Wasn't flood insurance reform intended to raise rates?
With the National Flood Insurance Program running a $24 billion deficit after huge payouts from Hurricanes Katrina in 2005 and Sandy in 2012, Congress in 2012 ordered radical changes to make premiums more closely reflect the true risk of damage for Americans who own insured property in floodplains near rivers and along the coast.
The changes began taking effect in 2013 and prompted protest from coastal residents and real estate interests across the country. Rep. Maxine Waters of California, one of the law’s co-sponsors, criticized FEMA’s implementation of the new law and supported legislation aimed at postponing the insurance premium increases. North Carolinians including Sen. Kay Hagan and Reps. Walter Jones and Mike McIntyre also are pushing for the delay, which could receive a Senate vote as soon as this week.
The loudest support for action to stall the insurance changes has come from New Jersey, Louisiana and other states where the impacts are showing up more quickly than in North Carolina. In states where flood insurance rate maps were updated last year, homeowners quickly learned what their new rates would be. The picture for most policyholders in North Carolina will become clearer as new flood maps start rolling out this spring.
The Wests [NC beach homeowners] pay just $850 a year for their flood coverage now, thanks to generous taxpayer subsidies that are being phased out under the new law. The new rate will be determined partly by the upcoming flood map for New Hanover County and by a surveyor’s elevation certificate required under the new law. One coastal policy expert reckons that the new premium for the Wests’ cottage could reach as high as $21,000.
“We had two contracts, and both of them crashed because of this uncertainty,” Sybil West said. “I’m alarmed because I think this law is going to cause problems all across the coastal United States. It puts us in a bind, and it puts buyers in a bind.
“I’m not opposed to paying more” for flood insurance, West said. “If people live on the beach, they need to pay for that. But I think nobody realizes what these subsidies have been. This is an education.”
Postponing the rate increases is a classic political move. It's a shame that someone thought it would be a good idea to subsidize rates so much in the first place.