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Editorial: Flood coverage remains unfairly expensive

 
Published Aug. 28, 2015

Florida's insurance commissioner has written on paper what thousands of Floridians have been thinking: The federal flood insurance rates in this state are unfair. Now Washington should hand over the secret information used to set those rates, and Congress should pass legislation to make it easier for homeowners to shop elsewhere for affordable flood insurance.

State Insurance Commissioner Kevin McCarty wrote this month that the National Flood Insurance Program's rates in Florida "are unfairly discriminatory" and would not comply with state law if they were regulated by the state. That's because of the way the program uses multiple flood zones and then combines them to determine rates. McCarty wants the federal program to release the data and models it uses so he can analyze the rates based on state law and more clearly show how Floridians are being mistreated and overcharged for flood insurance.

That would be an excellent exercise. The federal flood insurance program writes more policies in Florida than any other state, and those polices make up more than a third of its total. Yet Floridians are losing out. Over the history of the program, more than $50 billion has been paid out but Floridians have received less than $4 billion. That is way out of balance, yet Floridians are being gouged to help cover the program's deficit.

Even after adjustments to the 2012 Biggert-Waters federal law that made unreasonable changes, homeowners still face annual flood insurance premium increases of up to 18 percent on primary residences and 25 percent on non-primary residences. Those increases remain a strain on too many Tampa Bay families and make the cost of flood insurance out of proportion to the value of too many homes.

McCarty's initial assessment that Floridians are treated unfairly came in response to a request from Sen. Jeff Brandes, R-St. Petersburg, who sponsored legislation aimed at creating a flood insurance market among private insurers to compete with the federal insurance program. The state lists roughly a half dozen companies that will write those policies, but Brandes says the deck remains stacked against them because federally backed mortgages require federal flood insurance. And homeowners who have federal flood insurance who switch to a private insurer and later want to come back to the federal program would not pick up where they left off. They would lose the glide path of gradual premium increases and immediately pay whatever the federal program says is the actuarially sound rate. That remains a big deterrent to shopping around for flood insurance.

McCarty should keep pushing Washington to release the data it uses to set flood insurance rates. Congress should pass legislation filed by U.S. Reps. Patrick Murphy, D-Jupiter, and Dennis Ross, R-Lakeland, to create a competitive marketplace for coverage. And Floridians should continue to demand that flood insurance premiums are more in line with the storm risk and the values of their homes.