Flood Insurance for all local residences, condos, hotels and business faces another major deadline with the current National Flood Insurance Program (NFIP) set to expire November 30, after Congress passed a last-minute four-month extension on July 31.
The brief history, provided in part by Jake Holehouse, head of his new HH Insurance firm in St. Pete, is that if you go back to 2011 and 2012, the flood program had continuous lapses going on and policyholders at the time did not have an alternative solution outside of the NFIP program. At the time this had major ramifications to the real estate market as people could not close on a house as the NFIP was literally non-existent for weeks at a time and no alternative program existed.
Out of that, the National Association of Realtors and other groups put on a huge push to create a long-term, sustainable program, which ultimately led to the Biggert-Waters Act of 2012. At the time, the Act was celebrated as it led to a five-year extension of the flood insurance program. As we know, Biggert-Waters had some major unforeseen ramifications that caused rates to skyrocket — specifically in Pinellas County.
The challenge that we have seen of late is that Biggert-Waters became law in 2012 and Congress extended the program until mid-2017. So, for the past 15 months the flood insurance program has been running on 90- to 120-day extensions. The extensions almost came to a halt on July 31 as the program ran into the 11th hour with a pending expiration at midnight. Thankfully, that afternoon, we finally had another extension pushed out to November 30t of this year — essentially pushing the program beyond the very important mid-term election cycle.
We will be about three and half weeks past the November 6 elections when we need the flood program extended again. With so much focus right now on the election and not on the renewal of the flood insurance program, we do not know what the likelihood is that a true long-term extension will happen by the November 30 deadline.
Holehouse emphasized, “With that being said, the program does need a long-term solution. Ideally, from our standpoint, we would like to see a 5 to 7-year extension. With the extension, I think we need to be very cautious on just pushing for an extension without knowing what we are getting as part of that extension.
“Biggert-Waters happened because we just needed an extension and the Legislative Branch did not understand the ramification of removing grandfathering coverage from the older pre-Flood Insurance Rate Maps (FIRM) homes rate structures.
“With the extension, it is extremely important that we preserve grandfathering for the pre-FIRM homes; make it easy for homeowners to move from the NFIP to the private market and back to the NFIP if they choose to do so; and maintain grandfathering coverage for a home built in flood compliance at the time of construction.”
Good News
Holehouse provided some encouragement, noting “The good news is that since 2012, we have seen over 20 private flood market carriers become active in Florida and we see that approximately 75% of Floridians qualify for a rate savings by moving from the National Flood Insurance Program into the private market. Along with this significant factor, we are seeing private markets actually take rate decreases as they are becoming more and more competition-driven.
“The other piece of good news for the barrier islands and coastal locations in Pinellas County is that FEMA released the preliminary new results for FIRMs in June. On the preliminary results, it appears that in St. Pete Beach, Tierra Verde, Treasure Island, South Pasadena and Gulfport, approximately 90% of policyholders will see an improvement in rating by the maps — reducing base flood elevations or flood height requirements.
“For Madeira Beach, Redington Beach, North Redington Beach and Redington Shores, we are seeing the majority of policyholders also move down in base flood elevation and we are seeing many of the direct gulf-front homes and condos move from a V zone rate to a Coastal A zone rate which is a huge premium savings. However, in these same four communities, we are also seeing some policyholders move from an A zone to a V zone, which could mean much higher rates.
“However, I would overall estimate that about 85 to 90% of the barrier islands will actually see a positive result from the new flood maps coming into play.
“It’s very important to consult your own insurance agent or local town building supervisor on how these new maps will impact your specific property. They will review the new map with you as the FEMA website is not very user-friendly to anyone but a professional.”
The new maps include the new AE Flood Zone designation to help property owners better understand their risk of flooding. (See March 2018 issue.)
Holehouse urges all local residents and business owners to contact their Congressional representatives to extend the National Flood Insurance Program on a long-term basis or pass a long-needed replacement before the November 30 deadline.
For more information, Holehouse can be reached via email jwh@hhinsgroup.com or phone at (727) 498-5551.
Article by Steve Traiman
[Editor’s Note: Special thanks to Jake Holehouse, head of HH Insurance at 3443 First Avenue North St. Petersburg, FL 33713, for his excellent comments and insight.]
[Steve Traiman is President of Creative Copy by Steve Traiman in St. Pete Beach, offering freelance business writing services. He can be reached via email at traimancreativecopy@gmail.com ]