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Pinellas County
Sept. 25 seminar focuses on flood insurance
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Article published on Monday, Sept. 23, 2013
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A flood insurance seminar on Wednesday, Sept. 25, 6 p.m., in the Digitorium on the Seminole campus of St. Petersburg College is designed to help residents “wade through” changes in the law that are affecting flood insurance policies. The Digitorium is at 9200 113th St. N. in Seminole.
People who live along Pinellas County’s beaches, lakefronts and in low-lying areas are facing a nemesis as scary as any natural disaster.

Due to changes in federal law, flood insurance policies may soon become unaffordable. In this time of recovery after a devastating recession, some are saying this manmade disaster could be the final straw for local property owners, businesses and the real estate market.

A flood insurance seminar on Wednesday, Sept. 25, 6 p.m., in the Digitorium on the Seminole campus of St. Petersburg College is designed to help residents “wade through” changes in the law that are affecting flood insurance policies. The Digitorium is at 9200 113th St. N. in Seminole.

Sponsors of the seminar are SPC, Holehouse Insurance, Bankers Insurance Group, Tampa Bay Beaches Chamber of Commerce, Wright Flood and Re/Max.

The intent of Biggert-Waters is to phase out flood insurance subsidies in effect since 1968 when Congress passed the National Flood Insurance Act. The intent had been to help homeowners and businesses by providing affordable flood insurance, thus reducing the cost to taxpayers after flood disasters.

Most private insurance companies do not offer flood insurance policies and regular homeowner’s policies do not cover flooding. By providing insurance available through a federal program, NFIP’s purpose was to “pool risks, minimize costs and distribute burdens equitably among those who would be protected by flood insurance and the general public.”

Representative C.W. Bill Young, representing Florida’s 13th District, which includes Pinellas County, testified Sept. 18 during a U.S. Senate’s Committee on Banking, Housing, and Urban Affairs Subcommittee on Economic Policy hearing on the implementation of the Biggert-Waters Flood Insurance Act of 2012.

Young testified that until 2005, NFIP had paid for itself. However, the massive costs from hurricanes Ike and Katrina caused the program to fall into debt. Hurricane Sandy added to the deficit as will the current flooding in Colorado.

In 2012, Congress passed the Biggert-Water Insurance Act of 2012 extending the NFIP for another five years. It included a number of changes that requires policyholders to pay more of the costs to help rid the system of its debt and sustain the program into the future. Subsidized insurance policies would end within five years.

Young relayed the “concern, outrage and fear” of his constituents, many from Pinellas, about the “devastating effect” of premium increases.

“This change has caught policy holders unaware and unable to even consider steps to mitigate their risk prior to the implementation of the higher rates.”

Another round of rate hikes mandated by Biggert-Water begins Oct. 1. The House has approved delaying implementation of the rate increases for one year. A similar bill is pending in the Senate.

Young testified that Federal Emergency Management Agency’s new rate maps could change individual’s flood risk, increasing insurance rates. In addition, communities’ longstanding flood mitigation plans might not meet FEMA’s new standards.

“These problems are not addressed through the Biggert-Waters reform bill and the lack of focus on continued affordability is disturbing,” Young testified.

He said the law required an affordability study, due to Congress 270 days after enactment. That study is still pending and not expected until at least 2015, “which will be too late to help owners facing unaffordable premiums and considering a short list of options for dealing with the increase,” Young said.

Young asked that the Senate delay implementation of Biggert-Waters to allow “owners to maintain their flood insurance and mitigate these massive premium increases.”

Many officials believe Pinellas County is Biggert-Waters’ ground zero with 50,000 properties with subsidized insurance policies.

Young provided testimony from several of his constituents, including statements from Pinellas County Commissioners and the Barrier Islands Governmental Council that warned of the detrimental effects to the county as a whole. Other testimony came from individuals identified by first name only.

Anita said Biggert-Waters would make her home, and thousands like it, “virtually un-saleable.” Her home was built in 1962, before NFIP. It receives pre-FIRM insurance rates with a higher subsidy. The Act would require new owners of the property to pay “actual risk” rates.

Anita is an insurance agent. She estimates that the cost to a new owner, should she sell her house, would be almost $24,000 a year. Anita now pays $2,500 a year.

Cynthia testified that flood insurance on her home on the Intracoastal Waterway is going up from $2,500 a year to $12,000 a year. The home was purchased in December 2012. Cynthia said they weren’t aware that the flood insurance policy was subsidized.

David bought his home in North Redington Beach in June. Late in the purchase process, he found out about Biggert-Water, but could find no clear answers about its consequences. He considered backing out of the purchase, but didn’t want to lose his $10,000 in earnest money and face the other consequences of not going forward with his retirement plans.

Now, he finds himself facing the possibility of having escrow account payments of more than $2,000 a month. He fears having to sell his house because he can no longer afford to retire in Pinellas County. He is concerned he will take a loss, if he can even sell his new home.

Jim talked about the danger to the real estate market that is currently recovering after the recent recession. He asked that the bill be delayed by three years, the same request made by the state of Louisiana.

If the Senate does not act to delay the bill, as of Oct. 1, owners with subsidized policies on property that has experienced severe or repeated flooding will see their bills increase by 25 percent annually until the rate reflect true risk. Owners of business/non-residential properties in a Special Flood Hazard Area also will see rates increase by 25 percent annually beginning Oct. 1.

In addition, higher rates will affect any property that is sold and any policy that lapses. Severe, repeated flood losses will trigger rate hikes. Higher rates also will be charged for any new policies.

Several local municipalities have passed resolutions in opposition to Biggert-Waters, including Gulfport, Indian Rocks Beach, Indian Shores, North Redington Beach, Redington Beach, St. Pete Beach and Treasure Island.

Concerned citizens are asked to write U.S. Senators Bill Nelson and Marco Rubio. Call Nelson at his Tampa office at 813-225-7040 or send a message through his website, www.billnelson.senate.gov. The phone number to Rubio’s Tampa office is 813-977-6450 or send an email at www.rubio.senate.gov.

Young has invited FEMA Administrator Craig Fugate to visit Pinellas County to talk with local leaders.

“As a Floridian, you know that our state has three times more policies under NFIP than any other state, and these changes could have a serious impact on our economy,” Young said in his letter. “Local communities in my district are gravely concerned over the effect that higher rates will have on our housing market.”

Young asked Fugate to work with the local leaders of the “severely impacted community like Pinellas” to seek a resolution to the problem.

“Mayors of beach communities are meeting weekly to discuss their concerns,” Young said in his letter to Fugate. “I believe that coming together to discuss the issue would be the most effective way forward.”

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Article published on Monday, Sept. 23, 2013
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