Supporters of the 2012 law said Thursday’s bill in the U.S. Senate continues to subsidize home ownership in risky, flood-prone areas and increases the need of a future taxpayer bailout of the National Flood insurance Program.
“While politically expedient today, this abdication of responsibility by Congress is going to come back and bite them and taxpayers when the next disaster strikes,” said Steve Ellis, vice president of Taxpayers for Common Sense, a Washington-based watchdog group. “Everyone knows this program is not fiscally sound or even viable in the near term.”
The flood insurance program collects $3.5 billion in premiums each year, but FEMA officials say it needs another $1.5 billion from once-subsidized policyholders to remain solvent.
An estimated 1.1 million of the 5.5 million flood insurance policyholders receive subsidies. The 2012 law raised premiums for 250,000 businesses, owners of second homes, and people whose properties flood frequently. Under the 2012 law, about 578,000 policyholders in hazardous areas will keep their subsidies until they sell their homes or suffer severe flood losses.
Individual premiums for flood insurance depend on a host of factors but currently range from $400 a year to more than $8,000 in high-risk zones, according to FEMA’s website. There were more than 60,000 flood insurance policies in Massachusetts in 2013, but figures are not available for how many more properties have been brought into flood zones as a result of the new maps.
FEMA officials said the changes to the flood zones are meant to protect homeowners, not create financial hardships.
“We understand this impacts a lot of people, and we’re obviously concerned about that,” said Dennis Pinkham, a spokesman for FEMA in New England. “But we are also concerned that there are a lot of homes and other structures in these high hazard areas, and we want to be sure that we show people as accurately as we can what risk they have. That’s what these maps portray.”
Material from the Associated Press was used in this report.