The Pennsylvania Senate Banking & Insurance Committee and the Environmental Resources and Energy Committee met Tuesday to hear testimony from statewide organizations, county officials and residents concerning the implementation of the federal flood insurance law, known as the Biggert-Waters Flood Insurance Reform Act of 2012.
The hearing also brought to light the negative impacts that the federal law will have on local residents and businesses statewide. On October 1, 2013 approximately 4 million property and business owners nationwide saw their flood insurance premiums skyrocket as the result of BW-12.
The joint Senate committee hearing, chaired by Senators Don White (R-Indiana), Majority Chair of the Banking & Insurance Committee, and Gene Yaw (R-Lycoming), Majority Chair Environmental Resources & Energy Committee, welcomed 17 senators from both parties across the state.
“Something must be done to offer relief to those who are being hit with enormous, unaffordable increases in their premiums,” Sen. White said. “The hearing shed light on this important topic and I hope it will encourage our colleagues in Congress to act quickly to resolve the current problem.”
“Without a change to the current law, property owners across Pennsylvania will not be able to afford flood insurance, that’s the bottom line,” Sen. Yaw said. “We will see homeowners simply walk away from their homes and businesses. It seems to me this federal legislation was passed without thorough planning or good judgment.”
During the hearing, those testifying discussed their experiences with BW-12, and the negative impacts should the legislation not be repealed and/or amended.
“Lycoming County was half way through a County-wide reassessment when BW-12 began to roll out,” said Commissioner Jeff Wheeland. “Since October 1, 2013 we have heard reports of buyers leaving the table at closing when flood insurance rates were quoted. The biggest shock came to homeowners and business people who purchased in good faith after July 6, 2012, only to find out the premium quoted upon renewal AFTER October 1, 2012 was 1000 percent higher than the quote they received at their original closing. Baring full repeal of this law, what do we do as community officials? What is the path out for our constituents?”
The hearing also provided an opportunity for local homeowners to vent their concerns with the federal law.
“If the ‘unintended consequences’ of the Biggert Waters Flood Insurance Reform Act are not reversed, I fear many hardworking, middle-class citizens will lose everything they have worked their entire lives for, making a choice between paying for flood insurance or their mortgage,” said Lurie Portanova, homeowner and resident of Jersey Shore Borough. “The tax bases in these communities will eventually erode as the property values decrease and banks foreclose on basically worthless properties.”
Dr. Vince Matteo, President and CEO of the Williamsport/Lycoming Chamber of Commerce, also addressed the Senate Committee. “This is Washington’s mess, and Washington’s got to fix it. But this Act has to be repealed and it has to be repealed now because jobs are going to be affected, businesses are going to be affected.”
Offering perspective on the real estate market, Kim Skumanick, President of the Pennsylvania Association of Realtors said the law has hurt home sales.
“The Pennsylvania Association of Realtors has heard countless stories of how these rate increases are impeding real estate sales,” said Skumanick. “For example, in my own office, we recently had a client who wanted to sell his property in Luzerne County and listed it for $90,000. The property experienced minor flooding in the basement in 1996 after a heavy snow which required the replacement of its hot water heater and furnace. His annual flood insurance premium was $788. He accepted a buyer’s offer but when the homebuyer discovered the new flood insurance rate would be $7,015, the deal fell through. At that rate, the monthly escrowed flood insurance payment would be $175 more than the monthly mortgage payment.”
Barry Denk, Executive Director of the Center for Rural Pennsylvania, provided an overview of subsidized and unsubsidized federal flood insurance policyholders, by municipality, to the bipartisan Senate panel.
“Among Pennsylvania’s 2,562 municipalities, 218 (9 percent) have a high percentage of flood insurance policyholders, 1,998 (78 percent) have less than 5 percent, and 346 (13 percent) have no policyholders,” Denk said.
Denk added that, “Pennsylvania’s geography is not the sandy coastlines of Florida, North Carolina or New Jersey or the sea-level topography of Louisiana.” “The overwhelming majority of Pennsylvania homes covered by federal flood insurance are primary residences and not secondary resort homes.”
Others testifying at the hearing included: Fran McJunkin, Lycoming County Planning Commission; Lisa Schaefer, Director of Government Relations for the County Commissioners Association of Pennsylvania (CCAP); Donald Griffin, Vice President, Personal Lines, Property Casualty Insurers Association of America; Dan Berninger, President and CEO of the Muncy Bank and Trust Company; and Jeff Waltman, resident of Muncy Borough, Lycoming County.A video of the hearing is available on the Senate Environmental Resources and Energy Committee website.