Low insurance premiums encourage development of state’s most vulnerable areas



No one can deny the appeal of living beside or near Florida’s fabulous beaches and coastal areas. The beauty and charm simply cannot be found anywhere else in the country.

Unfortunately, these also are the areas most likely to be hit hardest by storms, hurricanes, and now, rising sea levels. This raises a difficult dilemma for Floridians — should all taxpayers continue to be required to subsidize the flood, wind and disaster insurance for those who live in the most vulnerable areas of the state? And should new development be curtailed in these areas, given its significant economic impact on taxpayers and the greater risk of loss of human life?

The answers are important to 1000 Friends of Florida because of our ongoing involvement in coastal development patterns and what that means to the environment and taxpayers.

This issue has garnered quite a bit of attention with the passage of the federal 2012 Biggert-Waters Act, which is designed to end taxpayer subsidization of the National Flood Insurance Program, or NFIP. In particular, this act was meant to end the subsidies paid for by all federal taxpayers for very low, non-market-driven insurance premiums for properties in flood-prone areas.

It also was intended to prevent an increase to the NFIP’s current deficit of more than $24 billion, much of which has accumulated since Hurricane Katrina and Superstorm Sandy. Because of a substantial backlash, both the U.S. Senate and House have now voted to undo major provisions of Biggert-Waters.

Compounding the problem in Florida is our state’s Citizens Property Insurance which, while only providing wind damage coverage, is also subsidized by Florida taxpayers. You can see this subsidy reflected on your car insurance and homeowners’ insurance premiums where a surcharge is being assessed to cover losses from Florida’s 2004-2005 hurricane season.

Can you imagine how much this subsidy will rise, both public and private, when a future major storm event crashes into one of Florida’s heavily populated areas? A 2010 planning scenario for a Category 5 storm hitting the Tampa Bay area projected about $250 billion in economic losses of all kinds, including property damage, business losses and flood damage.

This is why 1000 Friends of Florida has joined a diverse group of business, conservation and nonprofit organizations known as Stronger Safer Florida to promote appropriate changes to current insurance programs, curtail unreasonable subsidies, and offer market-based insurance alternatives.

Included in this mix should be increased emphasis on community resiliency, mitigation options, affordability considerations, private insurance incentives and a phase-in of necessary rate increases to eliminate subsidies.

An unintended consequence of artificially lowered insurance premiums is to encourage even more building in the most vulnerable parts of the state, where loss of life and limb is likely to be greatest.

As the 2014 legislative session begins, a number of bills have been introduced that address these critical issues. All citizens of Florida need to pay attention to proposed changes to coastal insurance programs and the state’s catastrophe fund for disaster payouts now, before the inevitable next major disaster strikes our state and we all pay the costs

Charles G. Pattison is president of 1000 Friends of Florida, a statewide not-for-profit membership organization.

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