May 23, 2018

Flood Insurance Passed, But Challenges Remain

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Flood Insurance Passed, But Challenges Remain

REALTORS® weren't the only group that was pleased with the passage in July of the Biggert-Waters Flood Insurance Act. Employees of the Federal Emergency Management Agency were also happy with the outcome, said Brad Loar, director of the mitigation division for FEMA's Region IV, which covers eight southeastern U.S. states, including Florida.

Speaking at the Land Use, Property Rights, and Environment Forum Friday morning during the 2012 REALTORS® Conference & Expo in Orlando, Loar said the successful long-term extension of flood insurance for U.S. home owners was a welcome change from the uncertainty brought about by the series of 60- and 90-day extensions that preceded it. However, it includes some significant changes to the way flood insurance works, he added.

"We're in the process of implementing this rather large bill," he explained. "It involves more than just extending flood insurance for five years. There's quite a bit of reform in it."

Those reforms include phasing in actuarial rates for nonprimary residence structures and for subsidized and newly mapped policies, as well as grants implementations, changes to installment payments, and flood mapping provisions.

One of the main consequences of those changes is that 650,000 existing pre-FIRM (Flood Insurance Rate Map) policies for non-primary residences will convert to full-risk rates when these properties are sold. Premiums for those homes could rise by as much as 200 percent, Loar said.

"It's going to be a little painful — maybe a lot painful — if you're a REALTOR® in an area with a lot of these kinds of properties," he added.

Compounding the complexity of those reforms is the serious devastation caused by Hurricane Sandy, which killed about 100 Americans and caused tens of billions of dollars in property damage in New York, New Jersey, and other states. "[Hurricane] Sandy is the Northeast's Katrina," Loar said. "FEMA and the Flood Insurance Program are going to be involved in that for some time."

-- Brian Summerfield, REALTOR® Magazine