When I was a teenager, I started one of my first construction jobs and I helped rebuild parts of Homestead with my father after a devastating hurricane hit the coast. It’s been a long time since the 1992 South Florida hurricane benignly named “Andrew” struck my beloved state, but even though the Miami/Homestead area has been mostly rebuilt, to this day its affects linger on all across the state and damage is still being caused to the fragile Florida housing market by this long past deadly storm.
Because damage was so extensive, many flood insurance companies essentially went broke from the damages. The companies that didn’t end up going bankrupt licked their wounds and slowly crept out of the state and left many Floridians behind without flood insurance and protection from the next potential storm. The state of Florida recognized what catastrophes the situation could bring, so they stepped in a created the state-owned Citizens Insurance Company.
For over 20 years, private insurance companies have been avoiding the state and Citizens Insurance has been failing in its task to lure private insurance companies back to the state. To make things worse, FEMA changed old flood maps through the Flood Hazard Mapping Program. Now, properties that were once deemed flood safe zones became at risk for flood damage. This essentially forced any homeowner within the new zones to buy flood insurance they previously hadn’t needed in the past.
Just two years ago, Congress passed the Biggert- Waters Flood Insurance Reform Act, which was meant to help the National Flood Insurance Program (NFIP) with its financial troubles by reflecting the “true risk” of flooding on properties all across the country. Before that, any property that predated flood plain management were grandfathered in with subsidized rates-the Biggers-Waters Act eliminated those subsides and homeowners felt the pinch when all of a sudden they were forced to pay hundreds-even thousands of dollars for flood insurance.
After much pressure from realtors, builders and home/business owners, Congress extended the subsidies for the next five years with a bill passed this November. The Florida House Insurance and Banking Subcommittee also passed a bill that helps Florida homeowners obtain flood insurance through a private company.
With the recent addition of Lloyd’s of London jumping into the Florida flood insurance game, we’re bound to see more insurance companies following suit and helping to soften the blow of the additional flood insurance payments that are soon to come to many unsuspecting Floridians.
Even though there is some relief thanks to some of the new modifications to the Biggert-Waters Flood Insurance Reform Act, I’m not sure it’s going to be enough to stem the rising rates and the result will be many prospective home buyers will worry more about flood insurance than they will about property taxes, hurting potential home sales in a state still reeling from a glut of foreclosed homes, a housing market bubble and low property values.
National Weather Service Weather Forecast Office: NOAA Hurricane Andrew
Insurance Information Institute: Hurricane Andrew and Insurance: The Enduring Impact of an Historic Storm, August 2012
FEMA’s National Flood Hazard Layer (official)
Biggert-Waters Reform Act of 2012, FloodSmart.gov
Lloyd’s of London dramatically lowers Florida flood insurance rates: Bay News 9, April 18, 2014