Floridians are better off now that President Barack Obama has signed the Homeowner Flood Insurance Affordability Act, but the really hard work is still ahead. The Federal Emergency Management Agency should embrace the spirit of the law and become more open and accountable for how it draws flood maps and sets insurance premiums. Local officials should consider how their communities can mitigate potential flood losses to qualify for lower insurance rates. And Florida's congressional delegation should remain vigilant to ensure flood maps are accurate and insurance rates charged to their constituents are fair and not just underwriting the rest of the nation's risk.
The new law is better than the status quo, but it's not clear by how much. Rate increases have been diminished or eliminated — though not for all properties. Gone is the devastating requirement that new owners immediately pay actuarially sound rates on properties that had previously enjoyed subsidized rates. But flood insurance rates will remain complicated. The program still will divide properties into three broad categories. Properties built before federal flood maps existed, which have long enjoyed subsidized rates, still will have to move to actuarial rates — though homeowners have been given a more gradual path than under the former flood insurance law, the 2012 Biggert-Waters Act. "Grandfathered" properties that were initially built to flood codes and later drawn into a higher-risk flood zone but not required to pay higher rates will keep their subsidized rates under the new law. Then there is everyone else who doesn't fit neatly into those categories.
There remains concern for the local real estate market about the lack of relief in the new law for rate increases for commercial and investment properties built before federal flood maps existed. Those properties, including second homes, will still face average rate increases of 25 percent a year until they reach actuarially sound rates, with no cap on the annual increase for individual properties. Primary homes will now face an average 15 percent increase, with the increase for any individual home capped at 18 percent.
There remain serious questions about the efficacy of the nation's flood maps and the flood insurance program's rate-setting. Hurricane Sandy, for example, exposed that cost-cutting on flood mapping led to maps that excluded many homes that should have been included in flood zones. The Tampa Bay Times and other media uncovered how wealthy waterfront property owners have undertaken the costly process of challenging flood maps and qualifying for lower rates — even when similarly situated neighbors are still paying higher rates. The agency has yet to adequately explain to its policyholders how rates are set.
The best Floridians can hope for at this point is that the bright light that has shone on the National Flood Insurance Program will continue to force more positive changes. FEMA is now on notice that it must justify its mapping and rate-setting and work closer with communities. It must establish within a year mitigation options for property owners. It must hire a consumer advocate. And it now has authority to create high-deductible policies and accept monthly premium payments.
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None of that will mean much, of course, unless FEMA is held to account by local communities and elected officials. Let that work begin.