Clock ticking to reform flood insurance

A Tampa Bay Times Editorial

Congress finally could be forced to make fundamental changes to the federal flood insurance program this summer, and Floridians could be unfairly treated and face soaring premiums unless the conversation changes. Florida homeowners have paid far more than their share in premiums, and the rush to raise costs even higher is out of proportion to Tampa Bay property values. The state's congressional delegation should take a leading role in pushing for more reasonable changes, and there isn't much time.

The reason for the newfound urgency can be found in the spending bill signed into law last week by President Donald Trump. Congress has routinely kept the National Flood Insurance Program going by tying its fate to spending bills that have to be passed to keep the federal government running. But this time, lawmakers funded the government through Sept. 30 but extended the flood insurance program only through July 31. That means the pressure is on to overhaul the program within the next four months or risk it going out of business at least temporarily.

Nobody wants that to happen. If the program lapsed, the Federal Emergency Management Agency would stop selling and renewing policies across Florida and the nation. That would paralyze the real estate market in Tampa Bay, because homes in neighborhoods where flood insurance is required for federally backed mortgages could not be bought or sold. Nationwide, the National Association of Realtors calculates about 40,000 home closings a month could be affected if federal flood insurance isn't available.

Yet changes to the flood insurance program approved by the House in November and awaiting action by the Senate are untenable for Floridians. The legislation would raise the minimum increase in flood insurance premiums on homes built at least 43 years ago, or before modern flood maps were drawn, by 60 percent. The nonpartisan Congressional Budget Office estimates that would affect 330,000 homes nationwide, and that would include thousands of older Tampa Bay homes that are far from being mansions. The legislation also would increase other fees and surcharges, and the CBO says overall premiums for flood insurance would go up while the number of homes covered would go down. That flies in the face of a basic tenet of insurance: spreading the risk.

The last time Congress approved sweeping reforms to flood insurance, the outcry was so loud in Florida and elsewhere that changes had to be made within two years. For example, the 2012 Biggert-Waters Act prohibited flood insurance subsidies from being passed on to new property owners when the home was sold, which triggered skyrocketing premiums and depressed the real estate market in coastal neighborhoods. Congress repealed that ban in 2014, although annual premiums on subsidized policies continue to rise between 5 percent and 15 percent a year. The legislation passed by the House in November would jack up those annual increases even higher.

There are some positives in the House bill, such as making it clear that flood insurance coverage written by private insurers would be allowed for federally backed mortgages and increasing flood mitigation efforts. But Democratic Reps. Kathy Castor of Tampa and Charlie Crist of St. Petersburg were right to vote against the bill, because Floridians would continue to shoulder too much of the burden. Florida accounts for about 35 percent of all flood insurance policies, yet it has received less than 7.5 percent of all payouts over the last four decades. That's fundamentally unfair, and jacking up rates even higher for Florida homeowners would make the disparity even worse.

The federal flood insurance program is some $30 billion in debt, so something has to change. But soaking Floridians isn't the answer. Sens. Bill Nelson and Marco Rubio will have to convince senators from landlocked states that a viable flood insurance program is a national responsibility that should be more equitably shared, and they have just four months to make the case.

Floridians lose on flood insurance

State Portion of payouts Portion of policies

1978-2017 July 2017

Louisiana 33.95 percent 9.92 percent

Texas 12.04 percent 11.98 percent

N.J. 10.43 percent 4.61 percent

New York 9.34 percent 3.68 percent

Florida 7.28 percent 34.99 percent

Miss. 5.29 percent 1.29 percent

Source: Federal Emergency Management Agency