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Flood insurance rates are seeing increase

By Staff | Feb 13, 2014

Property owners in the Ohio Valley and across the nation are seeing dramatic increases in their flood insurance rates, prompting a current fight in Congress to delay implementation of the Biggert-Waters Flood Insurance Reform Act of 2012.

The act was passed in July 2012. According to FEMA, the act “calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the National Flood Insurance Program (NFIP) is run. . . Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some-but not all-policyholders over time.”

Owners of property that requires flood insurance have been receiving letters outlining the changes brought about by the Biggert-Waters Act and how it would affect them. As it turns out, everyone who purchased property in a flood plain after July 2012, when it was passed, would be required to pay “full risk rates” as of Oct. 1, 2013.

What does that mean? In many cases it means rates have increased 100 times, often to levels of about 10 percent of their mortgage.

But those who purchased property prior to the act are not immune. The legislation calls for them to see at 25 percent increase in premium rates each year until premiums reflect full risk rates.

“I’ve heard from West Virginians facing astronomical increases in their flood insurance premiums, and I am concerned that some homeowners may be forced to choose between paying their mortgage or paying their insurance,” said U.S. Representative Shelley Moore Capito. “I will continue my efforts to make flood insurance premiums more affordable for homeowners in flood zones while also reducing the strain on the Flood Insurance Trust Fund.”

Flood insurance is necessary for any federally backed loan, like any loan from a FDIC institution-meaning most all banks. Often times homeowners in areas like the Ohio River valley drop their insurance as soon as loans are paid off. Areas such as this require flood insurance on loans for properties that rarely see any real damage from the easily predicted flooding.

Thankfully there is some hope on the horizon. On Jan. 30 the U.S. Senate passed Senate Bill 1926 by a vote of 67 to 32. It would delay the implementation of the act for four years.

That bill has now passed to the house, but Bart Cannizzaro of New Martinsville who has been closely following the issue says it may never get to the floor for a vote if Speaker of the House John Boehner doesn’t bring it up for a vote.

Boehner reportedly will not consider a four-year delay. But he has said he would be open to other reforms.

Congressman David McKinley, who represents the First District of West Virginia, which includes Tyler County, said, “I have some comfort that we are going to be successful in delaying it.” He further said action by the Senate first, before the House, is a good thing.

Reportedly President Barack Obama is against a delay. However, he said he would not veto a delay.

Under the Homeowner Flood Insurance Affordability Act, all new flood insurance premiums would revert to 2012 rates until the following steps are completed:

-FEMA completes the affordability study mandated by the Biggert-Waters act

-FEMA proposes a draft affordability framework for congressional review

-Congress gives FEMA affordability authority

-FEMA certifies that their flood mapping uses sound scientific and engineering methodologies

The legislation would give FEMA 18 months to complete these tasks, with Congress having as many as six months to review the completed affordability framework before each chamber would cast an up or down vote.

“Thousands of West Virginia homeowners have been hit hard by unreasonable and unmanageable increases to their flood insurance premiums and are struggling financially as a result,” said Sen. Joe Manchin.” With this legislation, citizens of the Mountain State and homeowners across this country will gain relief from these drastic rate increases. I’m pleased that my colleagues in the Senate have come together in a bipartisan way to help save hardworking Americans who are in need of affordable flood insurance.”

McKinley said he wants to be sure money spent for flood insurance is for flood coverage and limit the assistance to only those with flood insurance.

He noted hurricane damage is covered by homeowners insurance, not flood insurance. FEMA’s costs from hurricanes Sandy and Katrina are being cited as reasons for the NFIP increases. Of FEMA’s $25 billion shortfall, McKinley said $17 billion was spent on repairing the levy that protects New Orleans. He says that is not an acceptable use of NFIP funds.

McKinley fully understands that river floods are different from some other flooding events, having been through several himself. His former business was in the flood plain in Wheeling and his grandmother lived on Wheeling Island.

A river flood is not like a flash flood. There is ample warning and those within the flood’s possible path have time to remove any valuables, such as furnaces, hot water tanks, and laundry facilities.

McKinley sees part of the problem as a conflict of understanding between urban centers and rural areas. “By far the urban centers out vote rural America,” noted McKinley, saying places like Chicago and Los Angeles have no understanding of flooding.

“This is an example of bureaucrats not knowing how America works,” said McKinley.

When the Cannizzaro told McKinley how FEMA was requiring him to pay approximately $500 for a survey of their property in order to get an elevation certificate, proving the property was in the flood plain, McKinley was shocked. “You shouldn’t have to prove it is in a flood plain,” he said, noting the maps have been drawn for decades. “It is an unnecessary step. It is burdensome. This just has to stop!”

That is exactly what the Cannizzaros and countless property owners across the United States are hoping.


Bart Cannizzaro asked Congressman David McKinley why he, and all other representatives of West Virginia, voted for the Biggert-Waters Flood Insurance Reform Act. They wondered if it was even noticed, as it was part of a much larger Federal Transportation Bill.

“It was noticed,” reassured McKinley.

He explained that the five-year transportation bill was up for renewal in 2010 or 2011, but the legislature had simply been extending it. “That’s not an appropriate thing to do,” said McKinley.

Consequently they were looking to finally pass an appropriate bill. The NFIP was about to expire and required passage to even continue.

He said realtors were pushing for it to be renewed and the legislature could not find a time to fit it into the session. Consequently, it was included with the Transportation Bill.

“The American public has a perception that a lot of things are added to a bill that aren’t germane to the subject,” said McKinley. He said this simply is not the case, as items that are not tied to the matter at hand will be thrown out.

Biggert-Waters could be part of the transportation bill because there are highways in flooded areas, said McKinley.

“We knew there were some problems with it,” said McKinley. But he said it could not be amended because virtually no amendments are made from the floor, they must be made in committee.