Review draconian federal flood insurance act

November 10, 2013 

As a Longboat Key resident, Congressman Vern Buchanan literally stands at the front lines of the battle against rising flood insurance premiums. The poorly designed 2012 Biggert-Waters Flood Insurance Reform Act passed with little forethought about its impact on property values and the real estate industry as legislators put a priority on rebuilding the federal insurance program rendered insolvent by Hurricane Katrina.

But with October's implementation of the act, the crippling impact came into sharp focus.

On Friday, Buchanan held a roundtable discussion about bipartisan efforts to slow the devastating increases in policies from the National Flood Insurance Program.

Among many, one alarming comment came from Bradenton Mayor Wayne Poston: "It's a critical issue for us. People are scared to death." Poston also noted that investors are abandoning possible real estate purchases over the crippling insurance rate increases.

Sen. Bill Nelson has also been a very vocal proponent of delaying full implementation of Biggert-Waters. The patently unfair law yanks the rug out from under Florida property owners in particular.

With 2 million flood insurance policies, Florida holds the high water mark in the nation -- not surprising given the vast coastline of this flat and flood-prone peninsula. But surprisingly, too, is the fact that this state's NFIP policy-holders dole out far more than returned in benefits, as Herald business reporter Charles Schelle has reported.

Louisiana, New Jersey, New York and Texas ranked ahead of Florida in claims -- by a significant margin. Floridians paid some $16 billion in premiums over the past 30 years, but claimed only $3.7 billion -- and this includes years with terrible hurricane damage.

Biggert-Waters is punishing property owners for federal payments to cover Hurricane Katrina, in effect a panic response to $18 billion in losses to the national budget.

The idea behind the legislation is sound: to make the program solvent. But implementation boomeranged by eliminating subsidies on older homes on the real estate market, instantly after a home sale. With new flood maps determining flood risk -- think low-lying areas far from the coast -- those homes and others are now difficult commodities to sell.

Even current owners of subsidized older homes are being hit with huge premium hikes, with one, as Schelle reported, finding an insurance bill skyrocketing from $914 annually to $6,500. Manatee County has the 10th highest number of subsidized policies in Florida with more than 11,000. With some 28,700 unsubsidized policies, other Manatee property owners are exposed to big rate increases as well.

Congressional legislation to postpone the NFIP rate increases exists in both the House and Senate -- a retroactive delay until the federal government can fully analyze the impact of Biggert-Waters. Though well intended to fix artificially low flood insurance policies and bring sustainability to a national program, the unintended consequences are too severe.

The nation needs a more reasonable and balanced response to flood insurance, and an in-depth study of the impact of Biggert-Waters is a sound approach to revisiting this law.

A bipartisan measure to ensure this -- like those coming from Buchanan and Nelson -- is vital, else the real estate market in Florida and elsewhere literally sinks.

Bradenton Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service