Flood insurance still rising despite new law

Earlier this month, Jack Durney, mayor of Hoquiam, Wash., looks over his city, the Hoquiam River and Grays Harbor. Because most of Hoquiam lies in a flood plain, Durney says possible increases in federal flood insurance rates would adversely affect many who live in his town. / AP Photo/Ted S. Warren

Figure to know

In its latest overhaul of the National Flood Insurance Program, Congress tried to deal with the affordability issue by including language asking FEMA to “strive to minimize” the number of policies with an annual premium that exceeds $1 for every $100 in insurance coverage.
• Yet, that suggestion would be impossible for FEMA to follow without giving huge new discounts to the many policyholders now paying well above that rate.

Written by

David B. Caruso

Associated Press

JERSEY SHORE, PA. — This small, central Pennsylvania river town shares more than a name with the famous stretch of New Jersey coastline 250 miles to the east.

Both are among the thousands of places around the U.S. where people could face trouble in the years ahead because of the rising cost of government-mandated flood insurance.

Earlier this month, Congress sought to ease their fears of sky-high premiums by rolling back a 2012 reform ending the government’s practice of offering subsidized insurance for older homes and businesses in flood zones. The president signed the bill Friday.

But while the law was widely hailed as a victory for people who had seen their bills triple, quadruple or even increase 15-fold overnight, pocketbook pain for many has merely been delayed.

As many as 1.1 million policyholders with subsidized government insurance will still be hit with steady rate increases. There is cause for worry in cities and towns that rely on affordable policies.

Getting priced out

Lifelong Jersey Shore residents Lurie and Michael Portanova bought up a row of quaint, 19th-century brick shops along the West Branch Susquehanna River and have been restoring them. They found out that the annual flood insurance premium on two buildings they bought in 2012 had soared from less than $3,000 to a minimum of $26,868.

Now, thanks to the congressional rollback, that rate will reset to where it was before — only to immediately start climbing again. Within five years, the bill will be more than $8,700. Within a decade, it will be more than $26,000.

“There’s no way we can afford that. Just no way,” said Michael Portanova.

For years, people like the Portanovas relied on insurance cheaper than risks warranted. When Congress tried to stem the red ink, people in the flood plains screamed — and politicians listened.

But many say even the adjusted premiums will soon be beyond their means: Will the government continue to subsidize insurance in places that are increasingly untenable as sea levels rise and storms become more severe?

Short $24 billion

The Associated Press analyzed records from the Federal Emergency Management Agency for roughly 18,500 communities in the National Flood Insurance Program where the government offers subsidized rates.

Data show there are communities in every state where even a few years of price hikes could leave many affected owners unable to afford their properties.

At least 820,000 homeowners will still get hit with rate increases of up to 18 percent each year until the program is collecting enough revenue to cover a $24 billion shortfall created by a series of catastrophic storms.

Owners of another quarter million businesses or second homes will see rates rise 25 percent each year, until premiums reach rates that match the true risk of flooding.