Two Tampa Bay-area legislators said Tuesday that they are proposing a bill to give Florida's homeowners relief from rising flood insurance premiums.
State Sen. Jeff Brandes and Rep. Larry Ahern said during a news conference that the bill would allow private insurance companies to offer flood insurance policies to Florida homeowners.
The Biggert-Waters Act, which was passed last year, removes federal subsidies from properties in flood zones. FEMA says the phase-out of subsidies will affect fewer than 20 percent of flood policyholders nationwide — but many of those policies are in Florida, state officials say.
Florida, and Pinellas County in particular, are heavily affected by the rate hikes because there's a significant number of homeowners living in homes located in low-lying areas.
About 1.1 million homeowners nationwide — or 1 in 5 in the program — have received taxpayer-subsidized rates and the government has financed about 60 percent of losses on their properties. Most people can retain the subsidies but can't pass them along to people buying their home, a restriction that's especially burdensome to lower-income older homeowners seeking to sell their houses.
Many mortgages written in Florida require flood insurance.
"Congress has turned the American dream into a nightmare," said Brandes.
Tuesday's news conference was held at the Pinellas County Association of Realtors, a group that is concerned about the rate hikes because subsidized policy benefits extended to current homeowners can't be passed along to prospective buyers.
"We've lost numerous sales," said real estate agent Shirley Madden of Treasure Island. "It's affected everyone."
And it's not just residential home sales, Madden added. Her company was going to buy a new building in the Gulf front beach community, but backed out of a deal because the flood insurance rate would have been too expensive.
The Tampa Bay area, Miami-Dade and Lee counties are all uniquely affected by the flood insurance rate increases because of the number of subsidized plans in those areas.
Horror stories of flood insurance rate hikes have dominated Tampa Bay-area media. The Tampa Bay Times recently reported on a Pinellas County couple who bought a home last July for $628,000. The couple was under the impression that their flood insurance bill would be about $4,300 annually, but because they bought the home after the Biggert-Waters act was passed, the insurance subsidy was not grandfathered in.
The couple's flood insurance premium stands to increase 900 percent, to $44,000 a year, the paper reported.
Brandes cited this case during the news conference, and said that allowing private insurers to offer flood policies to Floridians will "relieve the nightmare that has become the federal flood insurance program."
Brandes and Ahern said that the bill, if passed, will make it easier for private insurance companies to begin writing flood insurance policies in Florida. The lawmakers said that the bill will help streamline state's regulatory procedures for flood insurance and add more state employees to scrutinize insurance products.
The men said that private insurance companies stand to make profit from offering flood insurance; they said that Floridians pay $16 billion to $20 billion in premiums and make $3.7 billion in claims.
In Washington, D.C., efforts to delay implementation of changes in the federal flood insurance program have run into roadblocks on both sides of Capitol Hill.
The leaders of the House Financial Services Committee say they are standing behind last year's bipartisan legislation to put the flood insurance program on sounder financial footing.