On March 21st, President Obama signed into law a bipartisan bill that will delay flood insurance rate hikes for property owners. The Homeowner Flood Insurance Affordability Act repeals the Federal Emergency Management Agency’s (FEMA) authority to increase premium rates when a property is sold. It also refunds the excessive premium to those who bought a property before FEMA warned them of the rate increase. The bill limits premium increases to 18 percent annually on newer properties and 25 percent for some older ones. The Senate approved the bill on March 13th, and the House of Representatives March 4.
As has been previously reported in Fast Track and Broker Blast, the original rate hikes were part of the 2012 Biggert-Waters law. Designed to gradually phase out flood insurance subsidies, the increases were an attempt to shore up finances for the National Flood Insurance Program (NFIP), which is roughly $24 billion in debt. Debt caused mainly by relief efforts of catastrophic events over the last decade. As a result of the phase-out, some home owners who were not required to pay the full actuarial cost of their insurance were being faced with tens of thousands of dollars a year in flood insurance hikes.
“Today, many months of hard work, negotiation and bipartisan compromise have culminated in a law that will end skyrocketing flood insurance costs for hundreds of thousands of home owners,” says U.S. Rep. Maxine Waters, D-Calif. “Though the measure isn’t perfect, it ensures there will be no more dramatic rate increases for families currently facing unaffordable premiums.”
For more Fast Track articles, visit www.mibor.com/fasttrack today.