Starting today, homeowners are paying more for their flood insurance.
The Homeowner Flood Insurance Affordability Act of 2014 went into effect April 1. The new law revises federal insurance premiums, as the government is slowly phasing out subsidized flood insurance for those who have houses in flood zones.
The revision was ordered by Congress because the National Flood Insurance Program is $24 billion in debt, in large part due to damage from Hurricanes Katrina and Sandy.
The first attempt at reforming the program came with the Biggert-Waters Act of 2012, which raised flood-insurance policies across the board by 25 percent. Many homeowners complained they could not afford those rates, which is why legislators went back to the drawing board to come up with a new plan to reform flood insurance.
Shore Acres resident Bonnie Carter is among the Bay area residents bracing for higher flood insurance. Carter says she doesn’t experience flooding like some of her neighbors, but any rate hike would cause a financial burden.
"I am on a limited income so it does concern me," said Carter.
However, Nancy Riley with Smith & Associates Real Estate says it could have been much worse.
"All in all, it’s a very modest change considering the $10, $20 and $30,000 increases we were seeing last year before they fixed the Biggert-Waters Act," said Riley.
The act limits increases to 18 percent and adds an annual surcharge that ranges anywhere from $25 to $250.
Rep. David Jolly says more needs to be done to find alternative ways to reduce the rising cost of flood insurance.
"The reality is there are a number of solutions to this problem, but the challenge is mustering the political will of the Congress," he said.
Carter agrees.
"I think it stinks," she said. "I don’t think it’s really necessary. I think Florida’s being blamed for things that go on in other states."
Rep. Jolly's statement on flood insurance hike
“Last year, Congress passed the Homeowner Flood Insurance Affordability Act, which limits flood insurance rate increases to no more than 18 percent annually. But this is not a long-term solution; it is only a temporary fix that still places many Pinellas residents in financial peril. Instead, we need a comprehensive plan that protects homeowners and businesses. The reality is there are a number of solutions to this problem, but the challenge is mustering the political will of the Congress.
Ultimately, it is my hope that a private sector alternative will develop and reflect a truly competitive industry. To encourage a private sector alternative, I recently contacted the House Committee on Financial Services requesting that the Committee consider a very simple measure. Currently, lenders backed by Freddie Mac or Fannie Mae require a flood insurance product issued by the National Flood Insurance Program. My request of the Committee was to move legislative language requiring lenders to accept any policy approved by a state’s department of insurance regulation. If approved, this simple change would allow, and require, lenders to accept any private sector product approved for coverage in Florida, thus creating competition to provide an alternative to the overpriced NFIP product for homeowners throughout Pinellas County.
I recently discussed other possible solutions with FEMA Director Craig Fugate. We met to talk about flood risk maps that utilize technically credible data and more accurately reflect insurance costs, as well as my ideas for a national natural disaster reinsurance program that diversifies policies across all risks and regions - from earthquakes in the west, to tornadoes in the plains states, to flooding in our home state of Florida. Again, these are steps we can take now to protect those facing this potentially economically devastating issue.
I have worked with countless organizations on potential solutions and want to thank realtors, the Chambers and others for their assistance. Additionally, to give a stronger voice in Congress to those affected by this issue, I recently started the Congressional Coastal Communities Caucus. The bi-partisan caucus will be organizing a meeting with NFIP representatives in the near future to ensure that our districts’ voices continue to be heard as the implementation of new rates continues.
Finally, I have again introduced the Flood Insurance Premium Parity Act of 2015, a measure that would allow for business properties and owner-occupied secondary residences to qualify for National Flood Insurance Program rates.
As a Member of Congress, I have made it my highest priority to provide more permanent relief for homeowners and businesses experiencing drastic flood insurance rate increases created by the Biggert-Waters Flood Insurance Reform Act of 2012. While recent Congressional action has helped manage the overall impact of these insurance rate increases, I believe there is still much more work to be done and will continue to find creative and comprehensive alternatives to reduce the rising costs of flood insurance rates.” – Congressman David Jolly (FL-13)