Biggert Waters Act – Flood Insurance hikes?

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I hear that some people in Florida are seeing HUUUGe hikes in their flood insurance premiums. It’s gotten so bad recently that if your house is in a flood zone, you’re paying 4 or 5 digits on your annual bill and nobody wants to buy your house from you.

Some please explain how this law caused those hikes. Is this like the Obamacare equivalent of flood insurance?

Or is it that the government stopped subsidizing flood insurers with tax money, so the money had to come from somewhere?

  1. Reply
    Casey Y
    March 1, 2014 at 1:45 am

    You hit the nail on the head with your last statement. FEMA flood insurance rates were approximately 45% of what they should have been in most places, so the federal government was subsidizing the claims.

    Going forward, they actually want that program to become solvent (shocking for the federal government I know), so the rate needs to come from somewhere.

    This is happening all over the place; its pretty contentious up in NJ and NYC post Superstorm Sandy.

  2. Reply
    March 1, 2014 at 2:14 am

    BW effectively phases out the subsidies for flood insurance, bringing the rates charged to the customers up to “actuarially sound” rates. It’s not just Florida – any high risk area, Louisiana, Texas, the whole entire east cost – is seeing rate increases, to all new policies, and pre-firm grandfathered policies (on a tiered level). First to go, are the subsidies for second homes and commercial properties.

    Rate increases in the “preferred” or low risk plan, are minimal.

    Coastal properties, in general, are the most expensive to buy – so excepting low areas like almost the entire state of Florida, those subsidies have mostly benefitted the people who can afford beachfront property – the very rich – paid for by the working guy like Joe Plumber.

    Yeah, I’ve seen the whining from the millionaires on Long Island, about how their flood insurance rates on their $ 3,000,000 properties are going from $ 2,000 a year to $ 20,000 a year. I just don’t have much sympathy for them.

  3. Reply
    March 1, 2014 at 2:17 am

    mbrcatz, your post is technically correct but you fell off the cliff at the end. The National Flood Insurance Program coverage maxes out at $ 250,000. There are no $ 3 million mansions covered by it. There are, however, loads of $ 150,000 homes with premiums going into the $ 5 – 10k range.

    The thing that never gets mentioned in stories about Biggert-Waters is the the NFIP collected $ 6 billion more in premiums than is paid in claims through 2012. So how is it $ 25 billion debt. FEMA mismanagement and huge commissions to insurance companies that have no risk is why!

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