Washington is finally taking a second look at the ill-conceived Biggert-Waters Flood Insurance Reform Act. A bipartisan plan announced this week would retroactively delay rate increases that took effect Oct. 1 for up to four years while federal officials conduct an affordability study. But Florida leaders should leave nothing to chance until Congress also addresses broader flaws in the law, including astronomical rates that may have little to do with flood risk but undermine property values. Florida should continue to explore its options.
Even in the best-case scenario, the proposed changes to Biggert-Waters won't necessarily fix the economic havoc Congress has wrought on thousands of Florida's families. Passed in 2012 before Hurricane Sandy, Biggert-Waters was billed as a path toward making the federal flood insurance program solvent after $18 billion in losses in Hurricane Katrina. Under the law, owners of homes built before federal flood maps existed would see their premium subsidies phased out over five years starting Oct. 1 — but the subsidies would be removed immediately for any property sold after July 1, 2012.
In theory, Biggert-Waters might have made sense. In implementation, it's been a disaster. As Sen. Jeff Merkley, D-Ore., accurately summed it up Tuesday: "There are more families … worried about the cost of flood insurance than are worried about floods."
The elimination of subsidies for new property owners has sent shock waves through the real estate market in Florida and Tampa Bay. Pinellas County has the most subsidized policies in the nation. Overnight, modest homes that can be miles from the coast have become virtually unsellable to anyone but cash buyers. Potential buyers of older homes in low-lying areas have been told flood insurance costs would increase as much as tenfold.
The proposed timeout on rate increases certainly would be better than nothing. But the bipartisan fix unveiled this week still doesn't address the red flag the Government Accountability Office waved in July. It told Congress that the Federal Emergency Management Agency didn't have the information — like elevation certificates — it needs to set rational rates.
Tallahassee should keep looking for alternatives. Two private insurance companies have announced they hope to start writing private flood insurance in the Tampa Bay market, something encouraged by Florida Insurance Commissioner Kevin McCarty. But McCarty and state legislators should also keep exploring establishing a state-run flood insurance pool where all excess premiums could be dedicated to reserves, not private company profits.
Florida is in a far better position than most states to consider alternatives as it has long been a donor to the flood insurance program, with property owners having paid $4 in flood insurance premiums for every $1 in claims paid out.
A National Flood Insurance Program with rational rates remains the best option, and Congress should approve the delay in rate increases. But Florida should continue to consider how to fend for itself.