Sometime in the near future, many South Floridians may no longer be able to afford their homes. Not because of high real-estate prices or property taxes. Rather, high flood insurance rates will price them out.
Floods and the cost they bring are engulfing us this week, just two months after the start of hurricane season and as 37 million Americans along the northern East Coast are being threatened by killer flash floods.
Floridians just learned this week, through policy updates, that their flood insurance is going up, an upward spiral increase predicted to continue every year. And under a policy change that the Federal Emergency Management Agency is considering for 2020, those rates could skyrocket even more in coming years.
This week, the U.S. Senate is scheduled to vote to extend, for the seventh time, the National Flood Insurance Program. The extension, both sides of the aisle agree, is simply a Band-aid until the financially-strapped program — which is $20 billion in debt — is reformed.
And the reform will likely hurt Florida homeowners’ pocketbooks even further.
That’s what happened the last time the NFIP was revamped: premiums doubled — or tripled — in flood-prone areas. The reason is that NFIP doesn’t charge homeowners like regular insurers do, by analyzing the property’s specific risks. Instead, it charges premiums based on average historical losses in the area and flood maps that are often outdated and incorrect.
Premiums through the NFIP are already rising an average of 8 percent this year. That brings the average annual price for a policy holder to about $1,062.
And FEMA is looking into switching to risk-based pricing, which would end the subsidies most coastal communities enjoy on their flood insurance premiums and show the true dollar cost of living in areas repeatedly pounded by hurricanes and drenched with floods — like South Florida, the Miami Herald reported.
Right now, FEMA’s flood maps are ridiculously flawed, failing to effectively reflect the real level of flood risk across the country. In fact, FEMA has warned homeowners not to use the maps to pinpoint whether they are at risk.
Incrementally extending NFIP is not sustainable. It’s time for Congress to face facts, and rip off that Band-aid. As the Herald Editorial Board’s collaborative series, “The Invading Sea,” on the challenges of sea-level rise made clear in May, there is a solution that makes much more sense for Florida, and the rest of the country.
Creating a national disaster fund would spread the risk and make private insurers participate in efforts to protect all Americans from the huge cost of natural disasters. In the 50 years since NFIP was created, Florida has been getting soaked. Florida is a donor state in the flood insurance program. In 2017, the state made up about 35 percent of NFIP policies. But it has received just over 7 percent of its payouts during the past 40 years.
But natural disasters occur across the nation — wildfires, tornadoes, earthquakes — and taxpayers already pay, through FEMA, to help recovery efforts. A national disaster fund would be the fairest way to spread the risk among insurers, the government and property owners — who should be required to participate.
We’ve been warned. Congress needs to take the lead, creating a system that is fair and that brings private insurers back into the flood-insurance arena, while reducing government’s role.
A national disaster fund could do both.