WASHINGTON — Congress is poised to offer a temporary reprieve to some homeowners facing potentially steep premium hikes on their flood insurance policies.
But several thousand Mainers could see longer-lasting relief from higher premiums under a more sweeping flood insurance bill that has strong bipartisan backing in the Senate, although it likely faces a tougher haul in the House.
New maps from the Federal Emergency Management Agency are expanding the flood zone farther inland, increasing the number of homes and businesses considered at risk of flooding. Numerous coastal Maine towns are appealing the redrawn maps.
But subsidies that lowered premiums for many property owners are also being phased out under a 2012 law that aimed to make the debt-ridden federal flood insurance program more financially stable after massive payouts from storms such as Hurricane Katrina and Superstorm Sandy. Roughly 3,300 property owners in Maine receive subsidies, about one-third of all flood insurance policy holders in the state.
“Some customers are seeing an almost doubling of their premiums when renewing policies, particularly if they have older homes and don’t have an elevation certificate,” said Robert Foley, a partner at Cole Harrison Insurance in Kennebunk.
Momentum is building on Capitol Hill to delay those price hikes nationwide.
Tucked into a massive spending bill passed by the House on Wednesday is a provision delaying some premium increases through Sept. 30. The Senate is expected to pass the $1.1 trillion spending bill this week.
“It’s wrong that some in Maine through no fault of their own find themselves suddenly facing the potential of significant premium increases,” Maine Rep. Mike Michaud, D-District 2, said in a statement. “The step taken in the omnibus funding bill provides some relief.”
Michaud, U.S. Rep. Chellie Pingree and Sen. Susan Collins are all co-sponsors of bills that would go farther.
A more comprehensive bill in the Senate would delay rate hikes by up to four years while FEMA studies the affordability of the program. The bill would delay premium increases for many properties affected by the new flood maps but would not delay hikes for second homes or buildings that have been repeatedly flooded or have incurred severe damage from a single event.
The Senate bill – the Homeowner Flood Insurance Affordability Act – has support from both sides of the aisle and could pass the Senate this week.
The fate of the bill in the House is less certain. Some conservative groups oppose the delays, insisting that subsidies should be eliminated to ensure that all flood insurance policyholders are paying the fair-market price.
Heritage Action, the political arm of the Heritage Foundation, described the more limited delay in the budget bill as “alarming” and warned that it would set “a terrible precedent that this promising reform may never be allowed to go into effect and taxpayers would be left holding the bag.”
But Pingree, D-District 1, said changes were needed to address the unintended consequences of the 2012 law.
“In some cases it was simply unaffordable and FEMA needs to take a closer look at the impact these rate hikes would have and figure out a way to make them affordable,” Pingree said in a statement. “It makes sense to delay the rate hikes for a few years while FEMA does that.”
Pingree is married to S. Donald Sussman, majority owner of Maine Today Media, publisher of the Portland Press Herald, the Kennebec Journal and Morning Sentinel.
Charles Katz-Leavy, a partner at the Maine-based law firm Verrill Dana, said clients are primarily focused on the long-term implications of FEMA’s redrawn maps rather than the loss of subsidies. The new maps will not only increase premiums for some existing policyholders but could make it harder for property owners to develop or sell land.
Katz-Leavy agreed that some property owners could get hit from both sides, however.
“Your (flood) risk has just gone up because of the revised maps and then your cost of insurance has just gone up because of the loss of the subsidy,” he said.
Foley said one client’s annual premium increased from $1,600 to $3,400 because of the loss of the subsidies. Properties most likely to be hit by the phased-out subsidies are second homes and homes built in Maine before 1983. The 2012 law also eliminated a “grandfathering” clause that allowed properties to keep their lower premiums even after being remapped into a higher-risk zone.
In many cases, homeowners must hire a licensed surveyor to document where the structure sits relative to the “base flood elevation,” and then issue an elevation certificate to the owner.
Foley said the entire flood insurance system needs restructuring because, under the present system, only properties at risk of flooding are insured. That creates a situation where payouts are exceeding income from premiums.
“I think we need to have a bigger discussion about flood insurance,” Foley said. “These (proposals) are more Band-Aid approaches to have the flood insurance program more sustainable, but I don’t see it happening.”
Kevin Miller can be contacted at 317-6256 or at: