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No solution in sight for Biggert-Waters flood insurance rates p2

We are discussing the various efforts under way to address the flood insurance rate hikes brought about with the implementation of the Biggert-Waters Flood Insurance Reform Act of 2012. In our last post, we talked about a couple of proposals in Congress, neither of which, it seems, will pass before the end of the year.

We touched on bills in the Florida State Legislature, as well. The chances of any of those passing before 2014 are very slim.

One idea that is not quite a bill yet has surfaced that could gain ground after the holidays. The proposal is for homeowners associations or similar groups of homeowners to form risk pools.

Remember, insurance is all about shared risk. Group health insurance, for example, is generally less expensive than individual coverage, because the risk is spread out over a larger population. The idea here would be to allow groups like homeowners associations to make the same kind of "bulk" buy with flood insurance. Combining high-risk properties with lower-risk properties would balance out the potential cost to the insurance company, and that would mean lower premiums for the homeowners.

While lawmakers work to find an answer, the state is also involved with the lawsuit filed by the Mississippi Department of Insurance against the federal government. The suit seeks to stay the rate increases until the affordability study mandated by the Biggert-Waters Act is completed. Florida and other Gulf Coast states have submitted briefs supporting Mississippi's position.

For Florida Senate leader Don Gaetz, the least attractive alternative would be a state-backed flood insurance program. The state created Citizens Property Insurance Corp. during a homeowners insurance crisis that looked a lot like the current situation with flood insurance. For Gaetz, though, the idea is a non-starter: Citizens has been the source of insurance battle fatigue for the past few years.

Source: The Ledger, "Legislation in Pipeline To Offset National Flood Insurance Hike," Jim Turner, Dec. 13, 2013

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