Spike in flood insurance rates

Tom Rishel is a small business owner in Muncy with several properties he had hoped to one day sell.

But when he learned his flood insurance had suddenly increased to astronomical proportions under federal legislation passed last year, he sees those land holdings more as burdens than investments.

His flood insurance for one property alone, he said, has been hiked from $600 a year to $9,555 a year.

“Nobody is going to buy a house and pay that kind of insurance,” he said. “It makes a house worthless as far as I’m concerned.”

Rishel, 70, like many other property owners with holdings in flood areas, didn’t know about the Biggert-Waters Flood Insurance Reform Act of 2012 until recently.

Under the law, long-term changes were made to the National Flood Insurance program as a means of improving its financial viability.

Rishel’s properties all are within flood prone areas of Muncy.

None of them, he said, have sustained any water damage since 1972, when rains from Hurricane Agnes caused major flooding in the area.

But that doesn’t matter under the new law.

The Federal Emergency Management Agency is redrawing flood zone maps, bringing more properties into flood zones and still others into a higher-risk zone.

“All my homes are in the flood area,” he said. “These were supposed to be my retirement. You can’t even think of selling them with the flood insurance.”

Jeff Smead, of Muncy, who owns a home in a flood-prone area, noted his insurance will go from $792 to $2,400 next year.

He said his rate increase is not as bad as others, and those are the people he’s really concerned about.

“There are many, many people out there who don’t know this is coming,” he added.

Smead and Rishel criticized Congress for passing the law and accused its members for failing to give it much consideration before taking it to vote.

“It’s just something that wasn’t thought out,” Rishel said.

U.S. Rep. Tom Marino, R-Cogan Station, voted in favor of the legislation. President Barack Obama signed the bill in early July of 2012.

“The Biggert-Waters Flood Insurance Reform Act, while not ideal, was the only option for making the National Flood Insurance Program viable for the future,” Marino wrote in an email to the Sun-Gazette.

“Unfortunately, there was an unintended consequence of a severe rise in insurance premium for policy holders,” he added. “As a result, I have co-sponsored legislation to ensure that flood insurance remains affordable and that (the) market for home sales continues to be robust.

“The Flood Insurance Implementation Act delays some of the more burdensome provisions of the Biggert-Waters Act and would require the Federal Emergency Management Agency to work with the state and local governments, as well as private homeowners, to re-evaluate non-structural mitigation features on flood maps,” Marino added.

Marino said another piece of legislation, the Grimm-Waters Homeowner Flood Insurance Affordability Act, delays implementation of flood insurance increases for certain qualified properties for two years until an affordability study, already required by law, is completed and FEMA certifies sound scientific methods to determine the flood risk. It also authorizes FEMA to reimburse homeowners for successful map appeals.

Both bills are before the House Financial Services Committee.

Aron Carter, senior vice president of enterprise risk management for Jersey Shore State Bank, said the new law will make it harder for homeowners to continue living in their houses.

“We are really concerned for people on fixed incomes,” he said. “Can they really afford this kind of increase?”

In general, rate changes will have the greatest effect on properties within a special hazard area that were constructed prior to a community’s adoption of its first flood insurance rate map and have not been elevated. Many of those properties up until now have been paying subsidized rates.

“We are urging people to get elevation certificates,” Carter said. “If you have one, your premium may not be as great.”