Flood insurance needs first look

By Steve Estes

As usual, those affected by the unintended consequences of Congressional action are unable to get their concerns addressed by the do-nothing 113th Congress, all of whom thought it was more important to go on holiday break than take up important business for those other than themselves.

So it is with that backdrop that flood insurance rates will continue to be the death knell of real estate transactions around the country in coastal communities, and could well be the impetus for a whole new round of foreclosures just as the existing housing market is beginning to stabilize and even recover.

And Monroe County heads into a new year with some serious work ahead of it to fend off the disaster that could be headed our way.

This will take the concerted efforts of our residents, our elected leadership, or unelected leadership, our state representatives and our federal representatives to stave off a move by Congress that could make thousands of our homes nearly worthless.

At issue is the implementation of the Biggert-Waters Act of 2012. Congress passed the measure, we’re sure without reading the fine print, as a way to make the beleaguered National Flood Insurance Program pay for itself, or at least try to pay for itself.

The subsidized federal flood insurance program is about $17 billion in the red, particularly after staggering payouts in New Orleans after Katrina, Galveston, Texas after Ike and New York/New Jersey after Sandy.

You will of course notice that none of the names on that list include Florida, although Florida property owners hold more than one-fourth of the total flood insurance policies in the country.

And you’ll never see Monroe County on that list because for years the county, under pressure from the NFIP parent agency Federal Emergency Management Agency, has been forcing new construction to be built above the flood plain, either by raising the land underneath or building on stilts.

As a result, Monroe County has been a donor county to the NFIP coffers for more than two decades, paying more in premiums than the total in payouts. That extra cash has gone to those areas where the flood premiums were actually too low to cover major losses.

Monroe Country is not alone as a donor county. Most of Florida also enjoys that status as we are a state with few, if any, basements, and much of our housing stock has followed NFIP building guidelines and been built above flood plain.

The issue is with older homes built before the NFIP came to be, and those are primarily ground level structures that are below base flood elevation. Those homes might see increases of tens of thousands of dollars in flood insurance premiums should they lose the subsidy, in many cases even though they have never filed a flood claim.

Second homes are going to see a 25 percent per year increase until the rates hit actuarial levels, a level which has yet to be determined by the NFIP.

Key West will be particularly hard hit by these Draconian new measures, particularly in Old Town where the homes were almost universally built before the NFIP came to be.

With the dawning of a new year, it is time for all of our elected officials at all levels to begin a concerted push to get the do-nothing 113th Congress to act on bills that would delay the implementation of Biggert-Waters until the affordability study required in that legislation is done.

We must also push hard for actuarial rates that reflect the efforts this community has made to avoid collecting flood payouts, an effort borne out by the fact that we are a donor community to the NFIP and have been since the inception of the program.

If we are unable to convince Congress that Biggert-Waters is just plain bad for every economic indicator it can affect, then we need to begin in earnest a process to jump into the self insurance pool.

Our history proves that we can sustain a viable flood insurance pool in Monroe County at today’s rates. We know we can because we have. The NFIP has taken more money form Monroe County since the agency’s inception for flood premiums than the agency has paid out in claims. In any definition of profitability, that’s a money maker.

The only sensible solution is for Congress to get off its do-nothing butt and take the steps necessary to establish a national catastrophic fund that uses premiums from all perils for which FEMA pays out claims to keep the fund viable in the long term.

But its obvious that this Congress, probably the worst in recorded history, cares so little about the effect on people of its actions, that any changes will have to wait until the ballot boxes are emptied later in 2014.

And that may well be too late.

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