More evidence that recent flood insurance changes don't make sense: Property owners in St. Petersburg have paid far more into the federal insurance program over the past three decades than they have received in claims — despite ranking among the top 30 communities in the nation in the amount of claims received. And since Oct. 1, they've been on notice they must pay even more. Congress needs to embrace the bipartisan plan to retroactively delay rate increases under the Biggert-Waters Flood Insurance Reform Act and then draft a flood insurance solution that is fair and reasonable.
The Shore Acres neighborhood in St. Petersburg has long been well-known for flooding, with images every few years of residents kayaking the streets after a major storm. Built before federal flood maps were drawn and the insurance program launched, the homes there qualify for flood insurance at a reduced rate. But as the Tampa Bay Times' Susan Taylor Martin and Connie Humburg reported Monday, the neighborhood on Tampa Bay is not one of the reasons the nation's flood insurance program is in crisis.
Martin and Humburg found that over the past 35 years, St. Petersburg property owners — even as they live in Pinellas County, home to more subsidized policies than anywhere — paid $8 in premiums for every $1 in claims they have collected. That's even more than the $4-to-$1 ratio for all of Florida. And claims in Shore Acres have diminished in the past two decades amid a $9.2 million investment by the city in infrastructure — not insignificant given that the flood insurance program has always been part of a broader policy to encourage communities to invest in flood mitigation measures.
Yet after Biggert-Waters went into effect Oct. 1, Shore Acres homeowners have been among those hardest hit. Subsidies are being eliminated over the next five years for homeowners, in some cases leading to premiums as much as five times higher. Also devastating is the impact on the real estate market, because under the law anyone purchasing an older home in a low-lying area after July 1, 2012, must pay the unsubsidized rate immediately.
Biggert-Waters wasn't supposed to work this way. Drafted in the wake of enormous losses from Hurricane Katrina, its goal was to make the insurance program solvent over the next decade by eliminating subsidies and raising rates. But Congress expected the Federal Emergency Management Agency, which administers the insurance program, to perform an affordability study and adopt new mapping technologies before setting new rates. FEMA did neither, saying there wasn't time. Now no one is exactly sure how it set the rates, given that a Government Accountability Office report in July noted the agency didn't even have elevation levels for individual policies.
Late last month, a bipartisan group of lawmakers, including Sen. Bill Nelson and much of the Florida congressional delegation, filed identical bills in both chambers to retroactively delay the rates until more analysis can be done. When those will be heard, much less voted on, is unclear. House Speaker John Boehner and Senate Majority Leader Harry Reid should make it a priority. Then Congress needs to make it a priority that the next flood insurance plan is a rational one.