View this article online: https://www.insurancejournal.com/news/national/2013/10/02/307021.htm
A bipartisan proposal to delay federal flood insurance rate hikes that took effect Tuesday is being stymied by a bitter congressional dispute over President Barack Obama’s signature health care law, Sen. Bill Nelson said.
Nelson, D-Fla., along with U.S. Sens. Robert Menendez, D-N.J.; David Vitter, R-La.; Mary Landrieu, D-La.; Elizabeth Warren, D-Mass.; and Brian Schatz, D-Hawaii, sponsored legislation last week to delay implementation of the Biggert-Waters Flood Insurance Reform Act until next year.
The rate hikes were passed in 2012 to keep the National Flood Insurance Program solvent after an onslaught of claims from Hurricane Katrina in 2005. Essentially, what it does is remove federal subsidies from properties in flood zones.
“My legislation to fix this is being blocked right now by partisan politics and those who continue to oppose the existing health care law,” Nelson wrote in an email to The Associated Press. “So what we’re trying to do is to get bipartisan support to join us to pass a clean bill as soon as we can delay those rate increases.”
Florida has among the highest rates of people covered by subsidized flood insurance, and Pinellas County, which includes St. Petersburg, has more subsidized policies than any other county in the nation.
Everyone from Florida Gov. Rick Scott to real estate agents and insurance agents say the rate increases have the potential to destabilize a real estate market that was just beginning to recover following the recession. On Tuesday, Scott was scheduled to meet with Realtors and other businesspeople to hold a news conference regarding the increases.
The Tampa Bay Times reported Tuesday that flood insurance rate increases taking effect today will have the biggest impact on owners of modest single-family homes not on the water.
The median value of the 33,000 affected homes in Pinellas County is $132,245, and the typical size is about 1,430 square feet. Roughly two-thirds of the homes don’t have water frontage or a water view, according to newly released county property appraiser figures.
And Florida isn’t the only state concerned about how this will affect property owners and home values.
The Mississippi Department of Insurance filed a lawsuit last Thursday against the federal government to try to block rate increases. The lawsuit is against the U.S. Department of Homeland Security and one of its divisions, the Federal Emergency Management Agency.
Louisiana’s treasurer suggested that the state consider selling flood insurance coverage to its residents. State Treasurer John Kennedy said state officials should look at creating a state-run flood insurance company, similar to the way Louisiana years ago created corporations that offer property insurance and worker’s compensation coverage for those who can’t get it on the private market.
Under the new rules, people who bought property in flood zones after the act was signed into law on July 6, 2012, will see their premiums increase nearly tenfold. Residents and businesses that already owned property in flood zones will see incremental increases of 25 percent annually.
While many of the affected properties are near or on the Gulf Coast, some of the affected homes aren’t even on or near a body of water, but in low-lying inland areas that are considered flood zones.