A bipartisan group of lawmakers from both the House and the Senate announced last week that they have introduced a bill to provide relief to homeowners whose flood insurance rates skyrocketed on Oct. 1. The rate increases were part of the 2012 Biggert-Waters Flood Insurance Reform Act, so they were not unexpected. What surprised homeowners was just how steep those increases turned out to be.
Biggert-Waters called for the Federal Emergency Management Agency to come up with actuarially sound flood insurance rates. The goal was to put the risk where the risk belongs: on properties built on coastlines and rivers, particularly in areas like Florida that have a history of major storms. Older homes, too, would pay more, because they are more vulnerable to storm damage.
There were a few different parts to “fixing” the premiums. FEMA completed one step by updating its flood maps, but the agency was calculating the new rates at the same time. FEMA also has to phase out flood insurance subsidies that have been in place for a long time. For the most part, the subsidies have gone to homes built in the high-risk areas before the federal government drew up the original flood maps and before local governments updated building codes.
On the surface, it would make sense that consumer advocates would be in favor of those subsidies, but that has not always been the case. The subsidies do not help the middle or lower classes, the homeowners who struggle to pay the premiums for the mandatory insurance coverage, critics say. The subsidies go to the wealthier homeowners who have built their vacation homes in flood-prone areas.
The proposed bill will benefit those wealthy snow birds, said one organization that supports leaving Biggert-Waters alone. The think tank argues that the delay is pretty much a gift to the wealthy from the rest of the taxpayers.
In September, though, FEMA had told a Senate hearing that the rates set under Biggert-Waters fell on middle-class homeowners who had not been the victims of flooding in the past. Lawmakers reiterated the finding when they announced the new bill.
Florida has a lot at stake here. According to Sen. Bill Nelson’s office, 40 percent of all flood insurance policies in the country cover property in this state.
Source: Reuters, “Bipartisan deal in Congress to delay flood insurance hike: sources,” David Adams, Oct. 28, 2013Tampa Bay Times, “Flood insurance relief bill introduced with Florida lawmakers’ support,” Alex Leary, Oct. 29, 2013Share