Uncertainty Surrounds Floridian Flood Rates
United States law makers are actively debating current legislation that may significantly impact the wallet of millions of homeowners. As Floridians, we once again find ourselves embedded in uncertainty and focused on the recent developments of Capitol Hill. As changes to the National Flood Insurance Program seem to be inevitable, insurance companies throughout Florida are readying for the severance of subsidized rates.
In an effort to maintain the Federal Emergency Management Agency (FEMA) which governs the flood insurance program, Washington has previously passed legislation to increase flood insurance premiums. The Biggert-Waters Flood Insurance Reform Act of 2012 restricted the availability of government subsidies which have kept premium prices relatively low even in places where land elevation is far from high. The plan is to revise flood zone maps as well as increase flood insurance rates to what experts are calling “actuarially sound” levels with annual increases capped at a whopping 25%. Jeffrey Grady, president of the Florida Association of Insurance Agents explains, “If you’re already in the program, and what you’ve been paying is not actuarially sound, you’ll get phased-in rate increases of 25% per year”. Grady goes on to explain that due to the neglect of rising costs that are meant to be reimbursed when the claims arise, some areas of Florida may have flood insurance rates that are 70% lower than what is required to cover the associated risk. Homeowners in these low lying areas may expect a 25% annual increase for years to come.
The legislation for flood insurance reform passed last year with great bipartisan support, mainly due to the required bailouts of over $24 billion since the program was originally established in 1968. This figure is sure to be escalated when the final costs associated with Superstorm Sandy are totaled. The majority of the lost finances are attributed to the subsidized insurance rates of homes and businesses that are repeatedly flooded.
Although many Florida homeowners will likely face higher federal flood insurance premiums down the road, a recent measure to grant a temporary one-year reprieve has been launched in the Senate. The Appropriations Committee has approved the measure as part of a $39 billion spending bill to fund the Department of Homeland Security and another version of this spending bill has already passed the House. As residents of Florida’s coastal regions wait in anticipation of these new developments, the recent proposal is much to the chagrin of homeowners outside of lender mandated flood zones. The supporters of last year’s changes believe that delaying the premium increases would force those whose homes face far less flood risk to pay higher premiums in order to subsidize those living in flood zones.
With the propensity for change lingering and the discussions unfolding on Capitol Hill, uncertainty remains throughout the low lying coastal areas of Florida. Therefore, until further notice, 25% rate increases are scheduled to begin for new flood insurance policies as well as subsequent renewals this October. In the meantime, Moore Resources Insurance Agency advises homeowners to consult with an agent for guidance on how potential changes could affect flood insurance rates.
Moore Resources is an Independent Insurance Agency located in St. Petersburg, FL and offering Homeowners Insurance, Auto Insurance, Personal Insurance and Business Insurance. Our reach extends beyond the Tampa Bay area to the entire state of Florida. Moore Resources has regionally been dedicated to serving the local residents of Pinellas, Hillsborough, Polk, Pasco, Manatee and Sarasota counties; including St. Pete, Tampa, Clearwater, Bradenton, Brandon, Dunedin, Gulfport, Lakeland, Largo, Lutz, Palm Harbor, Pinellas Park, Riverview, Ruskin, Seffner, Seminole, Temple Terrace, Tierra Verde, Town n Country, and the Gulf Coast Beaches.
Please remember that the purpose of this blog is to present general information only. It does not interpret specific policies or coverage. In order to obtain detailed information regarding your insurance, contact a licensed insurance agent.