Monday, March 20, 2023
HomeinsuranceFlood insurance battle reaching high-water mark

Flood insurance battle reaching high-water mark

The Biggert-Waters Act, which became law in 2012, was designed to stop the National Flood Insurance Program from going deeper into debt by cutting federal insurance subsidies to property in flood-prone areas. But the law's future has been thrown into question.

The Senate voted overwhelmingly last week to stop Biggert-Waters implementation for four years, and some House members are calling for an immediate repeal. That's because since the law went into effect last October, the price of flood insurance has risen dramatically for thousands of homeowners across the country.

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"My flood insurance premiums have gone up 50 percent," said Marc Roy, whose home in New Orleans remains damaged from Hurricane Irene in 2011.

"I've had to raise my deductible to $10,000 a year to try and keep the rates down," said Roy, a professor at the Disaster Resilience Leadership Academy at Tulane University. "I think it's crucial they delay Biggert-Waters with all the premiums going up."

2012 Claim Report for the top 10 states

State Total Number of 2012 Claims State Total 2012 Claims Payments
New Jersey 63,805 New York $3,439,521,916
New York 52,986 New Jersey $3,256,146,065
Louisiana 10,574 Louisiana $508,237,253
Connecticut 5,411 Connecticut $216,939,278
Florida 3,096 Florida $69,725,734
Mississippi 1,788 Mississippi $43,776,652
Texas 1,527 Texas $35,267,156
Delaware 1,252 Rhode Island $31,380,186
Maryland 1,237 Virginia $21,605,947
Virginia 1,147 Maryland $20,067,563

As a result of the insurance subsidies and massive claim payouts following extreme weather events such as Hurricane Katrina and last year's severe flooding in Colorado, the flood insurance program is $24 billion in debt.

Biggert-Waters was intended to temporarily shift the financial risk of flood insurance from taxpayers to home and building owners, who buy the coverage from private insurers. Twenty percent of policyholders had paid the subsidized rates.

The law had a wide range of political support, from deficit hawks in Congress to environmental groups such as the Union of Concerned Scientists (UCS).

"Subsidized insurance rates are only reinforcing risky development choices that are hit by climate change," said Rachel Cleetus, a senior climate economist at UCS, when asked about Biggert-Waters in September.

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However, key provisions in the law require the flood insurance program to raise rates on areas with higher flood risks, and to change how updates to the Flood Insurance Rate Map (FIRM)—a government map delineates flood hazard zones—affect policyholders.

For instance, homes that were built to Federal Emergency Management Agency codes in 1996—FEMA has oversight over the flood insurance program—are now subject to flood insurance rates that are higher by thousands of dollars.

Bob Childress, CEO of Florida-based Solace Insurance, said that many homeowners who previusly did not face high premiums "can't afford the much higher flood insurance rates."


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