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flood insurance

For more info on why these rate increases are happening,  read this article below.

“The Associated Press analyzed records from the Federal Emergency Management Agency for roughly 18,500 communities in the National Flood Insurance Program where the government offers subsidized rates.

The data show there are communities in every state where even a few years of price hikes could leave many affected owners unable to afford their properties. Hundreds of small river towns and coastal communities with significant numbers of homes and businesses in flood hazard zones are at risk.

FEMA’s records also show why there is pressure to raise rates. Some communities with a large proportion of subsidized properties have been tremendously costly for the flood program. But there are just as many places where those policy discounts have cost taxpayers almost nothing.

The reform law signed by the president rolls back portions of a 2012 overhaul that took away subsidies immediately for any property that changed hands or was remapped into a higher risk flood zone. Both groups will now be able to continue paying subsidized rates.

But at least 820,000 homeowners will still get hit with rate increases of up to 18 percent each year until the program is collecting enough revenue to cover a $24 billion shortfall created by a series of catastrophic storms.

Owners of another quarter million businesses or second homes will see their rates rise 25 percent each year, until their premiums reach rates that match the true risk of flooding.

There are indications that rising premiums already have had an effect. Records reviewed by the AP show that national enrollment in the insurance program dropped by nearly 80,000 in the 12-month period that ended Jan. 31.

The FEMA datasets analyzed by the AP show that 1,402 communities nationwide have at least 100 homes or businesses facing gradual price hikes. Of those, 765 communities have at least 200 policyholders who will steadily lose their discounts.

While the rate hikes will unquestionably affect the largest numbers of people in subtropical coastal cities like New Orleans, Miami and St. Petersburg, Fla., they also have the potential to deliver crippling blows to old river towns and port cities that have little in common with the eroding beach communities that have earned the flood program so much scorn.

The list includes places Brunswick, Ga., a port city where nearly 1,200 policyholders are set to gradually lose their subsidized rates.

The new legislation will offer temporary relief to people such as Ray Bodrey, whose annual premiums had surged from less than $700 to more than $4,700 before the rollback.

But if FEMA opts for an average increase of 15 percent each year, his annual payments would top $2,800 within a decade, and keep climbing — rates he says will push the limit of what he can afford.

“It doesn’t help me at all. We’ve still got the same problem,” Mr. Bodrey said.

Congress created the National Flood Insurance Program in the late 1960s, in part because private insurers had abandoned the market. Today, in most places, it is the only option for buying flood insurance, which is required for most mortgages on any property in a flood hazard zone.

There are about 5.5 million policies in force today, about 20 percent of which are subsidized.

In its latest overhaul of the program, Congress tried to deal with the affordability issue by including language asking FEMA to “strive to minimize” the number of policies with an annual premium that exceeds $1 for every $100 in insurance coverage.

Yet, that suggestion would be impossible for FEMA to follow without giving huge new discounts to the many policyholders now paying well above that rate.

All of that adds up to a big question mark for homeowners.

How high will their rates ultimately go?

One FEMA-funded study, conducted in 1999, estimated that 550,000 homes across the country would see premiums top $6,800 per year if they were required to pay a premium based on the true flooding risk.”

 

 

 

 

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