New Flood Insurance Law Not A Cure-All, Officials Say

New Flood Insurance Law Not A Cure-All, Officials Say

By Alex Breitler, The Record, Stockton, Calif.
Tribune Content Agency

Dec. 02–Still staggering under $24 billion in debt, the Federal Emergency Management Agency
will increase flood-insurance rates up to 18 percent next year for those living in high-risk flood zones,
including the Smith Canal area of Stockton.
Add to that a new surcharge and a requirement that FEMA squirrel away more money into a
reserve fund, and some residents could be paying up to 37 percent more, an agency representative
told local flood-control officials late last month.
These numbers may come as a bit of a cold shower for Smith Canal homeowners who are
forced to buy insurance. After all, Congress earlier this year passed legislation purportedly to keep
flood insurance affordable.
The legislation did, in fact, stave off even larger potential rate hikes. But it was not a cure-all,
FEMA insurance specialist Edie Lohmann told local officials.
“In the perception of the public, I’m afraid it sort of seems like this is all behind us,” she said.
“… We are still $24 billion in debt. We don’t have a lot of cash in the coffers if we have another big
storm.”
More than 5 million people across the country are insured under FEMA’s National Flood
Insurance Program. They pay subsidized rates that do not reflect the actual cost of the damage in a
potential flood.
That became a problem after Hurricane Katrina and Superstorm Sandy, whose massive claims
resulted in FEMA accruing $17.5 billion and $6.25 billion in debt, respectively.
Congress passed a law in 2012 that would have phased out those subsidized rates and put
the program on firmer financial ground. But pushback from flood-prone states led to this year’s
follow-up legislation capping rate increases and removing a requirement that full rates be charged
immediately whenever a home is sold.
Indeed, the news is not all bad for homeowners. A small number may receive refunds for
By Alex Breitler, The Record, Stockton, Calif.
Tribune Content Agency
overpaying under the old law.
Next April, however, everyone can expect to pay more — even those at the lowest “preferred
risk policy” rate of $414 per year. Factoring in the new surcharge, those homeowners will pay about
$430.
Not everyone will see their rates go up 18 percent, the maximum allowable under the new law

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