CBA Letter to Senate Banking on NFIP Hearing

Dear Chairmen and Ranking Members:

The Consumer Bankers Association (CBA), the only trade association exclusively dedicated to the retail banking industry, would like to thank the Subcommittee for holding this hearing to discuss progress and challenges with implementation of the Biggert-Waters Flood Insurance Act of 2012 (Biggert-Waters). On July 6, 2012, President Obama signed Biggert-Waters, which would make changes to the National Flood Insurance Program (NFIP) including revising the flood risk analysis conducted by the Federal Emergency Management Agency (FEMA), with the intention of improving its efficiency and financial soundness, and ensuring the availability of flood insurance for consumers.

FEMA’s flood maps must accurately reflect risk in order to have a sustainable and equitable NFIP. Homes built along coastal areas and rivers will understandably have a higher risk of being designated within a 100-year floodplain. However, FEMA’s models must account for risk mitigation efforts which can conclusively show reduced chances of property damage, and thus reduction of insurance claims. Risk-based premiums from a large, diversified pool of policy holders is essential to having the NFIP realize net economic benefits. Changes to flood maps may unexpectedly present consumers with an increase in flood insurance premiums. Balancing the important changes made by Biggert-Waters to ensure the financial stability of the program with its impacts on communities requires continued dialogue and careful analysis.

To read the full Comment Letter, download the PDF.