NFIP Experts Urge Senators To Mitigate Flood Risks
The Federal Emergency Management Agency’s transparency with its own risk rating algorithms drew sharp criticism from Sen. John Kennedy, R-La. He criticized the work of two think tanks, the Cato Institute and the R Street Institute – whose representatives testified at the hearing – for not hiring outside experts to review FEMA’s pricing methods. He then noted that the agency hasn’t made such disclosures about its process.
“They tell you, if we show it to you, we got to kill you,” Kennedy said.
Kennedy is co-sponsoring a bill, S.3829, that would require FEMA to disclose more information on how it calculates flood insurance premiums through its Risk Rating 2.0 system. The bill includes provisions to require FEMA to provide policyholders with a toolkit to estimate premiums for new construction, as well as a new requirement that the agency disclose how it calculates mitigation credits for property improvements.
The R Street Institute official, Jerry Theodorou, told Kennedy that the “technical documentation” for Risk Rating 2.0 was available through the NFIP, but Kennedy cut him off, saying that the algorithm itself wasn’t available, again lambasting the think tanks for not hiring outside consultants to understand the algorithm.
Earlier in the hearing, Theodorou noted that some of the top priorities for the NFIP’s reauthorization should include improving cost-sharing between the public and private sectors, and adjusting rates to allow private-sector competition. If NFIP policy rates were “actuarially sound,” private insurers could compete on their offerings, he said.
“We believe that a long-term reauthorization would afford Congress the opportunity to conduct a thorough review of the program’s performance and catalyze reforms,” Theodorou told the committee.
The NFIP is set to expire Sept. 30. In a draft discussion bill presented at last month’s House hearing, the program would be extended for five years, to September 2027.