Florida Keys News - Key West Citizen
Monday, June 17, 2013
Bill would halt flood insurance rate hike
Cost rises when a home is sold and for homes built before 1974 flood map

A bill that could delay huge flood insurance rate hikes is before the U.S. Senate.

The U.S. House of Representatives passed the proposal earlier this month with a bipartisan approval of 281 to 146.

U.S. Rep. Joe Garcia, D-South Florida, co-sponsored legislation to block the implementation of rate increases by the National Flood Insurance Program (NFIP) for the Florida Keys and other coastal areas.

Before the increases take effect, Garcia and his fellow legislators want a study conducted to determine the economic ramifications of rate hikes on NFIP policies and whether those increases are actually needed. Starting in October, rates could increase by 25 percent per year until they reach what is known as a "full risk rate" or actual risk rate.

Garcia, who represents the Keys, co-sponsored an amendment to block the implementation of the flood insurance rate increases under Section 207 of the Biggert-Waters Flood Insurance Reform Act. The amendment was included in the final House of Representatives appropriations bill for the Department of Homeland Security.

"This is a big first step to keeping flood insurance rates affordable for the Keys and other coastal communities," Garcia said. "I am committed to building on this strong bipartisan effort to pass the reforms we need to prevent steep increases to flood insurance rates and to ease the financial burdens on South Florida families."

Garcia's staff did not know Friday when the Senate would act on the pending legislation.

In July 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act, commonly referred to as the Flood Insurance Reform Act. The act changed the NFIP and called for rate increases, which are causing concern in counties like the Florida Keys.

"There is a tremendous amount of conflicting information," said Key West insurance agent Jon Diamond, co-owner of Diamond Insurance Partners.

Rate increases could be placed on homes that have "subsidized" policies or rates, which means they were built before government-recognized Flood Insurance Rate Maps were developed in 1974. The maps established where base flood elevation begins, which helps officials determine how a storm or flooding would affect a home.

Owners of primary residences will be able to keep their subsidized rates unless or until they sell their home. The property's next owner will have to pay the full rate if he or she chooses to obtain an NFIP policy or is required to do so by the terms of his or her mortgage, Margaret "Jody" Cottrill, Federal Emergency Management Agency (FEMA) spokeswoman, told The Citizen.

A rate could also increase if a property owner allowed his or her policy to lapse or the owner suffers a string of severe losses. That means the home has at least four NFIP claim payments, including building and contents claims greater than $5,000 each, and when added together are more than $20,000 or the home has two NFIP flood claim payments when added up are more than the fair market value of the home, she said.

Rates could also increase if a homeowner purchases a new policy, Cottrill added.

Owners of ground-level homes who purchased a new NFIP policy after federal legislators approved the new rate structure was put in place in July 2012 could see significant rate increases when their policies are renewed annually.

Rate increases for second homeowners started in January, FEMA officials said.

Starting this fall, subsidies will be phased out for businesses, properties of one to four residences that have experienced severe repetitive loss; and properties that have incurred flood-related damages where claims payments exceeded the fair market value of the property.

Premiums for these properties will increase by 25 percent per year until they reach the full risk rate, Cottrill said.

The proposed rate increases come at a time when Monroe County government officials are asking FEMA to be part of a program that would set up rate reductions.

County and FEMA officials met in Washington D.C. earlier this month and discussed the possibility of Monroe County applying for re-entry into the National Flood Plain Management Community Rating System (CRS), a voluntary incentive program that recognizes and encourages community flood-plain management activities, said Christine Hurley, the county's growth management director, while citing FEMA's website.

In exchange, flood insurance rates are discounted.

The county previously participated in the program, but left in the 1990s as FEMA officials criticized the county for not doing enough to deter the proliferation of illegal downstairs enclosures, county officials said.

Monroe County was first enrolled in the CRS on Oct. 1, 1991 and was a CRS Class 9, providing policyholders with a 5 percent discount on flood insurance premiums. Monroe County left the program on May 1, 1997.

"The specific dollar value of the discounts would vary depending upon the county's CRS Class rating," Cottrill said. "As a CRS Class 9 community, the average premium discount would be $56 per policy."


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