In a bid to stave off big flood insurance rate increases, Florida officials are supporting a lawsuit filed by Mississippi that challenges the overhaul of the National Flood Insurance Program.
"This unfair rate hike could devastate Florida's real estate market and homeowners," Gov. Rick Scott said in a statement Thursday announcing his support.
So far, Florida is not presenting its own legal challenge to the rate hikes, but rather taking the limited step of filing a "friend of the court" brief supporting Mississippi's case. Florida Attorney General Pam Bondi said she remains in "frequent communication" with the Florida Office of Insurance Regulation to consider other legal action.
Congress passed the Biggert-Waters Flood Insurance Reform Act in July 2012 as an attempt to shore up the flood program, which was forced to borrow nearly $18 billion from the U.S. Treasury to stay solvent after Hurricane Katrina.
The overhaul hinges on raising rates substantially for owners of older properties in flood zones that were built before flood maps went into effect and that have been subsidized with lower rates. For most, subsidies are being phased out gradually with annual rate increases near 20 percent.
In some cases, such as when a property changes hands, the subsidy is being eliminated immediately starting with renewals this month. That has left some local home buyers seeing their flood insurance rates jump fivefold or more.
Mississippi's suit, which was filed Sept. 26 in federal district court in Gulfport, asks a federal judge to find that FEMA, the Federal Emergency Management Agency, was obligated to deliver an affordability study to Congress by last April before imposing the rate hikes.
FEMA director Craig Fugate has blamed Congress for not appropriating money for his agency to complete the study before the deadline. Regardless, he said, the law did not require a finished study before implementing the rate hikes this month.
A hearing on Mississippi's motion for a preliminary injunction is set for Oct. 28.
Most businesses and home-owners are only marginally affected by Biggert-Waters. But Florida is hit hardest, accounting for 40 percent of all flood policies in the country, including 270,000 that are subsidized. Pinellas County has more than 50,000 subsidized policies, more than any other U.S. county.
Florida's congressional delegation has unified in a bipartisan push to stop the rate hikes or at least delay their rollout. However, even aside from the current standoff in Washington, legislators acknowledge a tough battle to change the law since it significantly impacts only a few states.
Beyond litigation and legislation, Florida is also considering a more sweeping, long-term policy change. Florida Insurance Commission Kevin McCarty is investigating whether Florida could induce private insurers to sell flood insurance, possibly severing ties to the federal flood program.
Since the private market pulled out of flood insurance 40 years ago, the landscape has changed, McCarty said. Flood plain mapping has improved and there is now a recorded flood claims history showing that Florida policyholders have paid four times more into the flood program than they've gotten back.
"There are two lessons learned,'' McCarty told the Times/Herald. "Florida could potentially be a self-sustaining state, and it could be a sign to the private market that Florida could be profitable."
Times/Herald Tallahassee co-bureau chief Mary Ellen Klas contributed to this report. Jeff Harrington can be reached at [email protected] (727) 893-8242.