As the U.S. Senate Banking Committee plans a hearing today on the planned rate hike on flood insurance policies, Gov. Rick Scott is urging Florida's senators to push for a delay and an extension in the federal subsidies.
"In cases where new maps move a property into a flood zone, homeowners may find it impossible to sell their properties to a new owner who will be shocked with the massive premium increases required to secure a mortgage,'' Scott wrote in a letter to U.S. Sen. Bill Nelson and Marco Rubio. "This unfair consequence could devastate parts of Florida's real estate market, stymie Florida's economic recovery, and diminish the state's tax base."
Under the Biggert-Waters Flood Insurance Reform Act of 2012, flood insurance rates will rise about 20 percent annually beginning Oct. 1 for homes in older, flood-zone areas that have previously enjoyed subsidized rate. The rate increases will continue until their premiums reflect the full market risk.
The rate increases are intended to keep the national flood insurance program from spiraling into insolvency by phasing out lower, subsidized rates for older properties in flood zones.
Scott noted that in the last 35 years, Florida families have paid more than $16 billion into the National Flood Insurance Program "four times more than the amount they have received in claim reimbursements."
He also commended the state's building code standards and hurricane loss mitigation efforts as reducing the exposure for the flood insurance program. "Florida's rates should commendsurately reflect these important risk-mitigating factors,'' he said.
In June, Congress passed an amendment to the Flood Insurance Reform act that would dealy the rate increases for at least a year. Nelson has indicated he supports a similar effort in the Senate. Rubio has said he supports working with homeowners but has not endorsed a delay.
Scott's opposition to eliminating the federal flood insurance subsidies appears to contrast with his position on Florida's subsidized property insurance program, Citizens Property Insurance. The governor has supported a push by the state-run insurer to raise premiums on property owners for the state-backed insurance plan in an effort to make those premium gradually reflect their market risk.
Citizens last week received aproval for a 6.3 percent average increase on standard homeowners premiums, an increase that follows two years of double-digit increases for the same policies.
Here's Scott's letter: Download Scott Flood Insurance letter9.18