Florida and Alabama government officials have filed an amicus brief this week supporting the Mississippi insurance department’s lawsuit against the federal government’s National Flood Insurance Program’s rate hike.
“We are supporting Mississippi in their lawsuit against FEMA because the NFIP rate hike will not only hurt Florida families but will devastate our real estate market,” said Florida Gov. Rick Scott who had announced in October his plan to file the legal brief.
“President Obama should use every tool possible to help Florida families and we urge him to act immediately,” he said.
The legal brief, filed on Nov. 11, was endorsed by Florida Gov. Scott, Florida’s Attorney General Pamela Jo Bondi, Alabama Gov. Robert Bentley and Alabama’s Attorney General Luther Strange.
It states that Florida’s citizens are particularly vulnerable to the “harsh effects of FEMA’s arbitrary implementation” of Biggert-Waters Flood Insurance Reform and Modernization Act, in light of the large number of Florida properties insured by the NFIP.
“Already, the premium quotes received by Florida policyholders are so high that many homes have become unaffordable, leaving homeowners to choose between foreclosure and sale to escape the crushing financial burden imposed by the NFIP rate increases,” the brief stated.
In many instances, however, sale is not a viable option because the new exorbitant premiums render the properties unaffordable to potential buyers, the brief stated. “This cycle has already begun to have a deleterious effect on the real estate markets and economy of the State of Florida.”
The amicus brief also stated that the increased flood premiums will greatly reduce the marketability of Alabama homes to future buyers, and will reduce real estate market values.
The brief made a a number of arguments in support of Mississippi’s lawsuit. Its main arguments are listed below:
• FEMA should be compelled to complete the mandatory studies required within the Biggert-Waters Flood Insurance Reform Act prior to establishing new flood insurance rates.
• FEMA’s implementation of the NFIP, as amended by Biggert-Waters Flood Insurance Reform Act, is arbitrary and capricious.
• FEMA failed to consider affordability when setting new premium rates. FEMA, in fact, has broad discretion in setting premium rates and it should employ such discretion when considering the affordability of the NFIP.
• Even if FEMA had no discretion to consider affordability when setting new premium rates, FEMA failed to utilize accepted actuarial principles and consider actual risk when calculating new rates.
The following is the amicus brief filed in the U.S. District Court for southern Mississippi.