New Jersey lawmakers take aim at flood insurance rate hikes. Here’s why

New Jersey lawmakers take aim at flood insurance rate hikes. Here’s why / July 11, 2023 / Asbury Park Press

By Amanda Oglesby

SEA BRIGHT — Facing skyrocketing rate hikes and more homeowners dropping flood insurance coverage, a group of New Jersey lawmakers are pressing Congress to pass a bill that aims to improve the program that insures millions of flood-prone properties across the nation.

U.S. Sen. Bob Menendez and U.S. Rep. Frank Pallone Jr. met with local leaders Monday for a news conference by the beach in Sea Bright to push for the passage of the National Flood Insurance Program Reauthorization, or “NFIP-RE,” Act of 2023.

Here in Sea Bright, Superstorm Sandy destroyed homes and businesses more than a decade ago. The National Flood Insurance Program helped to rebuild this community and others like it along the Jersey Shore, but now elected officials say rising costs for flood insurance and problems with participating private insurance companies are driving policyholders out of the program.

About 100,000 policyholders across the nation have dropped coverage through the National Flood Insurance Program over the past year, according to Pallone and Menendez.


A similar trend is happening in New Jersey. In the year after Sandy, nearly 290,000 Garden State properties were covered by the program, according to data collected by Rutgers University and the New Jersey Climate Change Resource Center.

By 2018, coverage across the state dropped to under 250,000 properties, according to the university’s analysis.

Yet, flood insurance is a “critical lifeline” for New Jersey property owners, particularly as they face threats from climate change and inflation, Menendez said during the news conference in Sea Bright.

“Up and down the Jersey Shore and in low lying areas of our state, climate change is a reality that is already here,” the senator said. “Stronger and more frequent storms, together with rising seas, pose an enormous risk to the wellbeing of our state.”

At the same time a new rate calculation by the Federal Emergency Management Agency, or FEMA, which oversees the National Flood Insurance Program, led to rate hikes of as much as 18% annually, Menendez said.

“In many places, the new costs will be as high as two, three, or even four times the amount of their prior rate,” he said. “Here in Sea Bright for example, the average premium goes from $1,132 to $2,423. Just up the road in Keansburg, the average premium more than triples from $1000 to $3500.

He added: “That’s a nonstarter at a time when families are still struggling with the high cost of living, and when we need to do everything we can to encourage homeowners to sign up for the program.”

The re-authorization bill supported by Menendez and Pallone would cap rate hikes to no more than 9% annually and enable the rate formula to consider neighborhood-scale projects that protect homes from floods, such as sea walls and pump stations. Currently, those protections are not included in the formula, said Pallone.


The new flood insurance bill would also give vouchers to low-income homeowners who cannot afford flood insurance, direct more money toward flood prevention projects, and create more oversight for private insurers that participated in the program but underpaid policyholders who filed claims, Pallone said.

“It’s long overdue to have reform of the NFIP (National Flood Insurance Program),” said Paul Jeffrey, a resident of the Ortley Beach section of Toms River, which was severely damaged in Sandy, and a leader of the New Jersey Organizing Project. The group represents the state’s flood victims who have struggled to collect insurance and rebuilding money.

“We experienced terrible issues with the insurance companies denying claims, saying certain things shouldn’t be covered, they altered records, (made) claims of foundation damage that weren’t true, and on and on and on,” he said. “We need this oversight.”


Mitigating future storm damage is another essential piece of the legislation, Jeffrey said.

“These storms are going to keep coming,” he said. “Everybody says ‘Oh, Superstorm Sandy isn’t going to happen again.’ Something like it is going to happen again… Climate change is happening. The storms are getting more frequent. And we are going to need this this money for recovery.”

Whether other Washington lawmakers will support the flood insurance reforms remains to be seen. In November, 2022, FEMA reported the National Flood Insurance Program owed $20.5 billion in loans to the U.S. Treasury. Last year, the program paid more than $280 million in interest on that debt, according to the agency.

“In recent decades, weather patterns have increased flood risk to an extent that was unimaginable at the NFIP’s inception, over fifty years ago,” officials wrote on the agency’s website.

In 2012, Superstorm Sandy lead to $11.1 billion in damages across the country, according to FEMA. Since 2005, the program has run at a financial loss, the agency said.

“The program must institute a sound financial framework that allows it to balance affordability and fiscal soundness,” FEMA officials wrote. “Without this, the NFIP’s longevity and sustainability are at risk.”

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