Bill Overview
Title: Increased Cost of Compliance Modernization Act of 2022
Description: This bill increases insurance coverage available to structures in high-risk flood areas under the National Flood Insurance Program (NFIP), commonly known as Increased Cost of Compliance (ICC) coverage. ICC coverage applies to costs related to flood mitigation requirements for repairs to, or the rebuilding of, flood-damaged structures with existing NFIP coverage. Currently, ICC coverage is capped at $30,000. The bill increases this amount to 20% of the maximum amount of flood insurance coverage (currently $50,000) with additional coverage available of up to 40% of the maximum amount of coverage (currently $100,000). The bill removes the cap on ICC premiums and requires the premium amount to be calculated pursuant to other NFIP rates. Additionally, ICC coverage does not count towards the cap on overall NFIP coverage. Finally, ICC policyholders are allowed to assign the rights or benefits of this coverage to a governmental agency to satisfy certain cost-sharing requirements applicable to mitigation assistance programs.
Sponsors: Rep. Rice, Tom [R-SC-7]
Target Audience
Population: Individuals owning property in high-risk flood areas
Estimated Size: 4000000
- The bill specifically targets structures in high-risk flood areas, which implies communities in regions prone to flooding like coastal and river areas.
- With the National Flood Insurance Program involved, the bill directly impacts property owners who have federal flood insurance.
- The higher ICC coverage can affect both residential and commercial property owners who need to comply with flood mitigation requirements.
- By allowing policyholders to assign benefits to governmental agencies, local governments and municipalities may also be indirectly impacted.
- Flood zones are prevalent in various parts of the world, thus the bill has potential implications for homeowners globally.
Reasoning
- The policy increases insurance coverage for high-risk flood areas, which primarily benefits individuals owning property in flood-prone regions.
- The policy's direct beneficiaries include property owners with existing NFIP policies, which is estimated to be around 4 million in the U.S.
- Budget constraints of $1.5 billion in year 1 and $13.675 billion over 10 years limit the policy's reach to primarily the most affected areas.
- We need to simulate individuals from various backgrounds—some heavily impacted, some moderately, and some not at all—to get a comprehensive view of the policy's effect.
- To properly capture different perspectives, it's crucial to include a mix of property types, locations, and socio-economic backgrounds.
Simulated Interviews
Restaurant Owner (New Orleans, Louisiana)
Age: 52 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- The increased ICC coverage will offer me more security when rebuilding after floods.
- Assigning rights to governmental agencies is beneficial for community-based projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 7 | 4 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Real Estate Agent (Miami, Florida)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- This policy may help stabilize property values in flood risk areas.
- The increased coverage could attract more buyers knowing there's better protection.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Retired Engineer (Newark, New Jersey)
Age: 65 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- As someone on a fixed income, higher premiums could be challenging.
- The increased coverage provides peace of mind if disasters strike.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 5 |
Software Developer (Houston, Texas)
Age: 28 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 2.0 years
Commonness: 17/20
Statement of Opinion:
- The policy doesn't directly impact me, but I see its value for community resilience.
- I think it's important for our city’s flood mitigation planning.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Construction Worker (Charleston, South Carolina)
Age: 43 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 14/20
Statement of Opinion:
- More work will likely be available with increased coverage for flood recovery projects.
- This policy may not significantly change my daily life, but it impacts my job stability during flood events.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
School Teacher (Biloxi, Mississippi)
Age: 60 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 13/20
Statement of Opinion:
- The increased ICC coverage means fewer out-of-pocket expenses after floods.
- Assigning coverage benefits to local agencies can help with large-scale projects.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Insurance Broker (Phoenix, Arizona)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 18/20
Statement of Opinion:
- This policy could boost interest and sales in flood insurance products.
- I foresee more clients being drawn to NFIP policies due to increased benefits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
NGO Worker (Wilmington, North Carolina)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- The policy will help alleviate some community level burdens post-disaster.
- I am concerned about equitable access to increased coverage.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Fisherman (Galveston, Texas)
Age: 40 | Gender: other
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- This policy could help stabilize the community during recovery phases.
- The success of the policy greatly depends on actual implementation and community support.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 7 | 4 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Retired School Principal (Trenton, New Jersey)
Age: 72 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 20/20
Statement of Opinion:
- I am personally unaffected, but my children who live in flood-prone areas might benefit.
- The higher costs of compliance should be balanced with the tangible benefits.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Cost Estimates
Year 1: $1500000000 (Low: $1000000000, High: $2000000000)
Year 2: $1450000000 (Low: $1000000000, High: $1900000000)
Year 3: $1400000000 (Low: $950000000, High: $1850000000)
Year 5: $1350000000 (Low: $900000000, High: $1800000000)
Year 10: $1300000000 (Low: $850000000, High: $1750000000)
Year 100: $1000000000 (Low: $500000000, High: $1500000000)
Key Considerations
- The bill significantly alters the financial architecture of the NFIP increasing payouts, which could impact its solvency.
- Population engagement in high-risk areas is a critical factor; the impact depends heavily on how many properties opt for higher coverage.
- The local government benefits and their stipulations of flood mitigation efforts are vital to realizing long-term savings.