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NFIP extended to Dec. 8

October 5, 2017
By JESSICA SALMOND ( , Fort Myers Beach Bulletin, Fort Myers Beach Observer

Hurricane Harvey and Hurricane Irma will likely impact upcoming national conversations on flood insurance.

The National Flood Insurance Program was set to expire Sept. 30.

Congress has had more than five years to come up with a NFIP replacement or revision, but never did. With two hurricanes underway, it voted for the extension Sept. 7 to add in a few more months for concentrated effort.

"Everything comes down to the last minute up there," said District 19 Representative Francis Rooney. "But given these two hurricanes, there will be a more intense discussion."

In coastal areas of Florida, all homeowners with a mortgage are required to obtain flood insurance. In other areas of the country, flood insurance may be required too, or some people choose to buy into it. The insurance premiums feed into the National Flood Insurance Program, which pays out when properties are destroyed from a flood.

Currently the NFIP is managed by the federal government, as private insurers pulled out of the program years ago. The insurance program has a federal "backstock," or a pot of money the premiums pay into. There are very few private-sector insurance companies that sell flood insurance, so most buyers go through the federal system.

More than five years ago, the Biggert-Waters Act was passed that removed subsidized rates from the NFIP. Premiums were re-calculated by the actuarial rate, which quantifies the risk of flooding for a given property. Jacki Liszak, owner of the Sea Gypsy Inn, has become a poster-child for the disaster the act caused - Rooney often uses her monstrous spike in rates as an example. Before Biggert-Waters, Liszak's insurance bill for two buildings on $180,000 worth of insurance was $2,700 a year; the act spiked it to $47,000 per year on her small, historic hotel on the beach, the Sea Gypsy Inn. The actuarial rate said her property floods every three years, but Liszak has said she doesn't even have a flood-out of the Sea Gypsy on record.

Biggert-Waters was repealed and in its place a temporary reform program was approved that lowered rates back to what they were before, but increased those rates by 7 percent a year. Liszak's flood insurance cost is $7,000 a year now, she said. The reform bill had September's sunset date, and in the meantime legislators were supposed to come up with a more permanent solution.

"When the NFIP lapsed years ago, we saw crazy rates," said Chris Lopez, director of public policy for the Royal Palm Coast Realtors Association. "We've been advocating or a year to reauthorize, if not to change it, so we don't have to keep doing this."

The current scenario's 7 percent annual increases aren't ideal. But it's better than the actuarial rate system, Lopez said.

Legislators had several years to work out a new program; now, Lopez doesn't think they'll be able to hash it out by Dec. 8. He hopes they will vote for a multi-year extension to the current program, instead.

"A five-year reauthorization is the best case," he said. "Rates can skyrocket overnight. We're wary of that. Any lapse would be very detrimental for sellers and buyers in mandated flood zones."

Congressman Kevin Brady (R, Texas) introduced a bill Sept. 25 called the Disaster Tax Relief and Airport and Airway Extension Act of 2017. This bill includes language concerning the Federal Aviation Administration and extending the funding for the Airport and Airway Trust Fund, providing disaster tax relief and "other purposed."

Lopez said within the legislation there is the Ross Bill, which has language that could help create a private flood insurance market place. Private flood insurance is uncommon now. Lopez favors expanding the market with private insurance.

"We think more choices are better in the end," he said.

Rooney said he's not certain if he will support the bill because he's not in favor of the other half of it, regarding the FAA, as he does not support the program in which the FAA is privatized but the federal government still pays for employee pensions.

"Nine percent of people like Congress because they make you vote on something you want and they tack on the things you don't want," he said.

Rooney hopes to see some serious discussion about how repetitive loss properties are handled. These properties are located an area that floods frequently. Florida is not the biggest contributor to these properties; it's states with lots of lakes and rivers that flood seasonally. However, Florida contributes heavily to the federal backstock due to the flood insurance requirement, which pays out more frequently to the repetitive loss properties.

"How much should you subsidize flooding? Sometimes the amount of government aide put into it is more than the property is worth," Rooney said. "I want a thorough analysis of the NFIP and the best use of tax dollars. We have to have a rational discussion."

Rooney said there's been some conversation about a the governmental buy-out program for frequent flooders, to get homeowners off the repetitive loss properties.

A bill was put into action earlier this summer, but with Hurricanes Harvey and Irma, everything was pushed back. There has also been conversation on the flood mapping and who should be doing it, Rooney said. Currently the flood maps are drawn up by the Federal Emergency Management Agency and dictate where the flood zones are. But Rooney said he's heard complaints that often these maps are inaccurate. He suggested local mappers, who are familiar with the area, may be better at determining what areas flood historically.

He's optimistic something could be worked out by December, but if not, he wants the current program extended.

"If an improvement on the mapping and responsible solution to repetitive loss came that would be great. but if it gets bogged down it will have to be extended," Rooney said.



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