Bank president addresses revised flood insurance law

Perhaps nowhere in Lycoming County were rising costs in flood insurance rates felt more severely than in Muncy.

And so, when Muncy Bank & Trust President Dan Berninger heard homeowners and businesspeople tell him they simply could not afford to pay suddenly skyrocketing premiums, he knew there was a potentially devastating financial problem that could reverberate throughout the community.

“This flood issue kind of blind-sided a lot of people,” he told the members of the Lycoming-Sullivan Boroughs Association Wednesday.

Passed by Congress two years ago, the Biggert-Waters Flood Insurance Act of 2012 was seen as a means of bringing solvency to the federal government’s emergency flood fund.

But property owners faced with large premium rate increases under the legislation made it clear that they couldn’t afford to foot the bill.

And in places such as Muncy, where about 40 percent of properties are in flood areas, it affected a lot of people, Berninger noted.

As a lending institution, the bank holds mortgages on many of the homes and businesses in the borough, as well as in other communities such as Montgomery and other surrounding communities with properties in flood areas.

Berninger noted that Biggert-Waters meant significant changes for banks.

He said he first began to see the impact of the law in November when a Muncy resident informed him his premium rates had significantly increased.

“I don’t think the government thought about the effect on communities when Biggert-Waters was passed,” Berninger said.

But it was clear early on, that the impact would be devastating.

Berninger said he and other bankers urged customers to call their federal and state lawmakers to see what could be done about the law.

“Eventually, our legislators got on board,” he said.

He said it was a special forum held at Pennsylvania College of Technology late in 2013 calling for a repeal of Biggert-Waters that got many people really involved.

Berninger later spoke out the law before state legislative committees.

Meanwhile, many other communities in floodprone areas across the nation were vocal about overturning Biggert-Waters.

Thankfully, Bigger-Waters has been repealed, although the new law is far from perfect, according to Berninger.

The Homeowners Flood Insurance Affordability Act limits flood insurance premiums increases to 18 percent a year. In addition, it reinstates the flood insurance program’s grandfathering provision, meaning that homes that complied with previous flood maps would not be hit with large increases when new maps show a greater risk of flooding.

The bill, passed earlier this month by both Houses of Congress, was supported by hundreds of groups, including bankers, realtors and mortgage brokers.

“This bill is by no means perfect,” Berninger said.

Perhaps the biggest problem with the law is that it fails to help commercial property owners.

Berninger noted that restaurants in Muncy, for example, all are in flood zones.

“No way are they going to be able to cover these huge increases,” he said.

What it hopefully will do, he added, is give Congress a chance to eventually come up with a law that’s even better.