Florida didn't trigger the financial crisis within the National Flood Insurance Program.
In fact, over the past 35 years, the state's property owners have helped prop up the program, paying four times more than what they have gotten back in claims.
The payback for all that financial help: About 270,000 Florida properties could face huge flood insurance rate hikes. That's three times more than the next most-affected state, New Jersey.
The bull's-eye is on Pinellas County, which leads all counties across the nation with almost 51,000 affected properties, roughly an eighth of its homes and businesses.
To put the federal flood insurance program on firm ground and make it fairer, Congress passed a law last year that targets low-lying properties whose owners have for decades paid cheaper, subsidized flood insurance premiums.
Most Floridians are unaware of what's about to hit them, said Patty Latshaw of St. Petersburg-based Wright National Flood Insurance Co., the biggest writer of federal flood insurance in the country.
"A lot of people here think this doesn't pertain to them — that it's a New Jersey situation from (Hurricane) Sandy or a Louisiana issue due to (Hurricane) Katrina," Latshaw said. "We're really not hearing a big noise. … Not yet."
First hit are investor-owned properties losing their subsidies. They face increases of 25 percent a year for multiple years until their rates reflect the "full rate risk" of flooding.
Owners of older homes in low lying areas aren't off the hook, either. Some could face rate increases of up to 20 percent a year after their communities adopt new flood insurance rate maps as part of the program overhaul. Rate hikes used to be capped at 10 percent.
If a house or business is sold, the rate increases could be even more stunning. Anyone who has bought a rate-subsidized property after the new flood law was signed July 6, 2012, will have to pay the full rate for coverage after Oct. 1. That could be more than triple the price paid by the previous owner.
Pinellas County has more than 24,000 properties facing that kind of rate shock if they sell. Pinellas is No. 1 in the nation in that category, too.
Jeff Grady, president and CEO of the Florida Association of Insurance Agents, has heard anecdotes of $3,000 premiums that will jump to $12,000 for policies renewed after October; or $9,000 premiums soaring to $22,000.
"That makes the business owners or property owners just gasp," Grady said. "Not only can't they afford it, it really devalues the property."
Chris Heidrick, owner of Heidrick and Co. Insurance in Sanibel, has tried to spread the word in his beachfront community. As a popular destination for second homes, Sanibel Island's Lee County has the second-highest number of investor-owned properties being affected by the phaseout of flood insurance subsidies.
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Heidrick is concerned spiraling rates will both dampen real estate sales and hurt small business.
"I'm concerned about ground-level offices and shopping centers and small businesses. The T-shirt shop near the beach," he said. "The impacts are so far-reaching. This is not just impacting the rich people who have second homes."
Officials with the Federal Emergency Management Association, which runs the flood program, have downplayed the impact. The phaseout of subsidies will affect fewer than 20 percent of flood policyholders, FEMA said. Even fewer will see rates triple in a year, officials said.
Elsewhere in Tampa Bay, 14,484 Hillsborough County properties could lose their subsidized rates over time. In Pasco, the number is 11,413; in Hernando, 1,044; in Citrus, 2,882.
"The numbers aren't hitting people's mailboxes yet, but once they do, you'll need a special edition of the Tampa Bay newspaper" to explain it all again, said David Thompson, a longtime staff instructor with Florida Association of Insurance Agents.
The Katrina effect
Just like Hurricane Andrew was the wake-up call for windstorm insurance in 1992, Hurricane Katrina had the same effect on flood insurance.
The storm plowed through the north Gulf Coast in 2005, leaving behind $16 billion in flood claims, primarily in Louisiana. The hurricane pushed the National Flood Insurance Program $18 billion in debt, forcing it to borrow from the government to stay in business.
To keep the flood program solvent for the long term, Congress overwhelmingly passed the 2012 Biggert-Waters act. The idea: focus the biggest rate hikes on investor-owned homes and older homes that have been paying sub-market rates for decades.
Louisiana's leaders have led a pushback against the law, with Louisiana Sen. Mary Landrieu advancing legislation to suspend the severe rate hikes for three years while FEMA studies its options.
Florida's two senators are reluctant to jump into the fray.
Staffers for Sen. Bill Nelson, a Democrat, said he voted for Biggert-Waters last year because the flood program was about to expire and needed reforms to stay solvent. Last week, he was seeking additional information from FEMA on the impact to Florida.
"But the bottom line is this: Though the flood insurance program may not be actuarially sound, tens of thousands of Floridians rely on it for affordable coverage — and, keeping coverage affordable for those in need is an important part of the equation," Nelson's press secretary Ryan Brown said.
Republican Sen. Marco Rubio, who voted against the bill last year, said the flood program reminds him of Florida's state-run Citizens Property Insurance: a government-run outfit that has to be financially restructured to become self-sustaining.
"I know eventually we're going to have to reform this program. Whether we can afford to delay (rate hikes) three more years … is something I need to think about," Rubio said in an interview with the Times.
"I'd prefer for no rates to go up in Florida, but I'd also prefer for the flood insurance program to survive or some alternative to it survive. Otherwise you won't be able to sell or buy property in Florida."
It's all about risk
In the history of the flood program, Florida property owners have paid $16.1 billion in premiums while collecting just $3.7 billion in claims, according to a 2011 analysis by the University of Pennsylvania's Wharton Center for Risk Management and Decision Processes.
Contrast that with Louisiana, which paid $4.4 billion in premiums but collected almost four times that in claims, the vast majority tied to Hurricane Katrina.
Since 1978, Texas ($5.5 billion), New Jersey ($4.8 billion) and New York ($4.4 billion) have also received more payouts than Florida, while paying far less in premiums. And those numbers predate last year's Superstorm Sandy, which caused billions more in flood damage in the Northeast.
And year after year, Florida ponies up a third of all premiums into the program.
"Flood in Florida is a moneymaker" for the government, said Thompson of the Florida Association of Insurance Agents.
Elsewhere, property owners are required to buy flood insurance to cover potential catastrophes from rising rivers, lakes and streams. Storm surge from major hurricanes is the bigger flood concern in Florida.
But most of the hurricanes that have struck Florida in modern times, including the grand-daddy, Hurricane Andrew in 1992, were more windmakers than floodmakers. Of the nation's top 10 flood-claim events since 1978, only one (Hurricane Ivan in 2004) caused heavy damage in Florida.
Why isn't Florida a bigger recipient of flood insurance payouts given the amount in premiums paid? "
Florida hasn't been hit by a major hurricane in seven years. That has a lot to do with it," said Dan Watson of FEMA.
Like any other insurance, flood premiums don't reflect real-life events; they reflect risk. With its 1,200 miles of coastline, Florida is still considered more at risk than any other state.
Just one major, slow moving hurricane that hits a populated part of Florida's coast could dramatically increase the state's flood claims. And private insurers have been unwilling to provide flood coverage.
Sam Miller of the Florida Insurance Council said the state is much better off with the security blanket of the National Flood Insurance Program than if it were on its own for flood coverage, as it is for windstorm.
"Florida has all it can say grace over," Miller said. "If you don't have a (federal) flood program, I don't know where the coverage would come from."
Times staff writer Alex Leary contributed to this report. Jeff Harrington can be reached at firstname.lastname@example.org or (727) 893-8242.