Florida lawmakers are trying to find a solution to a costly change in the flood insurance market. Rates are climbing for a lot of homeowners because of a federal law that extended the National Flood Insurance Program and raised premiums.
The program is for homes in designated flood zones, and more homeowners may unexpectedly be forced to get coverage. Under the federal law, homeowners will be phased into the higher rates over the next five years.Senate Banking and Insurance Chairman David Simmons, an Altamonte Springs Republican, says Florida homeowners already pay nearly four times into the program what they get back in claim reimbursements.
“We are a donor state, we’re paying significantly more in the way of premiums than there exists in the way of claims", Simmons said. "And the question is, why are we doing that?”
Realtors and bankers are worried that a new round of foreclosures could result from the added expense. Homes that are sold or that have lapses in their policies are subject to the higher rates immediately.
The committee heard an example from the St Petersburg area where the flood premiums for a 60-year-old 1,000 square foot cottage will jump from $2,000 to $16,000 as soon as someone buys it.
But there may be an alternative.
Rebecca Matthews with the Office of Insurance Regulation says private companies are interested in writing flood policies here.
"We are talking to companies that are interested in coming into Florida and are working through an expedited process for offering flood", said Matthews. "So, this is an issue that maybe needs to be taken care of a little sooner than waiting for session.”
The national flood program supports 5.6 million policies, and 2 million of those are in Florida.