West Hawaii Real Estate | August 17, 2016 9 Remember the flood insurance scare of 2013? It’s creeping back into Tampa Bay and Florida By Jeff Harrington, Tampa Bay Times Staff Writer Three years ago, Tampa Bay was roiling over massive flood insurance rate hikes. Home sales in some neighborhoods literally stopped. Real estateagents warned the market could collapse. Lawmakers held town halls and rallied from Tallahassee to Washington for help. Then Congress passed a temporary reprieve, and nearly all fears subsided. “It went from screaming loud madness to not even a whisper,” said Robin Sollie, head of the Tampa Bay Beaches Chamber of Commerce. Brace yourself for the chorus of discontent to rise up again. That 2014 congressional fix slowed down – but didn’t stop – the first wave of higher flood insurance premiums that are now hitting homeowners. “There’s nothing you can do about it,” said Sollie, who this summer got the sticker shock of a 21 percent increase for her beachfront home in St. Pete Beach’s Belle Vista neighborhood. “You can shop the private market or you pay it or you have to sell your house. As these higher rates are coming in, people are starting to put their houses up.” The good news: Owners of lowlying homes won’t endure a repeat scare of annual flood premiums immediately jumping five- or six-fold into the tens of thousands of dollars. But like a rising tide lapping at doorsteps, year after year of flood rate increases of 9 percent to more than 20 percent in some cases are coming, eventually pushing homeowners toward that higher, unsubsidized level. Some real estate agents caution prospective buyers that their flood rates will double within four or five years. As Jay Neal, president and CEO of the Florida Association of Insurance Reform, puts it: the flood insurance crisis is “a little quieter…but no less painful.” The sharply higher rates are an attempt to stabilize the National Flood Insurance Program, which was financially decimated by Hurricane Katrina and Superstorm Sandy and left desperate to climb out of a $23 billion deficit. Its solution was to target the 20 percent of NFIP properties in lowlying areas that had enjoyed lower, subsidized rates for decades. With more affected homeowners than any other state – and more subsidized properties in Pinellas than any other county in the country – Florida has led the awareness campaign and tried to find answers, says state Sen. Jeff Brandes, R-St. Petersburg, an advocate of private insurance options. Yet, nearly all the solutions Florida has come up with so far have a downside: • Raising the level of existing homes can be costly and in some cases impractical. “How would you raise (flood-susceptible) Shore Acres?” Brandes says. “How many times would you be spending more to raise a home than what it’s worth?” • A few private insurers, like Tampabased Homeowners Choice and Sarasota-based Centauri Insurance, are offering a limited number of private flood policies that undercut the federal NFIP rates. But they’re choosy on who qualifies and not all mortgage companies outside Florida allow private insurance anyway. (Centauri recently became the first insurer to have its flood endorsement certified by the Office of Insurance Regulation, making it acceptable by mortgage companies.) More problematic: If homeowners are later dropped by a private insurer and forced back into the NFIP, they may have to pay for a new, unsubsidized flood policy. That could immediately boost their bill from under $1,000 up to tens of thousands of dollars. • Actuaries from the Milliman consulting firm are creating new models to determine elevation levels house-by-house. Their goal is to offer clients – private property insurers – a way to sell targeted flood policies to owners of higher-elevated homes much cheaper than NFIP. But that program could take years to gain widespread adoption. Brandes worries about having enough time to build a viable private flood insurance marketplace before the cost of the public option becomes untenable for many. “We’re between the lightning and the thunder,” he said. To real estate agent Cyndee Haydon, who sells homes on Clearwater Beach, none of the solutions goes far enough; they only “help us move real estate in the short-term.” Haydon has her share of clients either avoiding purchase of a home in a high-risk, flood zone area or trying to sell one before market conditions worsen. She dissuades buyers from seeking private flood insurance, saying it’s too risky if they’re dropped and then have to pay full-boat for a new NFIP policy. So far, the overall impact on selling prices for flood-prone homes has been remarkably muted. Pinellas County Property Appraiser Pam Dubov surprised herself when she began dissecting some of the latest home sales figures. Perhaps it wasn’t a shock that beachfront homes are getting more expensive with a flood of cash buyers betting on rising property values. But then Dubov turned to Shore Acres, poster child for a low-lying, less upscale, inland Pinellas community that would have been hit hard if Congress had not overhauled the Biggert-Waters Act of 2012 (the law that triggered the high rate increases in the first place). She examined sales over the year in a smattering of Shore Acres neighborhoods where anywhere from 65 percent to 92 percent of the homes have subsidized flood insurance rates. “I’m looking at double-digit (sales price) increases for all of them,” Dubov said. Haydon sees such rising real estate values as an indication buyers may be clueless to how a few years of exponentially higher rates will hit their pocketbooks. “Because of the tight inventory at the beaches, some home buyers are more likely to buy a home in this seller’s market that requires flood insurance and utilize higher deductibles, not really understanding the rate at which their flood insurance will rise,” she said. “At current rates, most homeowners will see their (flood insurance premiums) doubling every four to five years depending on whether it’s their primary or second home.” Cristy Assidy said a 10 percent rate increase to the $2,300 flood insurance tab for her family’s home in Riviera Bay near Weedon Island is not enough to push them out of their home. It’s certainly better than the $17,000 bill they had faced if Biggert- Waters hadn’t been changed. But is it fair? Hardly, she says. “It’s still unreasonable,” said Assidy, a 42-year-old nurse. “They have to take another look at this. It’s not an acceptable answer for anybody to say that…after five years it would be unaffordable. They put a Band-Aid on it, but we’re still hemorrhaging.” Like many owners of homes that have never flooded, she challenges the accuracy of federal flood maps used to set rates. What’s particularly irksome to many is that Florida is not responsible for NFIP’s shortfall even as it shoulders the brunt of the financial fix. An oftnoted 2011 study by the University of Pennsylvania’s Wharton Center for Risk Management and Decision Processes found that Florida has paid in four times more in premiums than it has gotten back in payouts since the National Flood Insurance Program started.
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