The recent article in the Virginian-Pilot ((Obama to sign bipartisan bill to ease flood insurance woes 3/15/2014) only hints at some of the problems that FEMA and the National Flood Insurance Program (NFIP) is experiencing. The hurricanes and N’or Easters that have struck the coastal areas over the last twenty years have drained FEMA NFIP bank. Numerous articles have said that the NFIP premiums for those living in flood prone areas was going up, but by how much? A recent hint said 40%, or more. Some sources said that potential rates to fund the NFIP would increase thousands of dollars, to the point where most of the insured would feel a significant pinch like a ballooning second mortgage with a variable rate.
I have personally seen the near collapse of some coastal real estate markets (Florida comes to mind) when Flood Insurance policies are either not renewed, issued or become prohibitively expensive. Under such conditions, owners must either sell at a huge loss, cannot sell their property, or prospective buyers cannot find flood insurance as required by their mortgage company. This real estate bubble collapse directly impacts owners, buyers, city and state tax revenues, and all the associated elected officials. Many parties lose when structures are inadequately built in a flood hazard area. Many previous and current local building codes for coastal areas are not substantial enough to reasonably ensure that structures could withstand flood waters and winds from a potential CAT 3 hurricane. Many builders and city officials call “building to code” adequate and sufficient, yet many insurers are not so free with that classification. What happens when current building code are found to be insufficient by the insurance companies? Insurance rates will either get prohibitively expensive or policies will not be issued.
Faced with significant premium increases for NFIP subscribers, many coastal dwellers have complained to their lawmakers. Under pending legislation, increases have been rolled back and future rate increases will be limited to just 18% per year. Some home owners in flood prone areas (statistically a 1% chance or more of flooding per year) have been given a reprieve this year, but can now expect significantly higher rates in the coming years.
The days of small cinderblock summer cottage along Shore Drive and North Beach areas are gone as they have been replaced with pricey homes and condos. It is fair to expect that NFIP rates will keep on increasing until some reasonable balance between the insured and the insurers is achieved. But, who should reasonably pay either directly or indirectly for the NFIP premiums for such precarious living? More importantly, for the many of us who live in or near flood prone areas, what can be done to improve the storm worthiness of our homes or to improve our city’s building codes? We just cannot rely on the builders to do it, or many local politicians who receive their campaign funding and support from the builders’ and bankers’ clique.
We will all have to get a lot smarter about the NFIP, coastal building codes, and the stressors of coastal living. We must push for improvements in the quality of our city’s construction, strengthened storm codes, and improved knowledge on the part of owners and landlords. We should consider reasonably retrofitting our homes for improved sustainability, or asking our builders about what methods they will use to improve building survivability, like having a 10 year “bumper to bumper warranty. I think being told that the building “meets code” just won’t suffice any more. When told that to incorporate improved and reasonable storm mitigation upgrades would be cost prohibitive, we should just ask the builder if he would then underwrite future NFIP premiums? We don’t need to live concrete bomb shelters, but we can do a much better job asking questions and making reasonable improvements. Builders and city officials can do their part. And, we can become better informed, and then ask the right questions until both we and the insurance companies are satisfied.