Southerland wants shorter delay of flood insurance relief

PANAMA CITY — Flood insurance increases could be delayed for up to four years if legislation on Capitol Hill keeps moving, but Bay County’s voice in the House of Representatives says that’s too long.

The Senate passed a bill Thursday that would delay reforms to the National Flood Insurance Program (NFIP). On Oct. 1, subsidies propping up the program began to be removed, replaced by actuarial standards — setting rates based on actual risk — for insurance premiums.

The bill would put all that on hold for up to four years.

“The Senate version seems to kick … the can down the road for an awful long time,” said U.S. Rep. Steve Southerland, R-Panama City.

Southerland is more comfortable with a House bill to delay implementation until March 2015. Southerland cosponsored the legislation and said it would give the Federal Emergency Management Agency (FEMA) an opportunity to review its flood maps, in which, he said, no one has confidence.

The congressman cited an anecdote from Monroe County, which includes the Florida Keys, where a house premium jumped from $1,900 to $49,000. He said that is unreasonable, particularly because the home would sell for only $300,000.

“We need a solution,” he said.

Southerland also recommended the House legislation phase in premium increases so ratepayers aren’t left with sticker shock.

Right now, the dramatic increases are like an elevator, going from the ground floor to the top floor; the House version should take the stairs, using incremental, manageable steps, Southerland said.

Bipartisan support

The Senate bill passed 67-32 on Thursday with broad bipartisan support. Both Florida senators, Marco Rubio, a Republican, and Bill Nelson, a Democrat, voted for the measure. Nelson, along with Sen. Mary Landrieu, D-La., led the charge to push the bill out of the Senate.

The House legislation may not be such an easy go. Some news reports indicate House leadership won’t take up the Senate bill as written, and tea party members will balk at any delay in implementation, sticking by the 2012 law, known as the Biggert-Waters Act.

Opponents to the Senate legislation argue delaying Biggert-Waters’ implementation reinstitutes a subsidy — borne on the backs of taxpayers — benefiting homeowners living in flood-prone areas.

The White House’s Office of Management and Budget (OMB) has offered similar concerns about the bill, pointing out the program has racked up a $24 billion deficit.

"The Administration recognizes that many policyholders may be challenged financially by the new rates and remains committed to working with the Congress to develop approaches that ensure economically distressed policyholders are not unduly burdened while maintaining the financial stability of the NFIP,” an OMB statement stated last month.

The White House, however, has not threatened to veto the bill.

Votes

In the Senate, tea party stalwarts Ted Cruz, R-Texas, Mike Lee, R-Utah, and Rand Paul, R-Ky., all voted against the bill, possibly foreshadowing the fight in the House in an election year for all its members.

Two years ago, Southerland voted for Biggert-Waters, which was part of an omnibus bill that included transportation projects, post-BP spill Gulf restoration money and even a student loan interest rate extension.

The House passed the final version of the bill 373-52.

Southerland, a proud and vocal tea party supporter, nevertheless, wants the delay. His district includes plenty of Florida Panhandle coastline and angry homeowners. He’s also facing a serious Democratic challenger this fall in Gwen Graham, the daughter of former U.S. Sen. Bob Graham.

Southerland agreed the program should not be allowed to run massive deficits and approach insolvency, but said for a brief time period Congress must hit the pause button so FEMA can review the flood maps, which he called “overaggressive.”

He said it’s a “fairness issue.”

“If the flood maps are wrong, that needs to be addressed,” he said.

Local spike

South Florida homes aren’t the only ones seeing rate spikes. One local home’s flood insurance premium jumped from $3,300 to $26,000, said Tina Blackwell, chief operational officer at Blackwell Insurance in Panama City.

Blackwell said the soaring rate was an “extreme case” and the home was purchased after July 2012.

She said homes seeing the eye-popping rate increases were bought after July 2012, when Biggert-Waters was passed, and are in certain classification of flood zones.

“The increase happened at the renewal this year,” she said, after Biggert-Waters took effect Oct. 1.

The homeowner was not happy, but Blackwell said she searched the private insurance market and will secure a policy for less than than $13,000.

For years, the federally subsidized flood insurance market undercut private insurers, essentially pushing them out, but Blackwell said the skyrocketing premiums are generating more private options.

Blackwell said locals can avoid a flood insurance nightmare by knowing a home’s base flood elevation before buying or raising the foundation before building.

“That’s the best way people are going to be able to protect their assets,” she said.

Southerland, meanwhile, relished the idea of private insurers stepping back into the flood insurance market. He’d prefer to see market forces draw the premiums down.

“I don’t think the federal government should be in that business,” he said.