For years, people like the Portanovas relied on insurance that was far cheaper than the risks warranted. When Congress tried to stem the red ink by raising rates to reflect the real costs, people in the flood plains screamed — and the politicians listened.
But many say even the adjusted premiums will soon be beyond their means, though the question remains: Will the government continue to subsidize insurance in places that are increasingly untenable as sea levels rise and storms become more severe?
The Associated Press analyzed records from the Federal Emergency Management Agency for roughly 18,500 communities in the National Flood Insurance Program where the government offers subsidized rates.
The data show there are communities in every state where even a few years of price hikes could leave many affected owners unable to afford their properties. Hundreds of small river towns and coastal communities with significant numbers of homes and businesses in flood hazard zones are at risk.
FEMA’s records also show why there is pressure to raise rates. Some communities with a large proportion of subsidized properties have been tremendously costly for the flood program. But there are just as many places where those policy discounts have cost taxpayers almost nothing.
The reform law signed by the president rolls back portions of a 2012 overhaul that took away subsidies immediately for any property that changed hands or was remapped into a higher risk flood zone. Both groups will now be able to continue paying subsidized rates.
But at least 820,000 homeowners will still get hit with rate increases of up to 18 percent each year until the program is collecting enough revenue to cover a $24 billion shortfall created by a series of catastrophic storms.
Owners of another quarter million businesses or second homes will see their rates rise 25 percent each year, until their premiums reach rates that match the true risk of flooding.