild a home.

FEMA contends the system is simple, straightforward and fairer to homeowners living on the edge of flood zones. The existing system requires all homes located in FEMA-designated "flood plains" to pay the same insurance premium.

In a statement Thursday, FEMA said additional time was needed to conduct a "comprehensive analysis of the proposed rating structure so as to protect policyholders and minimize any unintentional negative effects of the transition."

The extension, officials said, would allow all properties, including single-family homes, apartments, and commercial buildings to change to the new rating system at one time instead of a phased-in approach.

"Over the course of the next year, FEMA will continue to actively engage with Congress and other key stakeholders to ensure transparency and visibility as we work to transform the [National Flood Insurance Program]," FEMA said.

The delay comes as FEMA faced intense pressure from federal lawmakers, led by Democratic Senate Minority Leader Chuck Schumer, to halt the flood insurance revamp.

Schumer contends that Long Island families, many still recovering from superstorm Sandy, would face a hit to their wallet from the new system, which would put an increased premium on proximity to the water.

“FEMA made the right call by heeding our concerns and delaying the implementation of Risk Rating 2.0," Schumer said Thursday. "It makes no sense to upend the way it determines how much Long Island homeowners pay for flood insurance in a way that likely raises local costs and hurts property values. FEMA still needs to present the plan directly on the Island and answer a litany of lingering questions by Congress."

Schumer has demanded that FEMA provide details on how rates will be calculated; who will be gathering and measuring the data; the systematic implications of insurance rates doubling and tripling for some homeowners and measures to provide oversight of insurance companies and the lawyers who defend their claims.

The National Flood Insurance Program covers about 5 million policyholders nationwide, down about 10% from its peak in 2009, at a cost to policyholders of nearly $1.3 billion per month, records show. 

The independent Government Accountability Office has said the program's claims often outpace premiums, leaving it $20.5 billion in debt as of September 2018, despite Congress canceling $16 billion in debt in October 2017.

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