Property owners and real-estate agents in Coastal Georgia are bracing for rising insurance rates due to federal legislation that has changed the way the National Flood Insurance Program operates. The new law is phasing out some subsidized rates, such as for vacation homes, and will raise insurance premiums for those properties at most risk of severe or repeated flooding.
These changes are the result of the Biggert Waters Flood Insurance Reform Act of 2012. Buying property, allowing a policy to lapse or buying a new policy can trigger rate hikes.
“Obviously, higher insurance rates make it more difficult for homeowners within these areas to be able to live there if they have insurance,” Liberty County Administrator Joey Brown said. “You may see unfinanced homes doing without insurance, or some homes remaining on the market for an extended period of time due to undesirability or affordability.”
Brown said the county has not had any direct complaints about the rising rates, which are regulated by the Federal Emergency Management Agency and the insurance industry.
“As plans are submitted for construction and rehabilitation, we will continue to check for certain minimal requirements already in existence related to base elevations and flood zones,” he said.
Paul Zechman, director of the Liberty County business and licensing department, said base flood levels vary in the county, depending on where the property is located, if it is on the coast or inland but near a river or creek. The base flood level for the coast is 16 feet, according to Zechman.
Zechman, Hinesville GIS coordinator Anna Phillips and Liberty County EMA Deputy Director Larry Logan spoke to area real-estate agents Tuesday about anticipated changes to flood-zone maps and the impact higher flood-insurance rates might have on property owners.
FEMA reassesses flood-plain maps every five years, Zechman said. In 2008, 2,500 parcels of land in Liberty County were impacted by the floodplain reassessment, he said. Zechman added that the floodplain-map changes may cause some properties to “come out of” flood zones and cause others to enter a flood zone for the first time.
Phillips said she counted 1,122 structures in Liberty County that were in the 2008 flood zones. She said 388 of those came out of the flood zone. In 2014, 734 would stay in the flood zone, and 237 would go into the flood zone for the first time, Phillips said.
Maps for inland zones will be adopted in May, the GIS coordinator said. Zechman said a public review of these maps will be conducted in April. He explained that inland flood zones are termed riverine, meaning areas near rivers and creeks.
Phillips added that local governments can help
homeowners lower the cost of increased flood-insurance rates. Municipalities and county governments can join the Community Rating System or increase their CRS activities to lower residents’ insurance premiums, according to fema.gov. Phillips said Hinesville has a CRS rating of 7, which saves 15 percent on homeowners’ flood insurance.
Still, some property owners already have experienced insurance-rate hikes this year as a result of the Biggert Waters Act, according to Zechman.
Zechman, who owns a home on the coast in Midway, told real-estate agents his flood-insurance rates increased from $365 a year to $2,800 and could continue to rise.
Grandfathered-in discount rates on flood-insurance premiums already have been phased out in some cases, such as in his case, he said. This phase-out applies to property owners, including nonsubsidized policy holders, affected by changes in the flood maps. Premiums for properties affected by map changes will increase over five years at a rate of 20 percent per year to reach full-risk rates, according to fema.gov.
“Flood-insurance premiums are increasing as a result of the continuing implementation of the Flood Insurance Reform Act of 2012,” Liberty Consolidated Planning Commission Executive Director Jeff Ricketson said in an email. “Many people think the act was passed as a result of Hurricane Sandy a year ago. And while the flood claims paid out in the wake of Hurricane Sandy have sent the debt attributable to the National Flood Insurance Program towards $30 billion, the 2012 Act was actually passed in the summer of 2012 before Hurricane Sandy.”
Ricketson said the NFIP was created 45 years ago “because flood insurance was not deemed profitable for private insurance carriers.” Since 2005, following Hurricane Katrina, claims exceeded the premiums collected, he said.
The NFIP subsidized development in the floodplain by selling flood insurance at premiums lower than the cost of providing coverage, according to Ricketson.
“As losses have mounted during recent years, the federal government absolutely has no choice but to ‘stop the bleeding’ by increasing premiums so that they cover the cost of providing the protection,” he said. Ricketson added the federal government tried to soften the impact of increasing flood-insurance rates with the grandfathering provision, which is being eliminated.
“Everybody is worried about it,” Coldwell Banker, Holtzman Realtors owner George Holtzman said. He and other real-estate agents voiced concern that some homeowners with property on the coast, such as elderly residents, could lose their homes because they won’t be able to pay the higher flood-insurance rates. Higher flood-insurance rates also will make it more difficult for real-estate agents to sell homes, they said.
Holtzman said the National Association of Realtors plans to lobby Congress to either delay the implementation of additional charges levied by the new legislation or to repeal the Biggert Waters Act altogether.