MIAMI (CBS4) – It was “The” storm of 2012 with a tremendous path of destruction through the heart of the northeast.

It earned its reputation as “Superstorm “Sandy.”

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Its storm surge triggered more than 143,000 flood insurance claims through the heart of the northeast and hit the National Flood Insurance program for more than $7-billion dollars in losses.

Those losses threatened to wipe-out the National Flood Program’s entire cash reserves. The growing clean-up bills forced Congress to approve FEMA, the Federal Emergency Management Agency, to borrow up to $30 billion dollars to keep its flood insurance program from generating a $28 billion dollar deficit.

FEMA director Craig Fugate addressed the issue at the recent Governors’ Hurricane Meeting.

“They gave FEMA borrowing authority, not only for Sandy but also to make sure we had funds available to pay claims for future events. So we were given additional borrowing authority to pay out all the Sandy claims, but also provide additional authority for future disasters if they occur this flood season,” said Fugate.

But the price tag came with a lot of strings attached called the Flood Insurance Reform Act of 2012.

In simple language, Congress cut discounts and authorized rate hikes starting in January. The measures were aimed at making the National Flood program more financially sound. In simple language, Washington lawmakers allowed it to raise more money from its policy holders.

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So why is what happens to the National Flood program in Washington so important to us here in South Florida? Because it turns out 37% of the national program’s customers live in Florida. That’s more than 2 million policies.

So when there’s a change on the program, like nationally-mandated rate hikes, it can affect the bottom line of a lot of local residents.

Under the new “reforms”, customers with policies on their primary homes could see rate hikes of as much as 10% a year. Discounts for secondary homes have been eliminated, which will raise rates by 25% a year.

Owners of flood-prone homes with repeated claims will also see rate hikes of 25% a year along with owners of flood-prone commercial properties.

To better manage the local risk, flood maps have been re-drawn in both Miami-Dade and Broward counties. That has cut required flood insurance for thousands of homeowners like Doral homeowner Edgar Huot.

“For a lot of homeowners that are in a flood area that are required to have insurance, yeah it adds whatever the cost I think I had to pay $600 a year for flood insurance,” said Huot.

But what about leaving his family without any flood coverage?

“I’m more afraid of a bad hurricane coming thru here and not so much the flood but the hurricane damage,” said Huot.
FEMA insists most current local residential customers will not see rate hikes in their National Flood Insurance bills. But that’s only if they don’t move or file any major claims.

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For everyone else, rates will be rising here and around the country depending on how bad of hurricane season we may have this year.