National Flood Insurance Program Expires in Oct.

Flood insurance costs continue to put small businesses and homeownership at risk

WASHINGTON – July 5, 2016 – Flood insurance costs continue to put small businesses and homeownership at risk, the National Association of Realtors® (NAR) told U.S. Senators last week in testimony before Congress. But NAR also talked about possible solutions for the National Flood Insurance Program (NFIP).

The 2016 vice chair of NAR's Insurance Committee, David McKey, testified on NAR's behalf before the Senate Small Business and Entrepreneurship committee. McKey told Senators that Realtors say that excessive flood insurance costs and future uncertainty continue to plague clients.

"Despite everything that's been done on this issue, the threat of a $30,000 flood insurance premium still looms," said McKey. "A few years ago, the uncertainty over future rate increases was enough for buyers to direct Realtors not to show them any listings in the floodplain," he said. "That's enough to worry business owners and homeowners alike, and it's something that needs to be addressed."

Kevin Robles, a homebuilder from Tampa Bay also testified before the committee. He said that Florida housing prices are still 22 percent below normal due to the Great Recession.

"Any negative change to the market – such as flood insurance rate increases – could have long-term unintended consequences to Florida's economy," he said. "I am a small business owner and at least a quarter of my customer base is active or retired military. I am constantly reminded of the need to keep housing prices affordable. In Florida, for every $1,000 increase in home prices, more than 8,000 households are priced out of the market."

McKey praised the "Homeowner Flood Insurance Affordability Act" that became law in 2014 and reined in the most inaccurate rate increases across the country. Before the Affordability Act, thousands of small business owners faced immediate and excessive rate increases under FEMA's implementation of the "Biggert Waters Flood Insurance Reform Act of 2012."

But McKey warned the committee that significant concerns still remain. Even now rates continue to rise exponentially by 25 percent each year until policyholders reach their "full-cost rate."

A business or homeowner who wants to prove they've reached their full-cost rate must hire a licensed surveyor and provide a costly elevation certificate to the Federal Emergency Management Agency (FEMA). If the certificate shows that owners have reached full cost, they may request an optional full-risk rating to end the 25 percent increases. Otherwise, the increases continue.

The current system creates what McKey described as an "endless escalator" of rising costs for businesses and homeowners.

Although it isn't possible to determine how many properties will ultimately be affected, current estimates show that roughly 1 million properties have subsidized insurance rates that may be subject to significant increases.

McKey reiterated NAR's support for a range of solutions to address the problem, including:

  • Reauthorize the National Flood Insurance Program that sunsets in October 2017
  • Use advanced technology to improve the accuracy of flood maps to determine how many owners face unaffordable rates and reduce the number of property owners who have to file expensive appeals
  • Foster a private insurance market to complement the NFIP

McKey also suggested a NAR-backed strategy for actually preventing flood damage. By authorizing the use of funds to proactively mitigate properties located in hazard areas, McKey noted that it's possible to protect property owners while saving taxpayers' money. This might include flood proofing, elevating or otherwise strengthening a property.

Funding is currently available for these mitigation efforts, but property owners typically can't tap into them until after a flood occurs and, after that, costs are higher and the damage has already been done.

"Realtors see the effect of rising flood insurance rates firsthand in their businesses and in the local communities," McKey said. "But commonsense solutions to the problem are well within reach. NAR is thankful for the opportunity to testify and applauds the Committee's attention to this important issue."

© 2016 Florida Realtors® All rights reserved. Reprinted with permission.

1 reply
  1. George Edward Chuddy
    George Edward Chuddy says:

    Palm Coasts’ Flood Plan and Drainage Design

    The last hurricane to affect Palm Coast was Hurricane David, which brushed the area in early September, 1979. David’s highest wind gust recorded in Palm Coast was 59 miles per hour, and though it did drop 4.16 inches of rain over a 48 -hour period, no flood-related water damage occurred. One of the main reasons damage did not occur is because Palm Coast has been designed to withstand, what is termed, “the 100-year flood.” That, says Richard Vaughan, director of environmental affairs for ITT Community Development Corporation, means a flood that statistically could occur once in a hundred years could hit Palm Coast and no flood water would enter the houses.

    The PalmCoaster, Volume 11, Number 1, Winter/Spring, 1982


    For the Newer Palm Coasters: You really should read the 1972 treatise titled ‘ An Approach to a New City; Palm Coast..’ by the Father of Palm Coast Dr. J. Norman Young. You can google the above and UP should pop two of our webpages where you can read it.

    Page 136 ( For those living on the vast Canal System of ‘ The Palm Coast Project ‘ pls. note the ‘Sampling’ schedules. Does anyone know if this schedule of sampling is still being done so the Canal System won’t pollute and fail ?

    rates are favorably low for biochemical oxygen demand, nitrogen, phosphates, and solids.
    Solution: Regulatory laws will be sought in order to (1) maintain dissolved oxygen levels at pre-determined values by combinations of natural and mechanical means; (2) maintain canal banks; (3) remove water surface debris, trash, oiil, etc.; (4) maintain tributary area drainage system; and (5) maintain all drainage works,. Responsive and corrective action in relation to established water quality criteria will be taken.
    G. Sampling and Monotiring of Canal Water quality
    Solutions: Representative sampling points will be established throughout the entire system. Also established will be a periodic sampling schedule as follows, based upon degree of resident occupancy:
    Occupancy : 1-25, Sampling once every four Months, 26-50 Composite sampling once every two months, 51-75 Composite sampling once every month, 76-100 Continuous sampling, recorded.
    Installation will be made of a permanent recording, remove-sensing, water-quality monitoring system at 75 % occupancy.

    H. Preservation of Tidal Wetlands

    Study: Preliminary site analysis data showed that approximately 4,000 acres of project property are tidal wetlands, which comprise areas of great biological diversity and productivity. These areas produce a wide variety of living organisms, from microscopic species to fish and shellfish, birds, and mammals. Many species spend their entire life cycles in tidal wetlands, whereas others spend portions of their cycles there. Abundant species of plant growth, which form the base for all animal life, are also evident.
    Solution: NO building, construction, or development will occur on tidal wetlands.
    1. Preservation of Intracoastal Waterway Water Quality.
    Study: Available engineering studies, reports, and other records were gathered on the Intracoastal Waterway in the vicinity of Palm Coast , relating to construction problems, erosion, and maintenance-
    Page 137

    dredging required within the waterway. Also, conditions of the waterway withing the Project tract, information on spoil easements and data relative to flood elevation were documented in the report.
    Solution: Earth plugs are used to prevent intrusion of sediment into the Waterway while canal construction is in progress. After turbidity levels in the canals subside to low background levels, the plugs are removed, leaving no adverse effects upon the water quality.

    ( Dr. Per Bruun of the University of Norway at Trondheim ( also he is / was at the University of Floridas’ Coastal Engineering Department. The World Famous Dr. Bruun designed the system so that the swales were the first line of defense against flooding; if they overflowed the streets were the next line of defense acting as drains, but, no floodwater would enter our houses – garages / porches maybe…but not the house structure itself. neat huh ! ) – that is why NO PARKING in the Swales to damage / compact / destroy them.).

    Eutrophication prevention for ‘ The Palm Coast Project’:

    Page 132
    lowing methods: (1) percolation, (2) spray irrigation, (3) evapo-transpiration ponds, (4) chemical treatment and mixed media filtration, or (5) drainage wells.
    Solution: Based upon these considerations, a tertiary quality central treatment plant has been designed and constructed using the percolation or recharge method for disosal. three beneficial environmental effects of this practice will be (1) to eliminate discharge into surface bodies and therby prevent eutrophication. (2) to recharge the saline water table and form a fresh water baarier to reduce salt water intrusion, and (3) to recycle waste effluent in order to form a reservoir of non-brackish water which will be a potential water supply source for future needs. In all canal areas now being sold there will be no septic tanks from which effluent seepage could potentially cause sutrophication in canals. A centralized sewer system is now being built to conduct wastes to the treatment plant.

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply