Mass. attorney general: Halt flood insurance hikes

By CHRISTINE LEGERE

clegere@capecodonline.com

October 03, 2013

BOSTON — State Attorney General Martha Coakley has joined a growing list of local, state and federal officials pushing to delay dramatic increases in insurance premiums for property owners in flood-prone areas.

The increases are part of the Biggert-Waters Insurance Reform Act of 2012, a law designed to return the National Flood Insurance Program to profitability. The government-subsidized program has been driven nearly $30 billion into debt by storm damage in the last several years.

Under the act, flood insurance premiums would increase to reflect a property's actual risk.

In a letter to House and Senate leaders sent Wednesday, Coakley urges Congress to "immediately delay further implementation" of the Biggert-Waters Act until the Federal Emergency Management Agency undertakes an affordability study of rate increases and a peer review of new flood zone maps, which dramatically expand risk areas and are expected to go into effect late in 2014.

"By eliminating various federal subsidies in the National Flood Insurance Program and requiring updated flood zone maps, Biggert-Waters will pose harsh economic consequences for many homeowners and small businesses in Massachusetts and across the country," Coakley wrote. "Premature implementation of the act threatens housing recovery that Massachusetts and the nation are just starting to experience."

Under the National Flood Insurance Program, all property owners with federally insured mortgages are required to buy flood insurance.

"We have already heard from many small businesses and homeowners about the devastating impact of this new policy," Coakley continued. "Several homeowners that purchased their homes in the last year — as the housing market was turning around — have been informed the flood maps have been redrawn so that they are now required to purchase flood insurance at costs of $10,000 and up."

Some will be forced to sell their homes, likely at reduced prices, Coakley said, because of the cost of flood insurance.

As it stands, small-business owners with subsidies will see their rates increase by 25 percent each year until they reflect actual risk; the same goes for primary residences with similar subsidies as soon as they are sold.

Rates also will start to climb on properties that have been previously damaged by floods. Owners of secondary homes in risk zones who had subsidized insurance already saw their rates start to jump in January.

Coakley is not the first to react to the flood insurance increases and accompanying expanded flood zone maps, currently on the way.

On Sept. 26, the entire Massachusetts congressional delegation signed on to a letter to House and Senate leaders, saying they recognize the aim of the Biggert-Waters Act but urge a delay until a cost study of premiums is completed.