Florida homeowners already have been slammed with rising windstorm insurance rates this year but they’re likely to get an unexpected reprieve on protection against the other major hurricane threat.
Federal flood insurance rates were poised to spike dramatically this year in Florida and other coastal states but that appears on hold for most homeowners because of push back — at least for this year.
The Federal Emergency Management Agency, which controls the National Flood Insurance Program, has been telling flood insurance brokers for weeks that the planned rollout of new (and for Floridians, potentially much higher) rates won’t happen all at once in October as originally planned.
FEMA now plans that only new policies will be subject to the new rate structure, known as Risk Rating 2.0, on October 1. Everyone who already has a flood insurance policy won’t see a rate change until April 2022.
Del Schwalls, immediate past chair of Florida Floodplain Managers Association, confirmed to the Herald that FEMA has told his members of this change in the scheduled rollout.
FEMA declined to confirm or deny that the agency was considering a delay, which was first reported in Politico this month.
“FEMA currently is finalizing its planned release of Risk Rating 2.0. Once that process is complete we will announce specifics related to the National Flood Insurance Program’s new rating system. At this time, any information would be pre-decisional, and as such, it would be inappropriate to comment further,” David Maurstad, senior executive of FEMA’s National Flood Insurance Program, said in a statement.
Risk Rating 2.0, the biggest revamp of the federal flood insurance program in decades, is meant to set new prices that actually align with the risk of flooding homeowners face. That could mean lower rates for some homeowners, but experts say it will likely lead to higher rates for coastal homeowners. Florida, which holds about a third of all flood policies nationwide, could see some of the biggest impacts.
The overhaul has been in the works for years for a federal system that has run billions in the red because of the massive losses from a string of storms, starting with Hurricane Katrina in 2005, which cause more than $125 billion in damage, much of it in badly flooded New Orleans.
The new system is expected to be a more accurate view of flood risk, one that takes rainfall and sea-rise-driven tidal flooding into account and doesn’t set rates solely on whether or not a building is in a flood zone.
The program was initially set to debut in October 2020 but was delayed a year under political pressure. Politico reported that political pressure, this time from the Biden administration, was yet again the reason for a delay.
On April 1, FEMA is supposed to release the new rates it plans to charge homeowners, as well as the math behind their decision. But that too could be pushed back. The New York Times reported this week that Senate Democratic Majority Leader Chuck Schumer is pressing FEMA to put off the release over concerns that the new rates will be more expensive for his New York constituents.
Neither FEMA nor Sen. Schumer’s office responded to a request for comment, but a spokesperson for Schumer told the Times that the agency should focus on “affordable protection” for communities nationwide.
“FEMA shouldn’t be rushing to overhaul their process and risk dramatically increasing premiums on middle-class and working-class families without first consulting with Congress and the communities at greatest risk to the effects of climate change,” Alex Nguyen said in a statement.
Raising rates is politically unpopular on both sides of the aisle, although experts say it’s needed to help the nation adapt to climate change. Currently, any changes to premium prices are capped at 18% a year.
Florida’s two Republican senators have a history of objecting to any reforms to the NFIP that would drastically raise rates for Floridians. As governor, Rick Scott openly opposed the major flood reform act of the day — the 2012 Biggert-Waters Act — arguing a dramatic rate hike would hurt the real estate industry.
As a senator, spokesperson McKinley Lewis said in a statement that Scott still supports keeping rates from rising quickly.
“Senator Scott supports a long-term, stable solution to the NFIP that is fair to Floridians. He continues to work with his colleagues on a permanent fix to the NFIP that will keep rates stable and remove the unfair burden on Floridians, as well as reforms to the private market that would strengthen the overall flood insurance market and give consumers more choice,” he said.
Sen. Marco Rubio has co-sponsored several bills to sustain or reform the National Flood Insurance Program, including a major bipartisan bill in 2019 that didn’t succeed.
“Flood insurance is a necessity in Florida, and as the private insurance market responds to increased flooding we must make sure the federal backstop remains an accessible and sustainable option for Floridians. Rates changes are unfortunately unavoidable, but they should happen alongside fundamental reforms that focus on much-needed mitigation efforts and guided by new mapping that allows the federal government, local communities, and homeowners to make informed decisions,” Rubio said in a statement.