The U.S. House’s vote Tuesday night was a move in the right direction to stop the short-sighted implementation of the Biggert-Waters Act, which has dire consequences for Floridians, who would bear the brunt of the financial burden, and our housing market.
Traveling throughout Florida as attorney general, I hear from countless Floridians who share their dread and concern over the drastic flood insurance rate hikes they face thanks to the Federal Emergency Management Agency’s reckless implementation of the Biggert-Waters Act. Due to exorbitant flood insurance rate increases, Floridians are facing losing their homes, fearful of not being able to sell their homes, and uncertain about purchasing a home due to unaffordable insurance rates. These effects are widespread.
These rate increases will have a chilling effect on Florida’s housing market as a whole. Florida’s foreclosure rate has consistently topped the charts in the nation, and drastic flood insurance rate increases will stall our housing market’s recovery.
According to a recent Florida TaxWatch study, those living in Pinellas, Miami-Dade and Lee counties will be most affected by the rate increases. In Pinellas alone, more than 30,000 single-family homes are within designated “high-risk flood zones” and the vast majority are not waterfront. FEMA is not simply asking Floridians to pay their fair share; it is asking them to pay exponentially more in flood insurance.
Even under the old rate structure, Florida policyholders paid into the National Flood Insurance Program (NFIP) far more than they received. According to the Journal of Economic Perspectives, from 1978 to 2008, flood insurance policyholders in Florida paid $16.1 billion in premiums but received only $4.5 billion in claims reimbursement. Yet some Floridians are now facing incomprehensible 600 to 700 percent rate increases.
Recently, I sent a letter to congressional leaders asking them to enact meaningful legislation to rectify this situation, and I have had numerous conversations with U.S. Rep. Vern Buchanan on how we can protect Floridians from these devastating rate hikes.
Rather than carefully studying the consequences of its actions — as Congress directed — FEMA arbitrarily assessed premiums without fully analyzing what its actions would mean in the real world. While moving briskly with premium increases, FEMA acknowledged that information necessary for proper implementation will not be available until 2015.
If Congress wishes to alter NFIP subsidies, it certainly has the authority to do so. But any modifications should be carefully considered, real-life consequences should be fully evaluated, and any rate changes should be fairly implemented.
Both the House and the Senate have engaged in a bipartisan effort to address the financial harm that has arisen from the implementation of the Act, and I encourage them to continue with their efforts to find a resolution that will protect Floridians.
Pam Bondi is Florida’s attorney general.