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Florida won't join Mississippi flood insurance lawsuit, but supports the effort

Gov. Rick Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater on Thursday announced that they are filling a "friend of the court" brief in support of a Mississippi lawsuit aimed at halting massive flood insurance increases, but they have decided not to join the lawsuit as a litigant.

"We’re hoping Congress will do the right thing,'' Bondi said, in explaining why the state has decided not to put its legal might behind the effort. "We haven't ruled anything out at this point" noting that she hopes Mississippi's efforts are successful.

Mississippi Insurance Commissioner Mike Chaney filed suit against the U.S. Department of Homeland Security and the Federal Emergency Management Agency last week asking a judge to halt the rate increases imposed by the Biggert Waters Flood Control Act of 2012 until FEMA completes an affordability study required by the act. Chaney asked the state's attorney general to join him in the lawsuit but he declined.

Under the act, an estimated 268,000 Florida homeowners with older homes in flood prone areas could see their rates soar when their property changes hands. The act was designed to eliminate a $24 billion deficit in the National Flood Insurance Program by gradually increasing rates for most homeowners in the program, and charging full-market rates for those who have benefited from below-market rates for years.

But Congress, which passed the bill with overwhelming support, and President Barack Obama who signed it, failed to calculate the rate shock homeowners in older homes would face. Scott and Florida's congressional delegation have asked congressional leaders to pass a bill to delay the rate hikes but, with government at a standstill and Congress in gridlock, nothing has happened.

“The first effort was to see if they in Washington could just do the right thing and regrettably this was the second effort,'' Atwater said. "We can know say they passed something before they knew what was in it.”

Scott and Atwater used the announcement to criticize Obama.

"I’m calling on the president to do the right thing,'' Scott said. "He has the opportunity through FEMA to stop this unfair raise in flood insurance rates for our citizens. This is unconscionable for what they’re doing – significant increases in flood insurance rates.”

Atwater said that the president should suspend the law without an act of Congress, as he has done with other laws, he said.

“Unless something is done soon there is a great likelihood that a Floridian will lose their home financially to the cost of the act rather than the cost of flood,'' he said. "We still ask and there’s still time for us to fix it." 

At a hearing before the U.S. Senate Banking subcommittee on Sept.18, FEMA Director Craig Fugate testified that he could not unilaterally stop the enforcement of the law and needed Congress to act.

"I need help,'' Fugate said. "I have not found a way to delay…without some additional legislative support."

Fugate, a former Florida emergency-management director, told subcommittee that while his office was ordered to conduct an affordability study, he did not have the data and Congress did not appropriate the resources to compete the work before the deadline. Meanwhile, he said, there was no provision that the rates be deemed affordable before they took effect.

In June, the U.S. House voted to delay parts of the act for one-year to give FEMA time to assess the impact the rate shock will have on homeowners, but the Senate has not taken up a similar bill.

Meanwhile, the Florida Office of Insurance Regulation is developing guidelines to help encourage insurance companies in the private market to write primary flood insurance policies for Florida.

Kevin McCarty, director of OIR, said that since the private market pulled out of flood insurance 40 years ago, the landscape has changed. There is now a recorded flood claims history and flood plain mapping has improved dramatically.

He said the claims record, which shows that Floridians have paid four times more in premiums than they have drawn in claims, coupled with the facts that Florida accounts for 37 percent of the NFIP flood insurance accounts, make the state a potential market for private insurers.

“There are two lessons learned,’’ McCarty told the Herald/Times. “Florida could potentially be a self-sustaining state, and it could be a sign to the private market that Florida could be profitable.”