Don’t panic yet, but federal flood insurance is gearing up for a major overhaul.

This could affect 40 percent of properties in Charlotte County, according to Claire Jubb, director of the county’s Community Development. That’s because 40 percent of property in the county are considered to be located in a high hazard flood zone. Even more, 60 percent of the land here is considered in this flood zone.

Sarasota County reports 25 percent of its land and 28,007 structures are in the high hazard zone. The percentage could climb as high as 35 percent once new maps take effect, staff said.

Florida in general will be among the most affected states. Laid out like a giant sandbar, Florida has more federally subsidized insurance policies — more than 2 million — than any other state, according to the Union of Concerned Scientists.

The National Flood Insurance Program is run by the Federal Emergency Management Agency, and FEMA isn’t talking much, except what they’ve put on their website. That website advises the public to be prepared for the all new “Risk Rating 2.0,” to come online October 2020. Two weeks ago, the website also said the new rates would be available for viewing online in April 2020, but they took that off the website.

If FEMA isn’t talking offline, flood experts are. The Union of Concerned Scientists, which has long warned of increased flooding due to climate change, is praising the new plan.

“This is badly needed,” Shana Udvardy, a climate resilience analyst with the Union of Concerned Scientists told Bloomberg news in March. She called the plan, “a huge step in the right direction, so we can let communities that have been repeatedly flooded, know what their actual risk is.”

Locally, one insurance agent said he is not raising any alarms with his customers yet, while he waits for the details.

“There’s no reason to scare them until you know what’s going to happen,” said Jim Nolan Jr., owner of Nolan Insurance in Punta Gorda.

Discussion of the overhaul reveals, however, that it will dramatically change the way the program has functioned for the past 51 years.

Greg Burns, a Washington lobbyist representing Charlotte County, announced the anticipated reforms to county commissioners last month. What he described sounded pretty obvious. A house located right on the water, or the coastline, will cost more to insure than a house that is farther inland, but still in the flood zone.

It may seem obvious, but currently, the federal program operates in what its critics call a binary system. Everyone in the high hazard zone pays the same rate. No one gets more than $250,000 for a house, $100,000 for contents. If you want more insurance, for example for an elite waterfront home, you have to buy from a private insurer, which probably won’t provide the base insurance.

FEMA staff did not return requests for information. Its website suggests, however, that FEMA will be determining rates more like a private insurer, meaning everyone won’t get the same rate like they do now.

To quote the government web page, FEMA will be: “incorporating multiple, logical rating variables — like different types of flood, the distance a building is from the coast or another water source, or the cost to rebuild a home.”

Perhaps to allay panic, FEMA promises to prevent abrupt increases, saying: “The new rating plan will also aim to ensure customers will no longer face dramatic rate increases during map changes or at the edge of flood zones. By reflecting the cost to rebuild, the new rating plan will also aim to deliver more equitable rates for owners of lower-value homes.”

“The concept is good,” said Jim Nolan of Nolan Insurance in Punta Gorda. “It could save some money for some people. It could cost some other people significantly more.”

Homeowners don’t always realize that standard property insurance doesn’t cover flooding. It’s a catastrophe that is harder to predict or control than, for example, fire or theft, and it can hit a lot of properties all at once, according the Union of Concerned Scientists report on increasing flood risk. After paying out big time for flooding disasters in the 1960s, the federal government began the NFIP. The government requires homeowners to buy this insurance if they live in areas deemed highest risk — also known as the 100-year flood plain.

Details of the program have leaked out in the past month, although FEMA has walked back some of that leaked information — for example stating that a memo used in a Bloomberg News report was no longer accurate.

FEMA likes to say that everyone lives in a flood zone, but the fact is, you’re only required to buy if you are in the 100-year flood zone, and have a mortgage. Many property owners, particularly retirees, own their home outright, and choose to be uninsured, increasing the cost to taxpayers in the event of a disaster. In recent disasters, such as Hurricane Harvey that hit Texas in 2017, only 15 percent of flooded homes had flood insurance, according to testimony at a March congressional hearing. Most of the flooded properties in Texas were not in a 100-year flood plain.

So FEMA is also hoping Risk Rating 2.0 will encourage more people in lower risk areas to buy flood insurance, Burns told commissioners. More premiums for lower risk property would help out the system, which was last reported to be in debt to the U.S. Treasury to the tune of $30 billion in 2017 according to Bloomberg News. That is now down to $20 billion after Congress forgave about $16 billion last year, testimony at a recent Congressional hearing revealed.

Charlotte County Emergency Management Director Jerry Mallet said he doesn’t believe a new insurance system will be implemented, given the fact that Congress backed off the last reform.

That legislation was the Biggert–Waters Flood Insurance Reform Act of 2012. Just like the current plan, it was designed to phase in rates that reflected the real risk of floods and to keep the NFIP solvent. It was also expected to discourage development in high risk areas.

Nolan recalls that time.

“That was a scary time,” he said. “You were talking about people whose rates could have gone from $1,500 a year to $10,000.”

Nolan owns a home in the historic district of Punta Gorda that was originally insured at $800. After Biggert Waters, it went first to $3,000 and was headed for $7,000 until he found private insurance with a lower rate.

When new insurance rates came in spectacularly high, legislators decided to walk back many of the reforms. Two years later, they passed the Homeowner Flood Insurance Affordability Act of 2014 to do that. The 2014 legislation capped annual rate increases, among other provisions.

Nolan was able to find a private insurer back then, because his property was of reduced risk. Private insurers have traditionally declined to cover the high risk areas, hence the entry of the federal government. One of those high risk areas is Punta Gorda Isles, Nolan said. He said he knows of no PGI property owner not using the federal program.

As a result of the disabling legislation, problems remain with the insolvent system. Federal legislators are clamoring for a fix. Risk Rating 2.0 may be one answer to that demand. This change is coming directly from FEMA rather than from Congressional legislation.

The whole premise of the federal system leaves Nolan skeptical that it can ever work.

“If FEMA ends up doing everything that the private market’s doing, they (FEMA) should get out of the business,” Nolan said.

By the same token, he said, if rates go strictly by risk, “It’s going to be sticker shock to a lot of people.”

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