Flood Insurance Rate Hikes Under Fire From States
JACKSON, Miss. (CBSMiami) – The Mississippi Department of Insurance filed a lawsuit against the federal government Friday that Floridians should pay special attention to if they own a home or may be buying a home soon.
The lawsuit is directed at the Department of Homeland Security and the Federal Emergency Management Agency, but its prime target is a 2012 law passed with bipartisan support known as the Biggert-Waters Flood Insurance Reform Act.
The bill was originally drafted to keep the national flood insurance program solvent after a large number of claims following Hurricane Katrina. The law ends all federal subsidies for flood insurance for properties in flood zones.
Florida is home to more than a quarter of the 1.1 million subsidized properties in the U.S. including more than 140,000 in Pinellas County, according to Reuters.
Residents are afraid that if the massive rate hikes go into place, it will make selling any homes that rely on the subsidies incredibly difficult and likely cut property values in half.
According to the law, anyone who bought a home with subsidized insurance after the law’s passage on July 6, 2012 will pay the new full-risk rates starting October 1. In addition, anyone who has suffered severe or repetitive loss on their property will see a 25 percent increase annually until the rates are in line with the average.
Subsidized policy holders in high-risk flood zones can also see rates rise between 16-17 percent next year and after that anywhere up to 20 percent, according to Reuters.
A Florida House subcommittee received several options earlier this week that could help residents fend off the federal subsidies ended. The proposals included lifting state laws and regulations to attract more private insurance to setting up a state backed agency similar to the Florida Hurricane Catastrophe Fund, according to the News Service of Florida.
House Insurance and Banking Chairman Bryan Nelson, R-Apopka, said the immediate need is to get Congress to postpone implementation of the Biggert-Waters Flood Insurance Reform Act. The postponement would give the state time to review the impacts of the change, Nelson said.
Gov. Rick Scott has asked U.S. Sens. Bill Nelson, D-Fla., and Marco Rubio, R-Fla., for help to ward off “the potential impact to Florida’s economy” of the act.
Senator Bill Nelson filed legislation to delay the rate hikes, but told Governor Scott and Chief Financial Officer Jeff Atwater, “the current state of gridlock in Congress, caused by a small minority, has prevented us from getting much of anything passed.”
Atwater took issue with the reference to the small minority and for Nelson asking for Scott’s help to get fellow Republicans to pass his legislation to delay the bill, but did ask for Congress to help the state avoid the cuts.
Senator Marco Rubio has not said how he would handle the rate hikes mainly because he feels nonoe of the plans offer “long term solutions.”
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