Monday, June 25, 2018
Business

Calm before the storm: Flood insurance could get messy over summer

Flood premiums are rising again this month in a dreaded springtime ritual, with homeowners seeing anywhere from 5 percent up to 25 percent increases in worst-case scenarios.

While an average hike of 8 percent might seem alarming to some homeowners, the big question that still looms is how much more prices will go up come July 31, the deadline for action on the federal flood insurance program — or whether that deadline will be met at all.

"The only concern I have is the date," said Patty Latshaw, principal flood coordinator at Wright National Flood Insurance Company. "It affects so many people and it’s hard to see it right smack in the middle of hurricane season."

After half a dozen temporary extensions, Congress now has until the end of July to renew the National Flood Insurance Program, a government-run program that is the main vehicle for buying flood insurance.

As of the beginning of the month, rates for flood insurance went up from $866 on average to $935. That amounts to about an 8 percent hike, though most homeowners’ policies will increase about 5 percent.

Ahead of the deadline, there are three possible outcomes: the NFIP is renewed long term —at least five years — likely with some changes; Congress pushes off a decision for another short period, saving renewal for after the 2018 midterm elections; or the NFIP is left to lapse.

In a worst-case scenario where the NFIP is left to lapse, that means no new policies will be written until action is taken, new and prospective homeowners will be the first to feel the effects.

Related coverage: Romano: Your flood insurance policy may have run out of reprieves>

Flood insurance is required for most mortgages in designated flood zones. If someone buys a home in such a zone and the NFIP lapsed before they closed on the house, they would not be able to get a flood insurance policy, and thus not be able to go through with the sale.

A similar issue would hit homeowners whose policies expire after July 31. They would not be able to renew their policies with the NFIP, causing a lapse in coverage.

In a less-dire scenario, if the price of flood insurance goes up significantly, home values, could decrease, making it difficult for sellers.

Jon Gentile, vice president of government relations for the National Association of Professional Insurance Agents, said consumers are right to be mildly concerned.

"If you’re a homeowner or business owner, there’s uncertainty right now with whether Congress will provide a long term reauthorization," Gentile said. "Consumers certainly have a right to be concerned."

One change may be in how the NFIP interacts with the private flood insurance market.

FEMA, private insurers and insurance companies such as Wright — which has the largest number of NFIP policy holders in the country — are pushing for Congress to require banks to recognize all flood insurance policies, including those from private insurers. This, they say, gives consumers more choices to satisfy the mandatory coverage.

Currently, it’s difficult for a homeowner who receives subsidized rates to switch between being covered by the NFIP and a private flood insurer without losing that reduced rate.

Previous coverage: Flood insurance reform front unusually quiet despite major storms>

That’s because if their mortgage requires continuous flood insurance coverage, it is only considered continuous by the NFIP if it is issued through the NFIP. Even if that homeowner had a policy with a private insurance company for a year, it wouldn’t be counted by the federal program, pushing that homeowner up to higher rates.

*Most* properties affected by this are called "pre-FIRM," or properties that were built before the first flood insurance rate maps were put into place in 1975. If those property owners had been with NFIP consistently, their rate increases would have been more gradual than trying to get back into the federal program. Only about 20 percent of policies under the NFIP are subsidized, which includes pre-FIRM.

"This is the unintended consequences of what Congress passed and what FEMA has to mandate," Latshaw said.

Under the rates effective April 1, those properties — as long as they weren’t the owner’s primary residence — saw a 25 percent rate increase. The rates will continue to increase by 25 percent until they reach what is considered an actuarially-sound price.

Now is not the time for panic, said Robin Sollie, head of the Tampa Bay Beaches Chamber of Commerce. July 31 is still a ways off, and until legislation is passed or close to being passed, the stakes are not clear.

MORE: Go here for more Business News

"It’s just been a bit quiet because it has been in a holding pattern and I don’t think really it’s going to get a sense of urgency until we get closer to an expiration," Sollie said.

Shore Acres, a waterfront community in Pinellas County, is likely to be among the most affected by flood insurance changes. The low-lying community routinely floods during the summer rainy season, and in 2016, 65 to 92 percent of homes in the community qualified for subsidized flood insurance rates.

And the issue may be in the back of residents’ minds right now because of the deadline extension. Sollie said she hasn’t been approached by any of the residents in her area about flood insurance recently.

Contact this reporter at [email protected] or (727) 892-2249. Follow @malenacarollo.

Comments
Falling gas prices in Tampa Bay might level out soon

Falling gas prices in Tampa Bay might level out soon

Gas prices in Florida have been declining for the past 30 days straight, but analysts say that trend might not last due to higher oil prices.Tampa Bay gas prices fell another seven cents a gallon over the past week to an average of $2.58 a gallon fo...
Updated: 6 minutes ago
Visit St. Pete-Clearwater partners with HSN to turn shoppers into tourists

Visit St. Pete-Clearwater partners with HSN to turn shoppers into tourists

Valerie Stup’s toes are in the sand at Clearwater Beach. Guy Yovan is spotting dolphins near John’s Pass. Sarah Anderson is touring the Dali Museum.Usually HSN’s shoppers only see their favorite network hosts inside the studio selling handbags, cookw...
Published: 06/25/18
Norwegian Airlines offers direct flights from Tampa to London-Gatwick

Norwegian Airlines offers direct flights from Tampa to London-Gatwick

TAMPA — Norwegian Airlines announced Monday it will start direct flights twice a week between Tampa International Airport and London’s Gatwick Airport effective Oct. 31, giving TIA another highly prized international flight.Bookings are available onl...
Updated: 3 hours ago
Office building demolition at Midtown Tampa site proves tougher than expected

Office building demolition at Midtown Tampa site proves tougher than expected

TAMPA — Stripped to the girders, the old Bromley office building looked about as substantial as fish bones on a dinner plate.But the 5-story structure proved Sunday it still had a surprising amount of fight left in it.A demolition team had planned to...
Updated: 4 hours ago
President Trump’s trade war threatens the US newspaper industry

President Trump’s trade war threatens the US newspaper industry

STERLING, Ill. - As a longtime editor of small-town newspapers, Jeff Rogers has seen his industry face the collapse of print advertising, the rise of the internet and more. Today, his 18 employees work in a newsroom here that puts out two daily newsp...
Published: 06/24/18
Making the case for more drones

Making the case for more drones

BLACKSBURG, Va. - They considered how well everyone slept the night before. They considered the chances a military jet might scream by on a training mission. They considered the farmer in the field.Then they considered some more.After making it throu...
Published: 06/24/18
Coal and gas hold onto their share of electricity production, despite massive push for renewables

Coal and gas hold onto their share of electricity production, despite massive push for renewables

Here’s an intriguing set of facts: Coal produces the same percentage of the world’s electricity as 20 years ago. Oil and gas remain about level, too.Same for nonfossil fuel sources. In other words, the massive push towards renewables over the past co...
Updated: 1 hour ago
Tampa Bay workforce development initiative looks to Houston for lessons

Tampa Bay workforce development initiative looks to Houston for lessons

The biggest hospitals in Houston had a problem.To earn a prized institutional certification, they needed more nurses with bachelor of science degrees in nursing.But local colleges were more focused on turning out nurses with two-year degrees who, to ...
Published: 06/22/18
Health care IT company CareSync shuts down, laying off 292

Health care IT company CareSync shuts down, laying off 292

TAMPA — The days ahead were supposed to be bright.For weeks, the future of health care tech company CareSync had been thrown into question as founder and CEO and founder Travis Bond unexpectedly departed, kicking off multiple rounds of layoffs. But t...
Published: 06/22/18
Brink: Why have Florida’s working-age men left the labor market in droves

Brink: Why have Florida’s working-age men left the labor market in droves

A cancer lurks within Florida’s otherwise rosy job numbers, one that’s been called a quiet catastrophe and an intractable time bomb.Too many men between the ages of 25 and 54 have stopped working.Economists call those the prime-age years. Incomes gen...
Published: 06/22/18