At 7 00 a. M. Eastern. Chair brown the committee will come to order. Thank you to the witnesses for joining us. This hearing is a continuation of our efforts to enact longterm reauthorization of the Flood Insurance program and fip programs. It has been extended 28 times since december 2017. The latest extension will expire march 8 of this year. We will disclose we will discuss local leader perspectives and the challenge of potential solutions to the risks that flooding poses to committees across the country. So many issues, transportation, housing, each of these is a priority for this committee. These leaders know all too well, flooding is the most costly Natural Disaster facing the country. It is devastating to communities in every state. That is one good reason that mayor patterson is here from my state. Landuse patterns play a role in whether people want to and whether people want to admit it or not, Climate Change is only making it worse. It is making extreme weather events more frequent, less predictable and more extreme across the country. This month, streams overflown in senator reids home state of rhode island, torrential rains in san diego neighborhoods, flash floods threatening communities across louisiana, which is well represented by two colleagues in the room. That is just this month. Flooding is not confined to communities on the coast or even near major bodies of water. In 2022, the same mountains and streams that make our appalachian towns in ohio and elsewhere beautiful also made family homes and local economies vulnerable to flooding. The only available land for development in appalachia is near floodplains. Disasters also often fall hardest on the families and communities that have fewer resources to prepare and respond to them, often because of where they live. Smaller Rural Communities dont have easy access to resources to respond to the immediate effects of disasters, nor do they have access to the resources they need for longterm recovery and to prevent disasters in the first place. We need to ensure our families and communities can adapt and become more resilient, both to the flooding we face into the increases we know are coming in the next several decades. Whenever possible, we want to help communities avoid extreme flooding altogether through predisaster flood medication and fip is critical to that effort. Nfip does not just provide insurance, its job is to prevent and minimize flood damage in the first place, not just help with a very expensive recovery. Nfip combats the overall threat of flooding through four components. Flood insurance covering 4. 7 million homes and businesses. Floodplain management, mapping and mitigation. We must reauthorize and strengthen nfip and invest in mitigation and floodplain management before disasters happen in communities. Recent hearings, we heard from a wide range of stakeholders who discussed the need for a longterm reauthorization to help communities and stakeholders plan. The importance of helping Property Owners understand the risk by improving mapping and other Risk Communications and through disclosure of flood hazards to prospective owners and tenants. The importance of building state local capacity to carry out our floodplain management and mitigation programs, especially rural and small communities. Weve heard femas recommendations for strengthening the program, including giving the overhang of debt and providing means to i am interested in hearing todays witnesses recommendations on how we can strengthen nfip so we can help local communities meet these needs. I am pleased to welcome mayor Steve Patterson of the city of athens, ohio to discuss some of the unique challenges faced by cities and towns in appalachia. Nfip is a complex program with multiple goals and implications for many things people care about most, homes and communities, Small Businesses. I believe it is possible for us to come together to reauthorize and improve this program. Todays hearings will help inform this effort, and this committee, while sometimes partisan, often senator scott and i will Work Together on major pieces of legislation as we have for Holding Banks accountable, medicinal marijuana, and the like. This committee, particularly on Flood Insurance is more regional in outlook than partisan and that should help us sooner rather than later, come to some agreement on nfip. Ranking member scott. Ranking member scott thank you mr. Chairman. I would like to take the time to welcome a charleston native, mr. Kaniewski. I cant think of a more helpful perspective in tackling the issues that are local in perspective. Although i now live in minnesota, i have never met someone who lived in charleston fulltime. We need smart thinking individuals back in charleston, South Carolina. We thank you for being here today. National Flood InsuranceProgram Comes into play when we start thinking about how to mitigate the risks that are so impactful and negative to communities across the country. As we consider potential reforms to the nfip, we must keep in mind local perspectives and not just those from washington bureaucrats. We all know that the most effective policymaking typically happens closer to the problem, not further away from the problem. Our program should foster local innovative solutions, not regulatory red tape. You have heard me say this before, that is a lifelong charlestonian, as well as an insurance professional for more than 20 years, having Flood Insurance policies, it is really important for us to understand and appreciate the devastation caused by flooding. There is no doubt that if you were around 1989 in charleston, the hurricane devastated our communities in a way that very few Natural Disasters have before or frankly since. The storm surge was so bad and so high that it literally left boats in the middle of downtown streets in charleston. Hurricanes matthew and florence devastated towns throughout my state and left some towns submerged. As a matter of fact, the town of nichols, South Carolina, a very small town, was hit by both storms so badly that more than half of the houses in that Small Community were underwater. The devastation of trying to rebuild, 24 months later, again was undeniably and frankly impossible. When you are surrounded by friends and family, the impossible becomes possible. They worked really hard to start the process of rebuilding very quickly, and frankly very successfully. This type of repeated flooding makes recovery harder and can even cause some residents to lose hope and certainly part of the town, those residents left. That is why i have her introduced my repeatedly flooded communities preparation act which would help communities suffering from frequent flooding plan for the next storm and hopefully lower the risk. It is my hope that by encouraging flood prone areas to reduce the impact of future storms, residents will be able to focus on longterm recovery. Long after the storm surge recedes, recovery does not simply mean rebuilding. It also includes uplifting communities. It includes making sure that families and neighbors learn to Work Together, that the synergy in the aftermath of a disaster is for really reveals itself. South carolinians who have lived through repeated flooding know this. My home state has taken action to prevent this outcome. South carolinas recent dedication of resources and strategic mitigation efforts are second to none. In 2023, the state budget included significant funding for mitigation efforts that would reduce flood damage from future storms. Backing up that investment, the offense of office of resilience releasing a plan identifying communities most wonderful to floods and targeting mitigation resources to protect those residents. These are local solutions to local challenges and they will make a huge difference in the lives of south carolyn ians. While i reckitt South Carolinans. While i realize it may not work in places like louisiana or ohio, im confident that similar locally based solutions and approaches can make a huge difference not only in those communities but to the national Flood Insurance program itself. To support these levels, we must have substantial reform to the nfip. The program is financially insolvent with over 20 billion, 20 billion in debt. Instead of educating communities and homeowners on the risks they face, the programs outdated flood maps and lack of transparent data often obscures the risks. Without a wellfunctioning and financially solvent insurance system, the nfip will fail to provide cities and towns with the tools they need to be resilient. And the nfip is unable to revive local communities within crew improved mapping and mitigation resources, the Financial Health of the Insurance Program will continue to deteriorate. When i say that, we have to recognize that the nfip pays out 30 of its resources to about 1 of the properties that consistently and repeatedly are flood victims again and again and again. 1 of the exposure absorbs 30 of the resources. That is an opportunity for us to look to the local communities to create strategies to perhaps not rebuild their. That will take local engagement to mitigate that risk for the nation and for the program and the communities where they happen. Comprehensive reform of the program is essential. One point before i close. Congress cannot allow the nfip to lapse. Most often we think about states like florida or South Carolina or louisiana, where they pay a disproportionate share of the premiums that go into the nfip. The truth is, that whether you are in ohio or california, whether you are in new jersey, new york, hurricane sandy, 8. 8 billion. Harvey, 9 billion. The number of Flood Insurance policies in place was certain was essentially nonexistent. Not only do we need a comprehensive reform of the program, we need to have a better education that floods dont simply happen when you live near the water. Senator cassidy, we welcome. Senator cassidy will introduce his friend from louisiana. Sen. Cassidy i appreciate you having this hearing and allowing me to introduce i appreciate your staff. We have done some fantastic work and we thank you for that. Today i have the privilege of introducing greater new orleans inc. President and ceo, michael hecht. Michael moved to new orleans after Hurricane Katrina with the goal of helping the city rebuild. Previously after 9 11, he had worked in new york in the mayors office, running a Small Business recovery program. Devastating tens of thousands of people and businesses, mr. Hecht took action by running a similar quarter of a billion dollar katrina Small Business recovery program. He helps when communities have been struck. There are many lingering effects of Hurricane Katrina that he will speak of but one of the most obvious is the method to assess flood risk. If i may add. They identified a new risk policy that has made Flood Insurance simply impossible to afford and in some case policies rising over 1000 . In some cases, Flood Insurance premiums are higher than a persons mortgage. At this point, we know that we are in an actuarial death spiral where people are dropping insurance so they cannot afford it, therefore more expensive premiums and more people drop. Mr. Hecht will address this and the impact it is having on families and businesses. I thank you for having this hearing because of the solution that senator menendez and i and others have proposed. We would love your input which we think could address this. I thank you very much are having me here. Chair brown thank you senator cassidy. I cant improve the introduction offered by our friend. Mr. Hecht, welcome. Mr. Kaniewski is the managing director of marsh mclennan. He worked for fema during the trump administration. Steve patterson, the mayor of athens, ohio, the largest city in appalachia. He serves as the second Vice President of the National League of cities. I meet with him and other mayors frequently. First elected in 2015 after two terms as city council, he is a former associate professor at Ohio University, former air force pilot serving as a major from the ash tittered to columbia air national guard. From the district of columbia air national guard. Mr. Hecht, you may begin. Mr. Hecht thank you so much, chairman brown and Ranking Member scott and senator cassidy. I want to thank him for his leadership on this issue and many others. My name is michael hecht. I am president and ceo of greater new orleans inc. For the past decade we have let the coalition for sustainable Flood Insurance, and National Alliance of approximately 250 organizations across 35 states. Today i will discuss the need to reauthorize nfip, given its benefits to the country, the need to reform the program that has been discussed and particularly giving femas administration a risk rating of 2. 0, its associated impacts. First and foremost, the coalition for sustainable Flood Insurance absolutely supports a longterm multiyear reauthorization of nfip, to ensure Program Stability and to minimize the negative impacts across the american economy. As senator scott mentioned, a lapse is something that we cannot allow to happen. This is destabilizing to the National Housing market. We know for example that during a june 2010 lapse, about 1400 home sale closings were delayed or canceled each day. Furthermore, the benefit that nfip provides to our nation is great and significant. It is 5 million policyholders. Two points i need to make here is that they are often mischaracterized as being wealthy homeowners who are subsidizing their beachfront homes. This is just empirically not the case. A study that we ran found that 98. 5 of all nfip policies are in counties with a median household below 100,000 and 52 are in counties below the national average. The reality is that the nfip program is about allowing the working coast and river parts of america to keep working. This is a very important point. We talk about the debt of the program and the cost of the program, estimated to be 36 billion over the past 50 years but on the other that, femas own analysis, the floodplain standards that have been implement it because of nfip have saved the country implemented because of nfip have saved the country a net benefit of about 85 billion. In terms of risk rating 2. 0, there are some dramatic impacts. On average, an nfip policy will be 1808, a 104 percent increase over legacy rates and rates will increase over 50 in 41 states. To the point that has been made by the senator about the death spiral, this is a major concern about affordability. Participation peaked at about 5. 7 million in 2009. The risk rating in october 2021, there were 4. 9 million policies. Since then, nfip has lost over 215 thousand policyholders and ultimately, fema through their own projections projects losses of 900,000, 20 because of risk rating 2. 0. This is not going to be good for the program or america. There is also regional impacts. Our region in greater new orleans is essential for the National Economy and global food and energy security. Nfip and risk rating does not take this into account. 50 of all u. S. Grain exports go through the port of south louisiana which is in our region. The average increase is going to be 239 in that region. If our workers cannot live there, this is going to have impact on our ability to supply america and the world with food. In conclusion, we do believe that nfip should be reauthorized but also reformed. Congress did not pause the risk rating 2. 0 problem because the risk rating 2. 0 problem but has the opportunity to make it better. Some of our priorities, many of which are reflected in the national Flood Insurance program reform act, include a review of 2. 0 methodology and Economic Impacts, mandating femas transparency through the release of a usable public facing risk calculator and also a rating appeals process. We need to lower annual premiums from we need to enact a means tested assistance program. Looking at housing burden which is even more subtle than looking at percentage of ami. Finally, the debt and Interest Payments should be frozen and redirected into mitigation because ultimately mitigation is how as a nation we are going to work our way out of this challenge. These policies would resolve affordability, transparency and accuracy concerns which looks to stabilize participation in the program and support communities across the country. Thank you for the opportunity to speak today and thank you for your service. I look forward to taking your questions. Chair brown thank you mr. Hecht. Dr. Kaniewski. Dr. Kaniewski my name is daniel kaniewski, and i focus on Public Sector challenges and solutions at marsh mclennan, the worlds leading professional Services Program in the areas of risk, strategy and people. We have 5000 colleagues worldwide advising clients in 130 countries. With years of experience, we help individuals, businesses, communities and governments address the financial impacts of disasters through insurance and other riskmanagement tools. Before coming to marsh mclennan, i was the second ranking official at the federal Emergency Management agency, where as the first deputy minister rate or for resilience, i served along some great leaders of this nation. As you can imagine, much of my work is focused on flood risk. I welcome the opportunity to speak to you today. As was said, flooding is the most common naturally occurring disaster and that communities fail to protect themselves from the impacts. Federal policies and programs including the nfip are essential but ultimately all disasters are local and so too are resilience investment decisions. To increase increase the resilience of communities, we believe that risk transfer, that includes the nfip, private Flood Insurance, parametric insurance, should be paired with Risk Reduction. Hazard mitigation. Strong building codes. There are several ways to improve Flood Resilience. Those include strengthening the nfip with a sound financial framework, protecting the nfip with solutions. Growing the private private Flood Insurance market. Closing gaps in nfip coverage. Promoting excess Flood Coverage to complement the nfip. Leveraging existing nfip Incentive Programs. On that final point i wish to elaborate. One existing nfip Incentive Program is the Community Rating system. Crs is a voluntary program that encourages floodplain Management Practices that exceed nfips requirements. It is an example of a federal program that incentivizes Community Action on Risk Reduction and risk transfer. Tulsa, oklahoma is one of two communities nationwide that have achieved the crss programs highest rating. I recently spoke to the oklahoma floodplain managers association, at the annual conference in tulsa and i saw firsthand how the city had transformed its approach to flooding. The conference host helped tulsa achieve their status and nfip policyholders now enjoy a 45 discount off of flood premiums. Apparently i was not the only one to notice the compliments. Oklahomas governor recently appointed the speaker to serve as the states top Emergency Management official. In addition to fema Grant Programs that incentivize resilience investments, states have been launching their own innovative programs. The secretary of the Maryland Department of works and minutes meant, recently elected to be the president of the national Emergency Management association is quoted as Hazard Mitigation is the center of the universe. To that end, South Carolina recently announced 200 million for Flood Resilience projects. While florida, South Carolina, alabama and louisiana and others have programs aimed at incentivizing homeowners to strengthen their homes against hurricane risk. A recent academic study found that participating homeowners saw their insurance premiums reduced and their home values increased, confirming our view that resilience pays. Beyond government programs, the property and Casualty Insurance and Reinsurance Industries are developing innovative programs for communities and homeowners against floods. Communitybased catastrophe insurance or cbci is a program that provides disaster insurance to local Government Entities that wish to cover a group of properties. The program enhances Financial Resilience by simultaneously providing affordable coverage and creating incentives for Risk Reduction. Our recent pilot in new york city was developed in partnership with the city of new york and several nonprofit and Insurance Industry partners and funded by the National Science foundation. It provides a level of financial protection for low to moderate income households that previously lacked insurance. More broadly, other industries such as the finance and Real Estate Industries can incentivize Flood Resilience investment together with the Insurance Industry and all levels of government. The National Institute of Building Sciences recently issued a roadmap specifically highlighting how Residential Structures prone to flooding would benefit from these incentives. The report identified cobeneficiaries of mitigation investments and highlighted how these cobeneficiary industries can help pay for these investments. Thank you for your time today and the opportunity to share how federal, state and local programs together with innovations from industry can help close americas Flood Resilience cap. Chair brown thank you dr. Kaniewski. Mayor patterson, welcome. Hon. Patterson good morning, esteemed members of this committee. I appreciate the event tatian to speak to you on behalf of the national Flood Insurance program. I am the mayor of the great city of athens, ohio, home to Ohio University and also second president for the National League of cities, representing 19,000 communities across the United States and the president of the mayors partnership, which represents 19 appalachian counties and 120 communities and 800 thousand citizens across southeast ohio. Cities, towns and villages are experiencing a higher frequency of extreme weather events including hurricanes, floods, heat waves. These severe and unpredictable weather conditions are leading to largescale disasters that are overwhelming existing infra structure as well as Emergency Response capabilities. As we discussed, the recent devastation we are seeing in san diego highlights the reoccurrence of impacts of flooding on cities and residents. My thoughts go out to mayor gloria and the san diego residents during these tough times. Ohio university is also one that has experienced floods, notably 1968s flood were reexperienced a 28 foot flood stage. Since then i have worked with the corps of engineers to mitigate a lot of those flood events that we see in our city. While athens strives to reduce flood risk, concern persists for communities like san diego. That is why nfip is critical to offset these potential losses, as such disasters and to protect our communities. Nfip ensures rapid access to funds for repair and restoration, minimizing the economic strain that affects our families and contribute to our communitys resilience, recognizing the critical need for longterm reauthorization of the nfip, nlc has endorsed the national Flood InsuranceProgram Reauthorization and reform act. Beyond individual homeowners, nfips impact extends to economic stability at the community level. The programs commitment to prompt Financial Assistance prevents prolonged Economic Impacts and Financial Assistance prevents these long downturns resulting in extensive property damage. This stability benefits homeowners and ripple effects on our local business economies, supporting the overall wellbeing and vitality of our communities. Nfip further empowers comprehensive floodplain management, catalyzing local governments to establish longterm floodplain management strategies. This includes detailed maps, Risk Assessment and mitigation plans. Through nfip, municipalities gain access to resources and expertise, enabling proactive measures such as robust zoning regulations, integrated flood risk considerations into landuse planning and Critical Infrastructure improvements. Cities such as athens are implement a strategies like green infrastructure, resilient housing, communitybased disaster preparedness, smart technologies, inclusive planning, stakeholder collaborations, social Infrastructure Investment and adaptive transportation. These efforts underscore these cities commitments to adapt and thrive in a changing world. While state, federal and local investments aims to minimize losses caused by extreme climate events, the allocation funds still fall significantly below the escalating demand to combat the increasing risk of extreme weather events. Local governments continue to need additional funding, and resources to enhance our collaborative efforts to bolster resilience, protect communities, and ensure the longterm sustainability of our infrastructure. Nfip continues to provide Flood Insurance for Property Owners due to challenges in the private Flood Insurance covering, and the many atrisk areas. Concerns about cherry picking by private insurers leaving vulnerable communities for nfip, raising equity issues and threatening the sustainability. Nfips capacity to address challenges from catastrophic floods, positions it as a vital player in providing financial protection to atrisk communities, a role elusive with the private sector. An lc members nlc members are also concerned about the sluggish pace where funds are being dispersed in block grants for Disaster Recovery programs. Hindering longterm Recovery Efforts after disasters. Bureaucratic hurdles and lengthy processes delay the muchneeded funds, impacting the ability to promptly address urgent needs and slowing down the overall Recovery Efforts. That is why nlc supports a bipartisan acts in the hopes that the legislation would significantly improve the program, for Faster Community recovery from major disasters. In conclusion, the nfip is a critical resource in offering financial protection, for residents and aiding and building resilience and sustainable communities. The National League of cities eagerly anticipates collaboration with this committee to ensure nfip remains an effective tool in safeguarding communities nationwide. Thank you for your attention. I am available for further information or questions. Chair brown thank you all for testifying. We are going a bit out of order. Senator scott, at the request and the agreement of the Ranking Member, senator kenny senator kennedy will be first to ask questions. I understand you have been called away for a constituent event related to d. C. Mardi gras. You will have to hope that i dont ask for much from you except a stay within your five minutes. I hope that maybe there will be a king cake in it for senator scott and me. Sen. Kennedy when you get back to the office, you will have a surprise. Ranking member scott if you go seven minutes, i will give you more. Chair brown that was not part of the agreement. Sen. Kennedy i want to thank our esteemed chairman and Ranking Member for accommodating my schedule. Thank you all for being here. Especially to my friend, michael hecht. He is a very talented guy. A respected man in the Business Community of new orleans and the surrounding area. I can say some things that he cant say. We have two problems in louisiana in terms of flooding. We have hurricane flooding and we have nonhurricane flooding. I want to talk about the nonhurricane flooding first. When new orleans gets two inches of rain in a short period of time, at floods. Why . Because new orleans is below sea level. It is a bowl. It is in a bowl. That is why our founders in the city built it in the highest area. We have what is called a sewage and water board, which has pumps, that when it rains a lot to pump the water out. Weve had that for years and years. The taxpayers pay for it. And for years and years, it has been a model of inefficiency. In fact, it has been a cesspool of political patronage and corruption. Michael cant say that, because in the Business Community, he doesnt want to say that because they are worried about retribution from politicians, but it is the truth. Look at the headlines from tv stations. Payroll fraud and a secret sex room. Troubling allegations at new orleans sewage and water board. Former new orleans sewage and water board employee arrested for sex scheme. Rated by fbi. X board official has to pay back 100,000 he stole. Next headline, we knew the sewage and water board was dysfunctional, now we know it is corrupt. The people of new orleans deserve better. What we need to do is one of two things. The politicians have had their shot and they missed. We need to either turn the sewage and water board over to the state of louisiana and let someone else run it, or we need to privatize it. The sewage and water boards plan right now when it floods, when half of the pumps are broken, you know what their plan is . I kid you not. Move to higher ground. Where . The second problem is hurricane flooding. This is the national Flood Insurance program. We need a national Flood Insurance program that looks like someone designed it on purpose because the one we have right now is not. The old one wasnt great. But at least it sort of worked. A few years ago, fema decided they were going to reinvent it. And they hired an outside group of consultants, paid them bucket loads of money. They came up with the new algorithm. This algorithm is so good, they said they can look in the future and look at each individual home and predict whether it will flood or not, 20 years from now. They made all kinds of wild allegations. Any day now i expect fema to say this algorithm is so great itll grow hair or itll cure ed. Ill say i need to see this algorithm. Can i see it . No. Im in charge of their budget. They lied. They have the credibility. They lied. They said one Million People will see the rates go down. I havent talked to a Single Person who has seen their rates go down. This is just an excuse to raise premiums, and they dont care. The whole purpose of the national Flood Insurance program is to bribe is to provide a product that people can afford. In my state, here is what the premiums have done. They said people will see decreases. Tara brown county, 305 increase. Another parish, 321 . Plaquemines parish, 540 . Fema lied. They are not going to do any better. The best part of senator menendezs bill. It is a good bill. Weve all worked hard on it. It is going to cap rate increases at 9 . Right now, fema can raise the premiums 18 every single year and they are going to keep doing it because they dont care. They lied to the American People and my people and they ought to hide their heads in a bag along with all the politicians that have allowed the sewage and water board to steal money for all these years. Thank you. Chair brown thank you senator kennedy. Senator tester is recognized from montana. Sen. Tester i always thought it was cleveland. Moving on. We are on our 28th straight shortterm extension of the national Flood Insurance program. Beyond ridiculous. My question is for all three of you, but i only want you to use it for 30 seconds because you can all talk on for 10 minutes. From this committees standpoint, what would you prioritize, besides the extension baloney . Would you prioritize in a nfip bill is the most important qualities . We will start with you mr. Hecht. Mr. Hecht thank you senator. First it would be affordability because we want to make sure that people stay in the program and that it does not go into a death spiral. The second would be comprehensive ability, so people understand what they can do to make improvements and what they are paying for. The third most fundamental will be money for mitigation, because hazard avoidance, reducing exposure is the center of the universe and it is how we improve this nation over time. Sen. Tester mr. Kaniewski . Dr. Kaniewski my answer is hazard negation. Hazard mitigation. Not only does it protect existing homeowners against existing risk, it helped protect homeowners in the future and anyone else who purchases that home in the future against future risk. It also gets to the affordability issue. If you reduce your risk, you should also be able to reduce your rates. Sen. Tester mayor patterson . Hon. Patterson i would echo the affordability and i would recommend looking hard at the cd bgbr. I come from one of three chronically distressed counties in the state of ohio and i will look at affordability and my constituents, it is a big challenge when you live under chronically desperate chronically distressed parts of the state. I look at all of appalachia and see the exactly same thing see the exact same thing. It is worth getting out more quickly and effectively. Sen. Tester thank you for that. Mr. Hecht, you talked about sustainability. All three of you talked about affordability. I agree, it doesnt do any good to have insurance if it is not obtainable. You also talked about sustainability, which is pretty important. Over 30 billion in the hole on the national Flood Insurance program right now. Ive worked with senator vitter, senator kennedys predecessor and senator heller on Flood Insurance. Affordability is always the issue and sustainability means it is paid for, at least that is my definition for it. How do we do this . When you are comparing the premium to risk, correct me if i am wrong, but the risk is pretty significant. Mr. Hecht thank you. There are two ways of looking at this. One is the cost and efficiency side. Senator scott spoke to this, the fact that 1 of claims are accounting for 30 of the payouts. Something that clearly needs to be addressed. Sen. Tester how would you address that . Mr. Hecht youll have programs that say if you are a repetitive at some point you dont qualify for new payouts. You need to be remediated and you cant build there any longer. There has to be a recognition of being smart about this program, going forward. Sen. Tester lets put this in plain talk. You are saying if you have an event that is expensive, unless you do some pretty significant mitigation, you are not going to be eligible for the policy anymore. Mr. Hecht i would say there is a subtlety to that because we have to define what is the appropriate definition of repetitive. If you have one event, you should not be taken out of the program. I cant say what the exact level should be, but there should be some point after two or three events that if you have not mitigated or reduced exposure on your own and you are using public assistance, you dont get to continue being a bad penny. Sen. Tester senator kennedy talked about being below sea level. Thats a problem. Building in the floodplain or in a river is a problem. Weve seen the same thing with fires. The question is, and yet we have taxpayer subsidies for these programs and a lot of programs. We have taxpayers subsidy this program. How do we get it to a point, because i do think sustainability is important, how do we get it to a point where it is a Sustainable Program so we are not dependent on the u. S. Taxpayer for people who make bad decisions . Mr. Hecht it is a very complicated issue. One is efficiency. The other question we have to look at is the way write your own programs are critical to us. Should you get 30 continually as the rates continue to go up, that is a question. On the others, we were able to be in amsterdam over the holidays. When you arrive at the amsterdam airport, there is a sign that says welcome to below sea level. They have mitigated so well that its actually a positive for them. We do have the ability to design structures that protect communities and homes in a way that ultimately will reduce the exposure to the taxpayer. And finally, Flood Insurance, i would argue is really a social good. We need to live and work near water as a nation. We have to have programs that provide some level of sen. Tester thank you three for your testimony. My good friend asked a good question about the impact of all of these challenges, repeated losses, but one of the things were going to have to talk about as a nation, about a comprehensive catastrophic occurrence approach. The truth of the matter is that if you live in inland, name your state, your exposure and education on Flood Insurance or the necessity of Flood Insurance or the nfip is probably just absent. If you live in charleston, you may have a tornado every now and then. If you live in colorado or california, your exposure to fires is a different experience. If you live in america, the fact is simple. We the taxpayers have paid out hundreds of billions of dollars over the last 10 years because of catastrophic occurrences. It matters where you live to what the occurrence is, but it is occurring everywhere. While we are here today to talk about the national Flood Insurance program and the importance of understanding how to mitigate that risk, the truth is that at some point we have to have a serious conversation about a comprehensive nature of catastrophic occurrences that an Insurance Company cannot create a probable maximum loss which means that experience or occurrence will not be insured at some point because you cant figure out how to have an actuary said a table and figure it out. Without that comprehensive approach, we really are missing the target by a mile. That said, if a home floods and the owner does not have coverage, mr. Kaniewski, what are the options . Dr. Kaniewski if i can back up a second and say if they dont have Flood Insurance, the first time they may learn about that will be when the flooding happens. Far too Many Americans believe that Flood Insurance is included in homeowner policies. It is not. Ranking member scott that was my second question. Dr. Kaniewski it also they also may believe that the federal government will be there to help them. In my role at fema, if there was a president ial declared disaster, fema was there to help. But the amount of assistance that fema is legally able to provide to a homeowner who has experienced a loss of any kind, including a flood, pales in comparison to what insurance would pay. Ranking member scott i am not sure that the number is 39,000 from fema or 40,000 but it is not 400,000. It is around 39,000 last time i checked. I will say this. The fact of the matter is that the floods that are occurring in different places every year, and the places where we are seeing floods occur, as an example, i think it was 2015 or so, we had a thousand year flood in South Carolina. Not in charlston, not in myrtle beach. In columbia. The community could not have been prepared for that because it is not supposed to flood in columbia, South Carolina. That Actual Experience is happening across the country, in places where they dont expect it to flood. Having a conversation about the necessity of Flood Insurance is very difficult. Having sold it on the coast, it is difficult to tell someone who is 1000 feet away from the water that they need Flood Insurance. Sometimes high enough is a relative definition. We do need to have a Marketing Strategy and approach as it relates to preparing for floods in places where we just dont think itll flood. In my Opening Statement i mentioned recent actions taken by my home state of South Carolina providing communities with tools they need to protect residents, combining savings and flood mitigation with a variety of strategies. It seems like a recipe for success. For the local level, it has positive impacts at the national level. Mr. Kaniewski, could you provide us with any thoughts you may have about this approach . Dr. Kaniewski i too applaud the state of South Carolina. It is a rare event where you see a state stepping up and saying we are going to commit hundreds of millions of dollars to address this risk in our state. We are going to protect our citizens. We are going to protect our mean discipline infrastructure our municipal infrastructure. We see it as a societal benefit. I just want to pause and say what a big deal that is, because not only will that protect the citizens of South Carolina. It will protect the american taxpayer. Ranking member scott with my last two seconds left, quickly, i thick about the hundreds of dollars paid out because of natural catastrophic occurrences, one thing i didnt think about until you mentioned it is that the Public Sector for Public Infrastructure pays out on top of that expense. I would imagine in the last 10 years, it has exceeded 1 trillion of payout, for the residence and Public Infrastructure around this country, for an occurrence that is going to happen again and again. Chair brown thank you senator scott. Senator menendez, thank you. Sen. Menendez thank you for holding this hearing. I agree with what a lot of senator kennedy had to say. Since fema recently changed its rating methodology, the program has lost 150,000 policyholders. Fema itself has estimated it will lose one million policyholders by the end of the decade due to the premium increases. In paterson, new jersey where the Median Household Income is 50,000 a year, policyholders will see premiums increase from an average of 1500 a year to an average of 4000 a year. In kingsburg, new jersey where the Median Household Income is 76,000, 1000 policyholders will go from an average of 1300 to 3500 and the list goes on. Mr. Hecht, mayor patterson, can working families handle these types of increases . Mr. Hecht thank you senator and for your leadership on this issue. One of my notes i looked at which i think is important to say is that the challenges of Flood Insurance, which would be difficult for a workingclass family to handle on their own are being compounded now by inflation which is making groceries and gasoline more expensive, and Homeowners Insurance which is being driven by reinsurance which is gone up in louisiana about 65 . Nationwide between 15 in 20 . We have a middle workingclass affordability crisis throughout the country for Flood Insurance where Flood Insurance is just one of the vectors. Hon. Patterson i would add to that, in athens and athens county, the Median Household Income is around 42,000, much lower than the national average. It is a challenge to have that added burden, especially for those living within the floodplains, within the city and throughout the county. It is going to be an exceptional burden, adding to already existing living increases we are all seeing. By default becomes the distressed counties in appalachia. Sen. Menendez families who are forced to drop their Insurance Coverage and later suffered damage in future disasters, that is the ultimate disaster to them. Insurance is about spreading risk. The wider the pool, the less the cost. The smaller the pool, the more the cost and that drives people out at the end of the day. If we think about how much money taxpayers have paid, when there is a disaster declaration, that is much as an insurance cup and he will pay, that is still taxpayer dollars and i have not seen too many president s when there is a Natural Disaster in the country, they say im not going to give you a declaration. They put a declaration which means taxpayer dollars are being spent. The private sector could do this, and do it at a reasonable cost, id be all for it but we have seen that the private sector really is not going to go into this in a way without a backstop that ultimately creates that opportunity. The nfip react that i introduced with a whole bunch of others on a bipartisan basis lowers the statutory cap at 9 , the average annual increase that policyholders have seen since the homeowner inched homeowner Flood Insurance affordable of the act, it helps families buy into the program. Endless increases helped no one remain in their homes, if there is unmitigated and uninsured consequences. A longterm solution must include robust funding. You all talked about mitigation to redisc reduce the risk profile of the program and provide a sound financial future. We know right now which homes are most at risk and we should not wait until the flood to step in and help. For every dollar of mitigation, the federal government saves seven dollars in Disaster Relief payments. There is one critical mitigation financial tool of the nfip, the increased cost of compliance coverage that has grown obsolete. Mr. Kaniewski, how much does it cost to raise a home in general . Dr. Kaniewski unfortunately flood mitigation efforts are some of the most expensive, between 100 one hundred thousand dollars and 150,000. Coverage only covers 30,000 which is not a home in compliance. That is why our act modernizes increased cost to complaints by increasing the coverage available and making accessible when homes are out of compliance with building codes. There are a series of things we can do. If we believe sustainability is going to be driven purely by rates and payment, we are to drive a lot more people. That will collapse. We will be uninsured offenses when a disaster takes place. We will have no mitigation on the private sector side and from the individual citizens participation. Not to mention that the value of their home goes to the basement. If you are in a flood zone and you dont have Flood Insurance and your mortgage requires it or you want to sell and someone needs to get Flood Insurance in order to buy for the new mortgage, that home is worthless. These are all parts of the equation maybe think about and when we tried to do. We look forward to looking at working with the chair and others. Sen. Brown senator britt is recognized. Sen. Britt i want to echo some concerns related to government overreach and overregulation. We have seen it across the board in all financials the dilutions, they are bringing the regulators are bringing under this administration more regulation, more overreach, more burden. The federal Insurance Office is no different. In november, the Treasury Department announced it is moving forward with the climate data call and this is another blatant effort to overstep into the state regulated Insurance Industry and collect incredibly detailed information from our communities. The effort completely undermines our wellfunctioning state regulatory system and is an effort to pursue this administrations climate agenda at the cost of taxpayers and an industry. That is why introduced the interest Data Protection act with 16 of my senate colleagues, including all of the republican making committee members. The bill would rain in the overreach we have seen and keep the office as it was intended, and informational body that supports the efforts of our state insurance regulators. State insurance regulators understand the unique needs, including the weather challenges faced by their communities and they help drive solutions. Unfortunately, alabama is no stranger to the acts of our Natural Disasters. We have experienced the devastation of everything from tornadoes to hurricanes to major weather events, the effects this have on families, homeowners and communities. This week we are preparing for strong storms and flash flooding across in alabama. It is imperative we are forward thinking and disaster mitigation, preparedness, and resiliency efforts. The Alabama Department of insurance has been a champion. Alabama established the strengthening Alabama Homes Program designed to aid and incentivize alabama homeowners to improve their homes and minimize property loss due to weather events. Mr. Comiskey mr. Kaniewski, you touched on a report by alabama and universities that demonstrated the benefits of the program. These studies found the program directly resulted in one, lower insurance premiums and two, higher home resale values. For those who may not be aware of the efforts in alabama, can you describe them and touch on the proven benefits they have to homeowners . Dr. Kaniewski in many forms i often lied alabama. Laud alabama. They have a resilience council, they created a council, it is a big deal. It means the governor is prioritizing resilience. In some states, those two dont even speak. I live in alabama, they sit together and work on these issues. Number two, strengthen alabama homes. That program has been so successful that other states are replicating it. Louisiana is putting it into place, a virtual carbon copy of what alabama put into place and your states Insurance Office is working with the state of alabama to implement that program. The study you mentioned, youre lucky to have a researcher who did that study. I think thank lars anytime because i think that is the study that gives real evidence that mitigation paid off. Sen. Britt how do these efforts play into the larger discussion we are having today around reforms to the national Flood Insurance program and on incentivizing communities to focus on disaster mitigation, preparedness, resiliency . Can each of you speak to that . Mr. Hecht louisiana competes with alabama or police tries to on many things or at least tries to buy many things, like football. We were recently in london talking about that program and what we love is we are going to debate affordability and how we make this work. Ultimately it is going to be communitybased resilience which prevents the damage from happening. That is the answer for our states and our country. Dr. Kaniewski we have studies but really do you see any opportunity where a state is a living laboratory, puts those ideas into action and shows with real data, with real homes, that resilience pays. Mayor patterson what i would add, speaking of test cases, city of athens is taking on flood mitigation given we have the hocking that runs to the middle of the city. We are home to Heights University where in 1968, the campus was split in half with high water events. We have worked with the corps of engineers to reroute the Hocking River and move it to where it was no longer as significant a flood threat but still a flood threat. We have gone to Great Lengths to remove the invasives along the bank lent, the banks of the river itself and we are reintroducing native trees that are highvolume suckers with sycamore trees, black willows, and swamp oak lining that which helps when we do have high water events. We are able to clear the watershed more quickly with absorption and also creating a more laminar flow by removing and vases acted as snags that catches debris and creating an artificial fastmoving flash flooded dams. That has been very effective with reducing the flooding we are seeing in different neighborhoods. We are going to continue on that mission. We are working with the corps of engineers under section 206 and 1135 to work with them to explore different ways the tributaries coming in are also reducing significant flooding. My point being that there are a lot of things cities can do, villages can do. When it comes to cities and villages, capacity becomes a real concern. Do they have the capacity . Do they have the financial wherewithal to address these things . I would say in the cities and villages i engage with, the answer is no. Sen. Britt we have to empower homeowners and communities to be resilience against visa storms and conditions. Sen. Brown i will continue to waive my questions. Senator warren. Sen. Warren Climate Change is wrecking havoc on our communities and with Global Temperatures on the rise, Natural Disasters are coming more often and doing more damage. With floods accounting for two thirds of the costs of all Natural Disasters, our nations Flood Insurance program is feeling the strain. In the past decade, the national Flood Insurance program has been hit by four of its top 10 costliest events in history. More floods and more intense floods means more families and businesses need Flood Insurance. Parts of massachusetts last year were devastated by historic flooding causing millions of dollars in damage to homes, businesses, farms. Over 100 thousand properties in the commonwealth in femas flood zones are at serious risk of experiencing a flooding event. We are an expert on Flood Insurance markets. With Climate Change on the rise, more people need Flood Insurance. Does that mean everyone who needs Flood Insurance today gets that insurance . Dr. Kaniewski no, only about 4 of americans have Flood Insurance. Sen. Brown our Flood Insurance system sen. Warren our Flood Insurance system is not working right now. The most important thing we can do is tackle the root of the problem. We should be making investments to stop Climate Change and reduce the risk that floods pose to our nations communities. We need to make sure we understand how the ongoing Climate Crisis is affecting our Insurance Market. Let me come back to you. We know a few things about how Climate Change is changing access to insurance. We know that premiums are up by hundreds of dollars. We know that private insurance insurers have pulled out of plates out of states like florida and louisiana. If we wanted to know exactly why an Insurance Company was pulling out of massachusetts, for example, and what Insurance Options were available, at what premium levels, do we currently have Data Available to do that . Mr. Hecht naic collect data at a state level, but we dont have the level of granularity. Sen. Warren at the homeowner level at the town level, the area that is flooding level, we just dont have that information. The office at the Treasury Department is working to try to fill that gap. Proposed a plan to collect data for insurers on how Climate Change is affecting americans access to insurance and the affordability of that insurance, including information on premiums, coverage, and claims. Mr. Hecht, they have gather data about the effects of Climate Change on one type of home insurance. Would it be helpful if the administration gathered data of more types of insurance like Flood Insurance and more categories of information like the reasons for all of the cancellations . Dr. Kaniewski as 8 mr. Hecht as a homeowner, you are looking at the cost of insurance so the answer is yes. Good data is power. Sen. Warren we are in the same place, i always want more information. We have to understand the problem in order to fix the problem. The Biden Administration should finalize its data call about the effects of Climate Change on the Insurance Market as soon as possible and the administration should collect all of the data necessary to understand our gaps in Insurance Coverage and outline the correct regulatory responses. Thank you for being with us today. Sen. Brown i want to go back to your talk, mayor patterson, about what you did in athens. I was a sophomore in high school and i remember that flood, the first time i thought about something happening relatively close to home. Talk about opportunities beyond what you did to create collaborations between you and other communities. The university is relatively big in a small town and has a big impact, 95 percent positive impact. Comment on that. Hon. Patterson we are blessed we have the university and the regional campus. They have a strong mapping arm so that school itself is a resource that has been available. They play well with us to scrape the data necessary for us to understand the flood risk as well as understand those with the greatest need when it comes to the impacts of flooding in our region. They have been a great partner. Having a volunteer workforce of the 19,000 students at Ohio University, they take part in the treeplanting spirit replanted over the past eight years more than 411 trees along the river and inland, not only to protect us and mitigate flooding issues, but our decolonization mission in athens which is strong Decarbonization Mission in athens which is strong. They are engaged in that effort as well. For me to have the ability, it does not hurt that i taught at Ohio University, i the schools and the departments to go to to use those resources. We are using them now in the cities of zanesville, saint clairsville, where there are regional campuses. It has become a multiplier to have access to these resources where the capacity in some of these smaller cities and villages to be able to get this work done is insurmountable. They are thinking about someone to have the snowplow. Sen. Brown few campuses have the reputation of activism as yours does. I introduced a bill, the neighborhood to react to plant more trees. I was informed that my thinking was about a book i read some time ago called urban trees. One of the things this book pointed out was an aerial picture of Los Angeles County sure that Beverly Hills was 55 recovered and southcentral was Something Like 13 . I was informed by the work you did because of the Hocking River flooding. This legislation can make a difference and helping in a significant way in some communities. Mr. Hecht, let me go to you for a moment. Reports of paying back debts from disasters will have to pay nearly 8 billion in debt interest over the next 10 years. In 2017, we forgave 16 million following hurricane harvey. I am gradually sure that you agree that forgiveness is important. Would you like to comment on the benefit of using resources for other things for things other than interest . Mr. Hecht i agree with the dr. That if we can use those funds to invest in mitigation at the community level, providing for better roofs or other bidding homes, we are going to reduce our exposure over time. If you think about exposure and cost, like net present value, it will improve our stock price by making these investments today. It does not seem like it is wise to pay back the treasury when that money could be going back to reduce costs to the treasury over time. Sen. Brown mr. Kaniewski, i know you played a role in that at fema. Back to the mayor. We have her support for investments in mitigation. Talk about the barriers in smaller communities, not just appalachia but other places where they are likely to have Natural Disasters. Talk about the barriers to accessing resources and managing floodplains and other Natural Disaster preparation. Hon. Patterson as i mentioned earlier, a lot has to do with the capacity. Some of the barriers become education. I look at my colleagues across the nation who come from small cities, villages. A lot of them dont know where to turn to seek insurance. A lot of them dont know about the funding. There is a disconnect in smaller cities and villages. Thank you for your work on ssi and ssdi. Individuals living on fixed incomes from a financial standpoint, being from a county will be having a lot of people on fixed incomes, upping them understand how they can access insurance if at all possible, it becomes an issue. Sen. Brown senator cortez masto is recognized. Sen. Cortez masto flood looks different in the desert and we have issues of heavy rain and flash floods, natural drainage and the thought of winter snow thaw of winter snow. The questions i have are on inland strategies. The department of Homeland Security created proposals to one of those was a recommendation that the agency, fema, differentiate between coastal and internet locations when determining premium rates. Would you agree with that . Mr. Hecht to the that differentiation allows for granularity and people have appropriate coverage. Sen. Cortez masto does anybody disagree with that . Thank you. Dr. Kaniewski, unfortunately we are seeing a lot of wildfires in the west. That literally has an impact after the fire on the geography. When rain comes, then we see horrific flooding. Have they made any changes to maps or policies when it comes to devastating fires . We all have this concern that there is a challenge after a fire that we dont get mitigation dollars for. We are unable to address when that is the worst flooding that can occur. Dr. Kaniewski i agree this is a risk many are unaware of and it adds additional painandsuffering. It makes sense to mitigate flood risk, whether it before or after that fire, to prevent anything like a landslide. It affects living organisms, including those that can prevent aggressive and future wildfires. It is a disaster onto another disaster. Sen. Cortez masto that is something i hope we tried to address any levels, throughout the west and anybody who has these devastating wildfires. There has to be appropriate remediation. Thank you for being here. One of the challenges in nevada is Affordable Housing. I suspect it is a challenge of yours. What are some strategies you are dealing with to enable Affordable Housing developments to remain operational when insurance costs increase by 20 or more . Hon. Patterson it is a national problem. It is an issue the National League of cities has taken up. One of the things i have been working hard on is there are levers that america can pool to help with Affordable Housing being developed. We can use things like incremental financing for Neighborhood Revitalization which is a 75 capture of the new evaluation of houses that are renovated or new housing that goes in, and use that to help pay for the infrastructure that has to go in place to support those homes, whether it is a used resurface or water sewers, storm. We have been using that to some effect. There are also some programs that are for developers who want to build more housing with the tax credit we are encouraging them to use. The other thing we have been looking at, and there is a challenge here, looking at housing within our community. We are fortunate that we are fortunate to get light tech projects to create Workforce Housing units. Yet unfortunate part with that is we are told there is a 4 light tech that was going to create a 36 Senior Housing units in athens. The gap is too large for the developer to come in and cover that gap. They did come and ask if we had 1. 5 minute dollars somewhere to fill that gap. If i had it, i would consider it predicated upon city council. It is those gaps that become a challenge. There are a lot of financial gaps we are experiencing when it comes to Affordable Housing. We are doing the best we can. Sen. Cortez masto that is what i hear in my community. That is why i have to thank richard and because his focus is on how we address Affordable Housing. There are other ways we can figure out how we cobble together the financing to keep the cost low. There is legislation that he is supporting and i think we need to get it done. This is bipartisan, we should be focused on how we address communities like yours to have a roof over their head. Thank you. Sen. Brown i liked how you said predicated on city council. Well said. We dont have a lot of elected officials at this table. Last week we had jellyroll who is not an elected official. This was a very good hearing. Thanks for the way you explained this very complicated issue, this body for years has not been able to work its way through. It is not a partisan issue. Almost half of this committee represents a coastal state and deals with this, but so does nevada. Thanks for being here. For senators who wish to submit questions, they are due one week from today. Witnesses, you have 45 days to respond to any questions. The hearing is adjourned. [indiscernable chatter] [indiscernable chatter]