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Thursday, Oct 02, 2014
Editorials

Editorial: Congress delivers a bipartisan flood insurance fix

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It borders on miraculous anymore for Congress to offer bipartisan support for anything. But that’s what happened Thursday with the Senate’s passage of a flood-insurance bill that President Obama is expected to sign.

Although not perfect, the measure brings relief to many of the homeowners facing steep rate hikes under the flawed 2012 Biggert-Waters Act. It also addresses a dark cloud threatening real estate markets in coastal states.

Florida’s congressional delegation, Democrat and Republican, should be applauded for responding to their constituency and coming together to fight for the much-needed relief.

Critics complain the bill’s passage will eliminate the reforms under Biggert-Waters, which was passed to address the national flood insurance program’s $24 billion debt. But the Homeowners Flood Insurance Affordability Act passed in the Senate and the House does not abandon efforts to make the program solvent.

It simply lessens the sticker shock for homeowners by gradually imposing the rate increases, rather than hitting them with giant increases all at once. The ultimate goal is to eliminate unsustainable flood insurance subsidies.

“This is a step the right direction,” said Rep. Dennis Ross, a Republican from Lakeland.

Under the bill, many of the affected homeowners will have their flood insurance rates restored to pre-Biggert-Waters levels and raised no more than 15 percent a year on average.

Additionally, sellers can transfer pre-Biggert-Waters flood insurance rates to buyers, eliminating the sudden rate spikes that were driving away buyers. Rates will rise, but not by more than 18 percent a year until reflecting the true risk. Homeowners who bought after Biggert-Waters, and were hit with the sudden hike, will get refunds for the increased amounts they paid.

The bill also creates a reserve fund in the event of a major storm or other catastrophe. A policy surcharge of $25 for primary residences and $250 for other properties will be collected for the reserve fund.

As the Tribune’s Josh Boatwright reports, 13 percent of the state’s 2 million flood insurance policies are affected by the rate changes. In Pinellas and Hillsborough counties, an estimated 50,000 owners were affected by Biggert-Waters.

Many live in modest homes miles from the shoreline. The bill Congress passed continues the new flood zone mapping to determine actual risk, and allows homeowners who challenge assessments to recover costs.

Getting the bill passed was no easy task. An earlier version that called for a four-year delay drew scorn from some conservatives who said it amounted to kicking the program’s huge debt down the road.

We agreed with the delay because the process for assessing the properties needs review. But we understand the nature of compromise.

The nation’s flood insurance program provided an incentive for risky building and fell deeply into debt. It desperately needed reform. If the mapping proves to be inadequate, Congress should be prepared to step in and order more fixes.

But for now, this fix is the best a divided Congress could be expected to deliver.

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