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With Florida blindsided by flood premium crisis, is it time for new state-run insurer of last resort?

Is a state-run flood insurer of last resort in Florida's future?

Never should it have come to this.

An insanely poor piece of federal legislation called the Biggert-Waters Flood Insurance Reform Act of 2012 tried to fix the nearly bankrupt national flood insurance program in the wake of Hurricanes Katrina and Sandy. How? For starters, by foolishly raising premiums — not via gradual price hikes but in draconian style.

Tales proliferate of irate Florida owners of modest homes along the coast or in lower-lying areas. Many face annual increases of 20 to 25 percent. And if they sell, the annual bill in some cases can leap from $2,000 to $12,000 or even higher.

The Florida real estate industry, whose national organization naively embraced Biggert-Waters last year, is now up in arms. Realtors are terrified that vast swaths of Florida homes will drop in value or become pariahs to buyers forced to inherit sky-high flood premiums.

Today's flood insurance fiasco smells a lot like the days that followed 1992's Hurricane Andrew. That's when property insurers in Florida panicked and said they must stop insuring homes in the state or start sharply raising their premiums. The public outcry back then from such threats prompted the creation of the state-run "insurer of last resort," which we know now as Citizens Property Insurance.

While establishing a state-run insurer of flood insurance may seem unlikely, something must be done soon to help those home­owners who will end up paying more for flood protection than they pay on their mortgages.

Perhaps Florida should listen to a nearby state rather familiar with floods.

Louisiana Treasurer John Kennedy suggested this week that his state explore getting into the business of offering flood insurance to help residents who, like Floridians, will suffer the same skyrocketing flood premiums.

Louisiana already operates state-run corporations for property insurance and workers' compensation coverage.

Given Florida Gov. Rick Scott's preference to minimize the role of government in private enterprise, a state-run insurer for flood insurance could prove a hard sell.

But if Scott gives a thumbs-down to such an idea that takes root in other states, what is his alternative plan?

Many Floridians in flood-prone areas will see huge leaps in flood insurance prices in the coming year. That could turn the cost of flood coverage and the potentially devastating impact it has on real estate values into a major campaign issue in 2014, when Scott seeks re-election.

Scott has a clear habit of flip-flopping on issues that endanger his stay in office.

One alternative, of course, is to persuade federal legislators to reconsider Biggert-Waters and phase in higher rates over a longer period of time.

For now, Florida is mobilizing to delay or soften the coming premium hikes. That's the mission of forums, including an event Wednesday evening held at St. Petersburg College attended by 500 people.

It's disturbing so few in Florida saw this threat coming. Florida's got too many other critical challenges than to be whipsawed by such poor legislation whose passage was naively approved by too many Florida elected officials.

Robert Trigaux can be reached at

With Florida blindsided by flood premium crisis, is it time for new state-run insurer of last resort? 09/25/13 [Last modified: Wednesday, September 25, 2013 8:51pm]
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