Flood insurance rate rising fast in Grand Forks region

By: John Hageman, Grand Forks Herald

Published January 10, 2014

Flood insurance rates have skyrocketed for some new homeowners in the Grand Forks region, prompting action from North Dakota and Minnesota congress members.

Following the passage of the Biggert-Waters Insurance Reform Act in 2012, homeowners in communities such as Grafton and Crookston started noticing increases in flood insurance premiums this fall.

Grafton Mayor Chris West, an insurance agent, said he knows of one homeowner there whose flood insurance payments rose from $971 a year to $4,300.

“And that’s not uncommon,” West said. “It’s had a huge negative impact on the housing market here.”

People who took out a mortgage after the law went into effect in the summer of 2012 are seeing the large rate hikes, West said, while others are seeing more moderate increases.

West said most of the city lies in the 100-year floodplain, in which homeowners are required to have flood insurance if there’s a mortgage. Grafton is currently planning a flood diversion project that would take homes out of the floodplain, but completion is still years away, West said.

Crookston Mayor Dave Genereux said the only instance of this issue he knows of is one homeowner’s insurance rate rising from $800 a year to $5,800. Even with the limited impact, so far, Crookston city officials are concerned, Genereux said.

He added that once the Federal Emergency Management Agency revises its map, most of Crookston will be out of the 100-year floodplain due to a newly constructed flood protection project.

Insurance rate hikes aren’t an issue in the city of Grand Forks because of the massive flood control project constructed after the 1997 flood, said Bev Collings, the city’s floodplain administrator. But they have been the topic of discussion in city halls in the area, including in a forum held by U.S. Sen. John Hoeven, R-N.D., in December in Grafton.

Federal changes

Hoeven said in a phone interview this week that lawmakers didn’t intend for insurance rates to increase like they have over the fall. He’s pushing for a vote on a bill that would require FEMA to conduct an affordability study and delay insurance increases for three to four years.

“We actually think we have the votes to pass it,” Hoeven said. He said a vote on the Senate floor may come sometime next week, and a bill in the House is still pending.

Minnesota Sens. Amy Klobuchar and Al Franken, both Democrats, are co-sponsors of the bill, dubbed the Homeowner Flood Insurance Affordability Act. Rep. Collin Peterson, D-Minn., is a co-sponsor of the House bill.

The bill also includes a provision authored by Hoeven and U.S. Sen. Heidi Heitkamp, D-N.D., that would give homeowners credit for flood-proofing their basements when determining flood insurance rates.

The Biggert-Waters Act reauthorized the National Flood Insurance Program until 2017, and included some changes aimed at making the program financially solvent. By July 2013, it was $24 billion in debt after large-scale disasters such as Hurricane Katrina in 2005, according to Resources for the Future and the Wharton Risk Management and Decision Processes Center.

Part of the bill requires FEMA to raise rates to accurately reflect risks, but Hoeven said the agency is doing it in an “unfair” way

“So we have homes, for example, in Grafton where FEMA is saying, ‘All right we’re just going to apply our 100-year floodplain rate and we’re going to raise their premium a large amount,’ just as if they were a community had been repeatedly flooded,” Hoeven said. “And they aren’t.”

West said if the bill is passed, it may give Grafton some time to set up their flood diversion project.

"It will provide some of the temporary relief that we need,” he said of the bill.