Congressional action hikes flood insurance premiums


By Joe Moskowitz
Area property owners with flood insurance my have already received the bad news, and if Congress doesn’t act, or if their policy lapses, the news could get worse, much worse.
In an attempt to stabilize the finances of the Federal Emergency Management Administration (FEMA), Congress recently passed the Biggert-Waters Act. The first phase  went into effect on October 1.
Peter Sluiter of Margaretville’s Sluiter Agency told the News that the Biggert-Waters Act has resulted in many property owners seeing an immediate average increase of 15 percent on their flood-insurance bill, although the increases range from six to more than 20 percent.
In an unusual show of bi-partisan solidarity, 57 members of the House of Representatives, including 19th District Congressman Chris Gibson, a Republican, passed a resolution last week calling for a four-year delay in the implementation of the highest premium hikes. It would take two years for FEMA to conduct an “affordability” survey, then two more years for it to be analyzed and become law.

Nothing concrete
But right now, that’s just talk in Washington. Sluiter says the October 1 increases are here now. He says flood insurance is affordable if you live in a preferred risk area. That doesn’t mean it won’t ever flood, but flooding is unlikely. Policies for those property owners can be “a couple of hundred dollars.” But coverage for property owners who live in a high-risk area can be very costly. A new business owner would have to pay annual increases of 25 percent until thy reach the “full risk rate”, and no one has determined what that rate will be. And if you let the policy lapse, look out.

Tough example
Wendy O’Reilly handles flood insurance at the Sluiter Agency. She says a local business owner, who she didn’t identify, was flooded out by Hurricane Irene and let their policy lapse. That person would like to start up again, but under the new rules, the property must be surveyed to determine whether it is above or below flood the flood way. The survey will cost $500 to $1,000 and that must be done before any agency can even get a price quote. Then, since the property has been flooded, coverage could run into the thousands of dollars.
Sluiter is skeptical of the attempt by Congress to keep rates from going up. He says flood insurance is unique. Most people only get it because “they are under the gun,” it’s required by lenders, or they live in a flood-prone area. He says premiums don’t cover for the amount paid out in claims. FEMA is supposed to take care of the difference, but FEMA has a $24 billion deficit.
Sluiter went on to say that the only solution he can see is to make flood insurance part of everyone’s home or business owner’s policy. That would spread out the cost, but he says people who live on top of a mountain probably won’t be happy about paying for people who live in a valley near a stream.