No surprise here: With the soaring rates on federal flood insurance policies for homeowners brave enough to live in vulnerable zones, people without mortgages and lender requirements are bailing out of the system. Florida ranks as the state with the most flood policies, small wonder given the vast shoreline and hurricane history.
So around 300,000 policy-holders abandoned coverage this fall compared with 2009, the vast majority of the 400,000 property owners nationwide who said enough is enough on rate hikes geared to pay for past losses from Superstorm Sandy, Hurricane Katrina and other losses -- about $23 billion in all. Congress passed on these costs and even added surcharges in the hopes of bringing the National Flood Insurance Program out of debt. Simply put, that backfired.
Consumer confidence plunged, especially with the steep surcharge for second homes -- like those imposed on our snowbird friends and neighbors -- that is way above the cost for primary homes.
The Biggert-Waters Act of 2012, the law that produced these real-estate market crippling charges, passed Congress with bipartisan support blind to the unintended consequences.
A subsequent 2014 rewrite of the act capped the cost on primary homes but not secondary ones. The act needs additional reforms.
Florida was wise to pass legislation that promotes private insurers to enter the flood policy market, but that system has only gained a few thousand clients.