Florida Realtors are rushing to gather sworn testimony about the effects of this month’s “drastic” flood insurance rate hikes to strengthen a Mississippi lawsuit meant to block increases before people are priced out of their homes.

The lawsuit, which Florida will support with a friend of the court brief, claims the massive changes made to the National Flood Insurance Program were approved by Congress in 2012 without consideration of policy holder impact or an affordability study required in the legislation.

An economic analysis conducted by the National Academy of Sciences is mandated in the Biggert-Waters Flood Insurance Reform Act, but was not conducted and could take several years to complete.

“Without this crucial information, (the Federal Emergency Management Agency) lacks the necessary information to avoid arbitrary and capricious decision-making in carrying out implementation of the program,” a motion filed Thursday by the Mississippi Insurance Department states. “The threatened injury to policyholders and the public at large is great.”

Homeowners, Realtors and politicians — including Rep. Maxine Waters, D-Calif., whose name is on the law — have repeatedly asked Congress to stall the rate increases, some of which began Oct. 1. Despite support for their pleas, the disarray in Washington has overshadowed the concerns. Now some are turning to FEMA to make changes.

Mississippi’s suit is against U.S. Department of Homeland Security and FEMA. On Friday, National Association of Realtors President Gary Thomas sent a letter to FEMA Administrator Craig Fugate asking that he defer the “drastic” rate hikes.

“Reports from Realtors nationwide indicate double-digit premium increases, decreasing property values and stalled markets due to increasing premiums and regulatory uncertainty,” Thomas wrote.

Florida has about 269,000 property owners who are affected by the early changes — about 13 percent of all policyholders and by far the most of any state.

In Palm Beach County, just 3 percent of policies, or 4,834 properties, will see rate increases from the act as they lose subsidies from the flood program. But those rate hikes can be substantial — up to seven times higher, according to some examples from the west coast of the state.

Pinellas County homeowners Ray and Kate Leone, who are submitting an affidavit, bought their 1958 house in September 2012 before FEMA published prices under the act. Their premium of $1,644 will skyrocket to $12,227 next year.

Even if they raised their deductible to the maximum amount allowed — $5,000 — they’d still be paying $8,000 per year.

“The argument being made by those who support the increases is that these are now actuarially justified rates, but if you ask someone on Fort Myers Beach if their new $46,000 premium is justified, they’d probably say no,” said Chris Heidrick, owner of Heidrick & Co. Insurance on Sanibel Island, referring to increases on the owner of a small inn.

Palm Beach County could see sizable effects when revised flood maps are completed, putting homes into high risk zones that weren’t there before and under the higher premium rates.

Preliminary maps presented in June were so disturbing that the county’s congressional delegation sent a letter to FEMA saying the proposed maps could harm the county’s real estate market and would have “far-reaching negative economic impacts” on the county’s tax base.

John Sebree, senior vice president of public policy for the Florida Realtors, said he expected to have 15 and 20 affidavits by day’s end Tuesday to illustrate how the steep increases to some policies are affecting homeowners and buyers.

The Florida Realtors are also supporting legislative amendments to delay the rate hikes that they hope will be approved when Congress passes a funding resolution that ends the government shutdown.

“We are working both tracks,” Sebree said.

The federal lawsuit likens the flood act to a “regulatory scheme that literally removes buyers from the market due to cost increases, and payment requirements.”

Mississippi and Louisiana are the only states where the flood map redraws have been completed, according to the lawsuit.

On Thursday, Florida Attorney General Pam Bondi and Gov. Rick Scott announced their support of the Mississippi lawsuit. The governor’s office will file the friend-of-the-court brief, but Bondi said Florida hasn’t ruled out taking legal action on its own.

Flood policies go higher

As of this month, homebuyers who purchase property that previously received a subsidy to pay for flood insurance must pay full price.

Business owners who received a subsidy face annual 25 percent increases in premiums until the full-risk rate is reached.

by Kimberly Miller