Cost of Flood Insurance Rises

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MIAMI — Sharp increases in federal flood insurance rates are distressing coastal homeowners from Hawaii to New England and are starting to hurt property values and housing sales in areas just beginning to recover from the recession, according to residents and legislators.

In recent weeks, the hefty flood insurance rate increases brought about by a 2012 law have stoked widespread alarm and uncertainty, prompting rallies, petitions and concern among state governors. Mississippi has sued the federal government to try to block the law. The issue has even garnered the attention of lawmakers, otherwise mired in the acrimonious government shutdown. A bipartisan group of senators and House members from Gulf Coast states are pressing for significant adjustments to the law once the Capitol returns to normal.

The law, officially known as the Biggert-Waters Flood Insurance Reform Act, is being rolled out in stages, with a major part having gone into effect on Oct 1. It removes subsidies that keep federal flood insurance premiums artificially low for more than a million policy holders around the country — a discount that was applied to properties that existed before the drawing of flood insurance rate maps.

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[Raptor Witness]

The boost to local economies, in terms of the increase in construction in high risk areas has largely panned out.

The subsidy is now being transferred to state and local property taxes. So I expect this will hurt some school districts, if property values fall as a result of this.

Those added costs will have to be made up for by local residents, who don't live in high risk zones. It seems draconian to me, to allow rates to jump up too quickly. That's just stupid.

The national economy is far better suited right now to absorb the higher risk, than smaller communities in high risk areas.

Edited October 13, 2013 by Raptor Witness