Skyrocketing Flood Insurance Premiums May Be Delayed
Federal legislation adopted in 2012 that could cause flood insurance premiums to skyrocket by as much as 400%-700% may be delayed four years if a new bill penned by bipartisan policymakers is approved. The new legislative initiative was announced October 29. No date has been set for hearings or a vote on the measure.
The Biggert-Waters Flood Insurance Reform Act, approved in 2012, ended the Federal Emergency Management Administration’s (FEMA) premium subsidies for National Flood Insurance Program policyholders, effective October 1, 2013. Its aim was to reduce the flood insurance program’s enormous debt, compliments in large part to claims resulting from Hurricane Katrina in 2005 and Sandy, the Super Storm that ravaged the East Coast in 2012.
As a result, in the St. Petersburg – Tampa area, a waterfront home in Pinellas County that currently carries a $2,000 annual flood insurance premium could see an increase to as much as $14,000 annually, or more.
FEMA underwrites 5.6 million flood policies valued at approximately $1.3 trillion throughout the United States. Thirty-seven percent of those policies are written in Florida. Pinellas County has the largest number at over 50,000. In Hillsborough it’s about 22,000. Subsequently, the effects could be staggering.
Just when the nation’s, and especially in the St. Petersburg – Tampa area’s belabored real estate industry was turning positive, gaining momentum and helping grow the American economy, along comes Congress to throw the brakes on it.
Prospective buyers are backing out of the market due to the rate increases, and are looking at areas where flood insurance is not required.
Many current owners, especially middle class owners, can no longer afford the premiums, and are being forced to sell homes whose values have dropped as a result of the measure.
Real estate boards in markets with low lying properties, like almost all of the St. Petersburg – Tampa area, expect to see plummeting home prices, increased mortgage defaults and declining tax revenues, all as a result of the Biggert-Waters Act if it’s not completely overhauled during the next four year proposed delay.
There are fears that if the law stands as is, Florida will be back on top of the foreclosure leader board very soon.
Representative Maxine Waters, the California Democrat who co-sponsored the 2012 law, says she didn’t anticipate the enormous rate increases and their harrowing affect on the national economy. She is now actively working to delay the law from going into effect until the problems leading to the unintended consequences are fixed.
What Can You Do? Contact Your Representative. Speak Your Mind
While approval of the new legislative push to delay the rate increases is an essential positive step, it is by no means assured. Some members of both the House and Senate support implementation of the 2012 law. And FEMA Director Craig Fugate, who is being pressured by many lawmakers to delay the premium increases, has said he does not have the authority under the 2012 Biggert-Water Act to stop them.
So it’s up to Congress to step in on a bipartisan basis to delay the rate increases. This should be interesting!
Following are links to our state and local representatives: Write and tell them to approve the new legislative initiative that was announced October 29, and delay implementation of the 2012 law until its full impact can be understood and then solved. Our country’s and Florida’s economy depends on it.
But keep in mind that if the new legislation is approved, rate increases may only be on hold for four years unless they find a state run, privatized or national alternative solution.
Chris Hounchell & Associates will make every attempt to update information on this important issue as it becomes available. For more information, please contact Chris today at 727-642-9107.