Monday, November 4, 2013

Flood Insurance: Hope on the Horizon

There is hope on the horizon when it comes to FLOOD INSURANCE in Florida. 

A few positive developments & explanation of the Florida flood insurance situation.

by Brianne Small, Agent at Ruggeri Insurance Agency. 

  • BIPARTISAN AGREEMENT ON THE TABLE. The sponsors of the Bigger-Waters flood reform act say that the consequences of the rate hikes were not intended. Lawmakers realize that the Biggert-Waters act has created a crisis in several geographic areas, as you know! There are tens of thousands of homes in our Tampa Bay area that have been or will be impacted by the premium increases under the current laws. The local real estate market has also felt effects as buyers look for homes that are not in a special flood hazard area. Under the proposed changes, the government will take a step back and make a plan that accounts for affordability. Note that this agreement has not yet passed, but Ruggeri Insurance continuously monitors any updates and will keep you posted as we see new development. 

  • NFIP (National Flood Insurance Program) IS $25 BILLION + IN DEBT. The Biggert-Waters flood insurance act was prompted by the massive debt from storms like Katrina and Sandy. Prior to these storms, the government could support the subsidies for those who are considered at higher risk for flooding. Now that the money is not there to subsidize rates, they want these homeowners to pay the full amount according to risk. Again, the lawmakers now realize that the lack of planning in implementing these changes has caused huge problems. While the laws to scale back Biggert-Waters have not been passed, it is encouraging to see bipartisan agreement. They will likely reassess the Biggert-Waters act and review how rates can be changed while taking affordability into account.  

  • PRIVATE COMPANIES ENTERING FLORIDA FLOOD INSURANCE MARKET. There are presently 2 private companies considering selling flood insurance to Florida residents. Flood insurance is currently offered through the government run NFIP (National Flood Insurance Program). Although flood insurance can be written through different carriers, the insurance itself is ultimately determined by the NFIP. The new private companies aim to provide flood insurance at lower rates than what the NFIP offers. Having private markets in addition to the NFIP will create more options for those with flood insurance. 

  • FLORIDA PAYS MORE IN FLOOD INSURANCE PREMIUMS THAN IT USES. Many people cite this argument when discussing the flood premium increases. Why should we pay more for insurance than we are actually paying out in claims? The problem with this logic is that if we look at each state individually, any large storms in Florida would result in a huge hike in our flood insurance premiums. Because the NFIP is a national program, risk is spread across all policy holders. If one state suffers devastating flood losses, insurance can be paid out and residents can still be offered flood insurance at what we anticipate will be reasonable premiums. 

As we see developments in the flood insurance changes, Ruggeri Insurance will keep you informed. Please visit us on Facebook for insurance updates and interesting tips.

*This article is intended for informational purposes only. The ideas are based on our professional opinion of the state of the insurance industry. For any specific questions or information, please call our office (941) 966-5900 to speak with an agent.

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