Florida Gov. Rick Scott is deeply troubled by the potential impact of flood insurance rate hikes and is asking for changes to legislation that one leading senator called a mistake during a congressional hearing Wednesday.

In a letter to Florida senators Bill Nelson and Marco Rubio, Scott said parts of Florida’s real estate market could be devastated by premium increases that will make homes unaffordable under the Biggert-Waters Flood Insurance Reform Act of 2012.

Scott’s concern is echoed by a handful of lawmakers, including Nelson and Rubio, who have said they’d like to see delays or other changes that will ease the burden on policy owners. The act, approved last summer, phases out subsidies, eliminates grandfathering clauses, and calls for a redrawing of flood maps that will put thousands of homes into high risk zones that weren’t there before.

Owners of second homes who received subsidies started paying higher rates Jan. 1. Beginning Oct. 1, businesses that were subsidized will see 25 percent annual rate increases until they reach their full rate price. Also beginning Oct. 1, homebuyers purchasing a previously subsidized home will pay the full rate.

The increases could mean policy owners will pay thousands of dollars more each year in premiums.

“In cases where new maps move a property into a flood zone, homeowners may find it impossible to sell their properties to a new owner who will be shocked with the massive premium increases required to secure a mortgage,” Scott said. “This cannot be what Congress intended.”

The flood insurance reforms were approved by a Congress eager to reduce the $20 billion debt of the National Flood Insurance Program caused largely by Hurricane Katrina in 2005. Last year’s Hurricane Sandy is estimated to have upped the debt to $24 billion.

Also at issue was an attempt to create a long-term plan that would end the stopgap measures that kept expiring.

But in the haste to reform, the impact on policy holders wasn’t considered. An affordability study called for in the act wasn’t conducted.

“This was built backward and upside down, authorizing immediate rate increases before they even began to study the impacts these rate increases will have on affordability,” said U.S. Sen. Mary Landrieu, D-La., during a hearing Wednesday in front of a Senate Banking, Housing and Urban Affairs subcommittee. “It was premature, it was not well thought out, it must be fixed. I know we had good intentions, but we made a mistake.”

Nelson, a Democrat, voted in favor of the act, but on Friday called for at least a yearlong delay on increasing rates.

Rubio, a Republican, voted against the act. His office said he is working on solutions to sustain the program long-term with affordable costs.

First affected will be property owners with subsidies, including 268,646 in Florida, or about 13 percent of all policyholders and by far the most of any other state.

In Palm Beach County, just 3 percent of policies, or 4,834 properties, will see rate increases from the loss of subsidies.

But other areas, particularly in Miami-Dade County and Florida’s west coast communities, will be more severely affected by the subsidy loss.

FEMA Administrator W. Craig Fugate told lawmakers Wednesday that there’s little he can do on his own to address affordability issues.

“Let me put my cards on the table. I need your help,” Fugate said. “I do not have the authority.”

Sen. Robert Menendez, D-NJ, said he’d gladly put forward a proposal to delay the subsidy phase out. But whether he can get it passed is questionable.

“It seems like this Congress is so divisive right now, I’m not hopeful we’ll see solutions,” said Chad Berginnis, executive director of the Association of State Floodplain Managers.

Not everyone during Wednesday’s hearing supported stalling the reform act.

Steve Ellis, vice president of Taxpayers for Common Sense, said, “Taxpayers deserve to have those who choose to live in harm’s way pick up their share of the tab.”


Beginning Oct. 1, homebuyers who purchase property that previously received a subsidy to pay for flood insurance will pay full price. Business owners who received a subsidy on their properties will see annual 25 percent increases in premiums until the full-risk rate is reached.

Want to know more?

How Florida cities are affected:http://www.mypalmbeachpost.com/flood-rates

by Kimberly Miller