Efforts are underway to fend off rising flood insurance costs that could drive up premiums for some homeowners.
NC-20, an advocacy group for North Carolina’s 20 coastal counties, and the Wilmington-based Business Alliance for a Sound Economy, are leading area efforts to delay implementation of the changes until they can be studied further.
The National Flood Insurance Program reforms proposed are expected to place a heavy burden on homeowners and other property owners in designated flood hazard area.
“Congress is trying to make the program solvent, but it’s going to be on the backs of homeowners,” said Willo Kelly of NC-20, which includes Onslow and Carteret counties among those it represents.
Kelly, who also helped lead opposition to recent coastal homeowner insurance rates that jumped an average of 20 percent, said she had homeowners say then that they couldn’t absorb the costs. Flood insurance changes could be more damaging to their budgets.
“When they get a bill that’s two times, five times, 10 times what it is now, where are they going to get the extra money?” she asked.
The issue is complex and flood insurance rates are impacted by many factors, including amount of risk, age of the home and whether it’s a primary residence or secondary home among them.
But full implementation of the new law could mean an increase in flood insurance premiums for some from a few hundred dollars per year to tens of thousands per year.
Ryan McAllister, governmental affairs director for BASE, which includes the Jacksonville Board of Realtors and Topsail Island Board of Realtors, among its members, said they’ve heard of premiums going up to as much as $20,000 and $30,000 a year.
“If your policy goes up to $10,000, $20,000 in a year, where are you going to get that kind of money?” he asked.
The dramatic increases have BASE and NC-20 calling for a stay in implementation of the law until there is more study of the rate structure and other issues.
The move has the bipartisan support of U.S. Reps. Walter Jones, R-NC, and Mike McIntyre, D-NC, who joined two colleagues in sending a letter last week to Congressional leaders requesting a provision in the budget bill that would delay the flood insurance rate increases.
“Reforms to the NFIP are certainly necessary to ensure the program’s financial stability,” Jones said in a statement. “However, I believe that the changes should be implemented in such a way that they do not cause homeowners in Eastern North Carolina and across the country to face sudden, exorbitant rate increases. The one-year delay will allow time for adjustments to be made so that flood insurance remains affordable.”
McIntyre said they are working to “derail” the increases.
“Flood insurance must be accessible and affordable to North Carolinians, and the increase in rates must be stopped,” he said. “Folks from across Eastern North Carolina have expressed to me their very serious concerns about the impact that increased flood rates would have on homes, communities and the local economy.”
According to information from the Federal Emergency Management Agency, the new law encourages financial stability for the program by eliminating some artificially low rates and discounts, with most flood insurance rates now moving to reflect full risk. Buying a property, allowing a policy to lapse and purchasing a new policy can lead to rate increases.
Changes to date have primarily involved the phasing out of subsidized rates. The phase out began in January for owners of subsidized policies on non-primary, or secondary, residences and continues with additional subsidized policies added effective Oct. 1.
While only 20 percent of program policies receive subsidies, that’s only part of the concern.
The law could bring higher rates for buildings in all flood zones.
And as new Flood Insurance Rate Maps are put into place, likely in spring 2014, those zones could be expanded, adding to the number of structures impacted.
McAllister said there are about 6,500 flood insurance policies in the Onslow County area and approximately 7,000 policies that could be affected by changes as of Oct. 1. He said these would involve structures built before flood maps were in place.
He also stressed that the issue can affect properties in flood zones, whether oceanfront or along rivers and creeks.
“This isn’t just a coastal issue,” he said.
Kelly said Congress also needs to look at the overall cost and efficiency of the program as well.