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Individuals with disabilities who require an auxiliary aid or service should contact the committee chief clerk at (202) 224-5175 at least three business days in advance of the hearing date.
Homer L. Hitt Alumni and Visitors Center, University of New Orleans, 2000 Lakeshore Drive, New Orleans, LA 10:00am CST

Chairman David Vitter

Good morning, and thank you for joining me for today’s Senate Small Business Committee field hearing to discuss the impact of flood insurance rates on small businesses. We will dig into the details of the National Flood Insurance Program (NFIP) and the need to avoid unaffordable rate increases in Louisiana.

In my role as Chairman of the Senate Committee on Small Business and Entrepreneurship, I am making every effort to give small businesses a larger voice in Congress and to shape policies that will allow these businesses to succeed and find stability in the marketplace.

To fully understand the issues that the NFIP has historically created for homeowners and small businesses in the marketplace, it is important to have a basic understanding of the recent changes in our country’s flood policy.

For the most part, flood protection is not a partisan issue in Congress. Responsible disaster recovery and flood protection always manages to garner a bipartisan coalition of supporters.

Nationally, there are nearly 5.5 million flood insurance policy holders, and after the Biggert-Waters Flood Insurance Reform Act was signed into law in 2012 to help make the program solvent after Hurricane Sandy, many of these people were outraged at dramatic increases in their premiums – and rightfully so.

Rates were so dramatic that some families faced 10 times the price of their previous premium (or higher in some cases), and it was not uncommon to hear horror stories of families paying $20,000-30,000 for a policy that was previously $2,000 or less.

I met with many Louisianians about this, including with folks from Bayou Gauche who asked me to hand deliver copies of their house keys to FEMA’s headquarters because if Biggert-Waters was not changed, they would not be able to afford their mortgage.

The Federal Emergency Management Agency’s (FEMA) mishandling of the Biggert-Waters Act implementation resulted in inaccurate rate hikes that placed the viability of the entire National Flood Insurance Program at risk and caused turmoil in the real estate market.

Not only did FEMA publish inaccurate flood maps that could have permanently devalued the Louisiana housing market, they would have completely wiped out the life savings of thousands of middle class homeowners and small business owners.

Bill Bubrig, a resident of Plaquemines Parish lives in a home that was constructed at or above the NFIP required elevation at the time of construction. In 2013, he wrote to me that his flood insurance annual premium was increasing from $633 to $28,544 for an insurance policy worth $250,000.

This is one of the many nightmare scenarios that we heard about on a weekly basis and occurred largely due to incorrect information that regional FEMA officials provided directly to policy holders in Louisiana.

Because of stories like these, it was clear that the NFIP needed an urgent fix to prevent homeowners and small businesses from losing their savings and homes.

In 2010, the NFIP expired four times for a total of 53 days, adding uncertainty to an already fragile housing market and delaying or canceling more than 1,400 home closings each day the program expired.

One of the major reasons for passing Biggert-Waters in the first place was to ensure that there was no lapse of coverage for policy holders. FEMA’s failed implementation actually priced out policy holders by excessively high rate increases and would have also created a lapse in coverage for these people if they could not meet the payments.

Congress acted in a completely bipartisan fashion to pass a permanent legislative fix that provided relief to homeowners. Unfortunately, FEMA was not as quick to implement these reforms, but under congressional pressure devised a plan to refund excessive overpayments back to the policy holders.

Going forward, we need to find a way to deal with the solvency of the NFIP in a responsible way, but - at the same time - does not do so solely on the back of policyholders. We need to examine how FEMA spends every dollar of premiums paid into the system.

In closing, I would also like to welcome and introduce our two panels of witnesses. The first of which are representatives from FEMA. The second panel is made up of business leaders in the Southwest Louisiana community.

I appreciate you all taking time away from your jobs and businesses to share your experiences and concerns about the NFIP and how the program has affected your industries and communities.

Again, thank you for being here this morning, and I look forward to hearing from our witnesses.


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