Congressman Vern Buchanan files bipartisan bill to delay flood insurance hikes

Delay would push rate increases until March 1, 2015

cschelle@bradenton.comDecember 12, 2013 

WASHINGTON -- Rep. Vern Buchanan, R-Sarasota, filed legislation Wednesday aimed at delaying the effects of potentially astronomical flood insurance increases.

The House bill, dubbed the Flood Insurance Relief and Transparency Act of 2013, aims to delay rate increases until March 1, 2015, and ensures an affordability study is completed by the Federal Emergency Management Agency by Oct. 1.

The bill is designed to benefit policyholders affected by section 207 of the Biggert-Waters Flood Insurance Reform Act of 2012, which triggered large increases last Oct. 1 for most flood insurance policyholders. Congress sought to eliminate subsidies in the National Flood Insurance Program as it faced $24 billion in debt after paying for hurricanes Katrina and Rita and Superstorm Sandy.

"Hundreds of thousands of Floridians are experiencing untenable rate increases that threaten to wash away property values and push people out of their homes," said Buchanan, who co-chairs Florida's congressional delegation with Rep. Alcee Hastings, D-Fort Lauderdale. "This bill is an important first step toward combating these rate hikes while invalidating FEMA's excuse for failing to conduct an affordability study."

If the bill is passed, primary homeowners would benefit from the rate delay affecting about 1.4 million Floridians, according to the bill, while vacation homeowners would continue to pay the new rates.

The bill is being fast-tracked. It is also sponsored by Rep. Bill Cassidy, a Republican from Louisiana, and Hastings. Buchanan hosted a public forum Tuesday at New College of Florida to answer questions from residents about the pending increases. He promptly left on plane for Washington, D.C., where he spent time with lawmakers to pick up co-sponsors, and is continuing to find more support for the bill.

The bill, considered a suspension bill, would require two-thirds vote by the House to pass. Congress has attempted to delay the rates before through amendments to other bills, but those efforts failed.

In the Senate Wednesday, Sen. Bill Nelson, D-Fla., and a bipartisan group of lawmakers tried to fast-track a bill to address the soaring rate hikes, but the move was rejected, according to several Washington reports.

"This is no-fooling time," Nelson said. "I beg the Senate to let this legislation go by unanimous consent."

But Sen. Pat Roberts, R-Kan., objected, saying the bill had still not cleared the Banking Committee.

A string of lawmakers, from a range of states, appeared on the floor to call attention to the issue -- and to send a signal to angry constituents they are working on it.

"We are down to the wire here," Sen. Mary Landrieu, D-La., said.

The Senate bill, like Buchanan's bill, is intended to roll back any rate increases until FEMA completes an affordability study.

After his bill was blocked, however, Nelson learned that Buchanan had just introduced the House bill. Nelson issued a statement that it might give the Senate another chance to take up the issue next week.

The latest round of increases took effect Oct. 1, in some instances raising policies by thousands of dollars for homes in special flood hazard areas. The latest rate increases when policies renew cause homes built below base flood-line elevation, and before Dec. 31, 1974, when the first flood maps were made, to experience the greatest increases. The Bradenton Herald has documented homeowner increases of up to 600 percent in the Bradenton area.

The highest increases locally are in Cortez, Anna Maria, northwest Bradenton and along Manatee River and Ware's Creek.

John van Zandt with Island Real Estate of Anna Maria Island said he fears the effects of the rate increases on the local housing market, especially for homes built before the first flood insurance rate maps in 1974, also called pre-FIRM.

"Owners of pre-FIRM properties are afraid their rates are going to go to such a point that they can no longer afford to stay. Typically, those are older people on fixed incomes," van Zandt said. "If over a period of time their rates go up 20 percent a year to whatever the actuarial rate is, they may be driven from their homes."

Monthly payment plans might help some policyholders. Biggert-Waters has a provision to allow monthly payment plans instead of paying off the policy in one lump sum. But FEMA has not issued guidance on how that would be structured, said David Thompson, training educator for the Florida Association of Insurance Agents.

In Buchanan's bill, the payment system is further defined. The bill would cap the first payment at no less than 1/12 of the annual premium as the down payment, then 11 equal remaining monthly payments. It allows for automatic withdrawals and contains provisions for missed payments.

Florida has the most flood insurance policyholders at more than 2 million, and since 1978 has the second-most claims in the program at 240,374. It ranks fifth in total payments at $3.7 billion, behind Louisiana, New Jersey, New York and Texas, according to FEMA. Manatee County has the 10th-most subsidized policies in the state -- based on estimated risk versus cost -- with 11,264 policies, according to FEMA.

In Manatee County, the flood insurance program paid out $27.1 million in claims from Jan. 1, 1978, through July 31 for 3,084 losses, according to FEMA. More than 1,200 claims were rejected, according to FEMA.

Homeowners wouldn't be absolved of all increases. Regular annual rate increases are still allowed, and Manatee County rates could change for some homeowners as new flood rate maps take effect March 17.

Charles Schelle, business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck.

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