Amid growing fears that hundreds of thousands of coastal homeowners could face drastic premium increases under a federal flood insurance reform law that is gradually taking effect, Florida Sen. Bill Nelson on Friday called for the government to delay rate hikes for consumers for at least a year.
While new federal rating guidelines show more modest premium increases than anticipated for some properties, worst-case scenario spikes are up to 3,000 percent, according to Louisiana officials who have organized a multi-state coalition to fend off the Biggert-Waters Flood Insurance Reform Act of 2012.
"It really confirmed everybody's worst fears because (the Federal Emer
gency Management Agency) improved the rates by 50 percent and they're still utterly unaffordable," said Michael Hecht, CEO of Greater New Orleans Inc., an economic development organization leading the coalition.
Locally, the Bay Area Houston Economic Partnership has joined the effort.
Overwhelmingly passed by Congress last year, Biggert-Waters aims to stabilize the insolvent National Flood Insurance Program by phasing out subsidized flood insurance rates, increasing them by 20 percent to 25 percent a year until they cover true flood risk. The subsidies are set to expire Oct. 1.
Nelson said he wants the U.S. Senate's Banking Committee to explore other possible ways to reform the nation's flood insurance program.
"I'm not opposed to making the flood insurance program more financially stable, but it won't do much good if it turns out folks cannot afford the coverage," the Democrat wrote in a letter he sent to the chairman of the Banking Committee on Friday.
As Congress convenes this week, officials are hoping for passage of a bill carried by Louisiana lawmakers to delay implementation of a section of Biggert-Waters that would abolish subsidies for all policies when they are next renewed. The bill has passed the House and its supporters hope the Senate will approve it this fall.
Nelson wrote he supports a legislative initiative "aimed at delaying the rate increases for at least a year as we gather more information about how many folks are affected and by how much."
"A key mission of the flood insurance program is to encourage Americans to purchase flood insurance and for the insurance to be affordable," he wrote. "But many homeowners in Florida are concerned that the insurance rate increases scheduled to go into effect this year will make it impossible for them to sell their homes or pay the premiums. This is an impossible choice for most Americans.
-- Information from the Houston Chronicle was used in this report.