Alex Sink on Flood Insurance Reform

Congressional candidate Alex Sink has unveiled her plan for flood insurance reform.

Stopping the unfair flood insurance rate spike, promoting affordability and choice. Alex supports the immediate delay of the rate spike, and a roll back for those who have received premium increases under the current flawed system. Congress should delay the spike until fair rates can be accurately calculated.

Alex will also work with FEMA to educate homeowners on how to save money and better prepare for disasters – such as through the elevation of HVAC systems and the installation of backflow preventers and breakaway walls, which should result in lower premiums. Congress should consider tax credits and supporting low-interest loans for homeowners related to these and other improvements, which should save money in the long run. Alex will also work with the private sector and FEMA to explore expanding insurance options and choices for consumers, such as offering higher deductible policies to reduce premiums.

FEMA Should Complete the Affordability and Re-Mapping Studies, Reevaluate Rate Calculations. FEMA should complete the affordability and re-mapping studies that were promised and are part of the basis for rate calculations. FEMA should include outside industry experts in completing these studies to ensure a fair review of procedures and accurate mapping in Florida.

Enhancing FEMA’s Transparency. FEMA should disclose the methodology for calculating flood insurance rates in a consumer friendly way. Formulas related to calculations should be reviewed by independent experts and stakeholders.

Increasing FEMA’s Accountability. Alex will work to create a simplified appeals process and consumer advocacy services to facilitate communications between stakeholders, ensure that homeowners can file complaints, hold politicians and FEMA accountable, and make sure homeowners receive their claim checks quickly.

The details are scant on what exactly would be the appeals process for homeowners. The best long-term solution Sink provided is revamping rate calculations and the maps of high risk flood areas.

Rates went up because Congress voted for the increase.

Congress approved the increase in 2012 in an attempt to put the program on stable fiscal footing after Hurricane Katrina nearly drove it to bankruptcy. The program has doled out billions of dollars in claims since its inception in 1968, including $7.7 billion last year, according to its website.

FEMA said on its website that the Biggert-Waters Flood Insurance Reform Act of 2012 would increase rates.

In July 2012, the U.S. Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) which calls on the Federal Emergency Management Agency (FEMA), and other agencies, to make a number of changes to the way the National Flood Insurance Program (NFIP) is run. Some of these changes already have occurred, and others will be implemented in the coming months. Key provisions of the legislation will require the NFIP to raise rates to reflect true flood risk, make the program more financially stable, and change how Flood Insurance Rate Map (FIRM) updates impact policyholders. The changes will mean premium rate increases for some—but not all—policyholders over time. Homeowners and business owners are encouraged to learn their flood risk and talk to their insurance agent to determine if their policy will be affected by BW-12.

An explanation of the rate increases from the FEMA website.

FEMA Rate Increases by Michael Robert Hussey