Fix the disastrous national flood insurance rate hikes

January 2, 2014 

Before adjourning for the holidays, Congress failed to slow down implementation of a new law that threatens to cripple a large part of Florida's real estate market -- an unintended consequence of an overly ambitious solution to the deep indebtedness of the federal National Flood Insurance Program. But the state Legislature now has a well-intended proposal to reduce the damage by inviting the private insurance market to offer less expensive flood insurance.

Once again, we encourage two of Florida's congressional delegation -- Rep. Vern Buchanan, R-Sarasota, and Sen. Bill Nelson -- to push even harder on legislation that will soften the blow of the draconian 2012 Biggert-Waters Act. Both have been working diligently on a homeowner and real estate market rescue.

One proposal would delay changes for four years while studies are conducted on rate affordability and new flood map accuracy -- legislation stymied by opponents bent on ending subsidized insurance rates.

Homebuyers are balking at purchases of older homes because those subsidies would end upon closing. The situation will worsen in 2014 with implementation of other Biggert-Waters mandates.

While we agree subsidized rates must be moderated, this should not come all at once and leave some homeowners with annual rate increases ranging from $2,000 to $10,000 or more. Some policyholders in flood zones will be hit with about 20 percent premium increases annually until reaching the appropriate market risk. Some owners are caught with unsalable properties and unaffordable flood insurance, with foreclosures feared.

Florida already owns the dreadful distinction of being the state with the most expensive homeowners insurance rates in the nation with an average annual premium of $1,993. That's almost twice the national average in a state highly vulnerable to hurricanes, though none have made landfall since 2005.

The Sunshine State is also home to the largest number of property owners holding subsidized policies in the National Flood Insurance Program. Plus, 40 percent of all federal flood policies are in Florida.

Strangely enough, Florida property owners have paid four times more into the NFIP in premiums that the money collected on claims. Yet Floridians are being hammered with huge premium increases under Biggert-Waters.

Meanwhile, a measure in Florida's Senate holds some hope but no guarantees. The bill is designed to create a regulatory system for flood insurance that would spur private insurers to join the market.

Three Bradenton legislators -- Sen. Bill Galvano and Reps. Jim Boyd and Greg Steube -- have expressed support for a potential state solution. "Unfortunately, it seems we cannot count on the federal government with regards to this issue," Galvano recently stated in a report published in the Herald, "and if something isn't done, the impact will be tremendously negative for Florida."

But there are several signs that Congress could intercede in January with momentum building in both the House and Senate as lawmakers from coastal states and flood-prone regions unite.

Yet Florida cannot afford to gamble on a Congress known more for gridlock than legislation. The state is pursuing a prudent course of action by turning to private carriers.

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