CLEARWATER – Pinellas County officials are deeply concerned about the effect changes in federal law governing flood insurance could have on local residents and businesses.
County Administrator Bob LaSala told commissioners Sept. 5 that county employees were combining their expertise in a number of areas to learn all they could about the Biggert-Waters Flood Insurance Reform Act of 2012.
According to the Federal Emergency Management Agency’s website, www.fema.gov, BW-12, requires FEMA and other agencies to change how the National Flood Insurance Program is administered to make it more sustainable.
“Key provisions of the legislation will require the NFIP to raise rates to reflect the true flood risk, make the program more financially stable and change how Flood Insurance Rate Map (FIRM) updates impact policyholders,” the website says.
Bottom line, the changes will result in insurance premium increases for many homeowners and businesses living in flood-prone areas, including waterfront and beachfront properties in Pinellas County.
“I consider this a high priority,” LaSala said.
He said changes in the law were “more complicated and technical” than anticipated. He said it would take staff some time to prepare a presentation.
Commissioner Janet Long said information presented in a recent public forum on the matter had shown that Florida was the No. 1 recipient of the changes.
“There’s not a lot of time to take action,” she said.
The first phase of the law’s implementation began Jan. 1. A second phase, involving a much larger group of properties, begins Oct. 1.
“It’s unbelievable how many people don’t have a clue (the change is coming),” Long said.
LaSala said the Communication Department was part of the group working on the issue.
“We want to make sure we’re not yelling fire in a crowded theater,” he said.
He said Congressman Bill Young and others were working on trying to get officials to “hit the pause button” until more is learned about the effect of the new law.
Commission Chair Ken Welch suggested that the commission write a letter in support of Young and send a copy to the state’s senators.
Commissioner Susan Latvala pointed out that law didn’t just affect the beaches.
“It’s all waterfront property,” she said.
About NFIP and BW-12
U.S. Congress established NFIP in 1968 because insurance companies were excluding flood damage from homeowner’s insurance. The program allowed property owners in communities that adopted floodplain management ordinances and minimum standards in new construction to purchase flood insurance through NFIP.
Owners of existing homes and businesses did not have to rebuild to higher standards, and many received subsidized rates that did not reflect their true risk.
Costs of flooding have continued to increase since 1968. Claims following Hurricanes Katrina and Sandy make it clear that NFIP was not sustainable without an increase in rates that reflects true risks and costs.
FEMA says that currently about 80 percent of policyholders do not pay subsidized rates. Of the 20 percent that do, about 25 percent will be charged higher premiums starting this year. Rates will increase annually until they are “full-risk” premiums.
FEMA also says that 5 percent of policyholders with subsidized policies for non-primary residences, businesses and “severe repetitive loss” properties will experience rate hikes of 25 percent immediately. Subsidies will no longer be offered on policies for newly purchased properties, lapsed policies or new policies covering properties for the first time.
All policyholders, subsidized or not, will pay more for flood insurance as NFIP increases its reserve fund, as required by the new law. In addition, FEMA says remapping of communities, a task scheduled to begin in 2014, could result in premium changes for all policyholders. Full risk rates will be phased in for all policyholders over five years at a rate of 20 percent a year, and subsidies and discounts will no longer be available.