Newly Passed House Bill Will Avert Flood Insurance Disaster

A statement from Susan Savage, 2017 president of the Hawai‘i Association of REALTORS®

In April 2016, the Federal Emergency Management Agency (FEMA) sent a letter warning the State of Hawaii that they will suspend Hawaii’s participation from the National Flood Insurance Program (NFIP) because of Act 203, which exempts agricultural structures from building permits. FEMA requires permits for all construction. In their letter, they stated, “Failure to address this compliance problem by July 31, 2017, will force FEMA to initiate suspension procedures for the State and all Hawaii communities that participate in the NFIP.”

What many people do not know is that all properties are at some risk for flooding. In 1968, Congress established the NFIP, which enables homeowners, business owners, and renters in participating communities, such as Hawaii, to purchase federally backed flood insurance. This potential suspension would have negatively affected existing policies in Hawaii and would adversely affect new policies as required by mortgages.

Hawaii currently has 60,000 flood insurance policies totaling in over $13.2 billion in flood insurance covered by these NFIP insurance policies, which were vulnerable to cancellation from FEMA’s suspension warning. For the past four decades, Hawaii benefited from nearly 4,600 claims paid, totaling over $87 million. It is estimated that Federal Disaster Assistance made available to the State of Hawaii since 1980 provided under the NFIP, has totaled over $400 million following Hurricanes Iwa, Iniki, Tropical Storm Iselle, the magnitude 6.7 Kiholo Earthquake, and various severe storms, tsunamis, earthquakes, volcanic activity, and flooding. Furthermore, FEMA’s letter threatened that all Federal agencies will also be prohibited from making grants, loans, or guarantees for the acquisition or construction of structures, including assistance from the Federal Housing Administration, Veterans Administration, and the Small Business Administration, among others, if the State of Hawaii was suspended from the NFIP.

This year, efforts were initiated by Representative Ryan I. Yamane (Mililani, Waipio Gentry, Waikele), with the support of FEMA Region IX, the Hawaii State Legislature, the Engineering Division of the Department of Land and Natural Resources, Hawaii’s four counties, the Hawaii Association of Realtors, the Hawaii Farm Bureau, and Hawaii’s insurers, banks, and builders to address this federal warning. Thanks to this partnership, the State of Hawaii was able to pass House Bill 1418 to clarify our state building laws and avert a disaster in our federal flood insurance coverage.

With the passage of House Bill 1418, Hawaii’s property owners can trust that their NFIP federal flood insurance will be protected and remain in place. We would like to express our appreciation and thanks to everyone involved in the support and passage of House Bill 1418.

As REALTORS®, we are committed to staying informed and advocating when necessary for our communities.