House considers options as higher flood insurance costs loom

TALLAHASSEE, Fla. – A state House subcommittee received a number of options Wednesday to help homeowners fend off an expected end to federal flood-insurance subsidies that Realtors claim could devastate Florida's economy.

The proposals ranged from lifting state laws and regulations to attract more private insurance companies into the market to setting up a state-backed agency --- similar to the Florida Hurricane Catastrophe Fund --- to back coverage.

House Insurance and Banking Chairman Bryan Nelson, R-Apopka, said the immediate need is to get Congress to postpone implementation of the Biggert-Waters Flood Insurance Reform Act, which phases out subsidies on older properties in flood zones.

The postponement would give the state time to review the impacts of the change, Nelson said.

"We want to look at anything, we just need to take care of the citizens of Florida," Nelson said. "The easiest and quickest would be for them to delay it and give us some options."

The 2012 act calls on the Federal Emergency Management Agency and other agencies to make a number of changes to the way the National Flood Insurance Program is run, including raising rates to reflect true flood risk and to make the program more financially stable.

In June, the U.S. House voted to delay parts of the act, including putting a one-year hold on the rate changes that FEMA is rolling out. The House also approved a delay in the removal of a longstanding grandfather clause that has allowed subsidies to be carried over when properties are sold.

Gov. Rick Scott has asked U.S. Sens. Bill Nelson, D-Fla., and Marco Rubio, R-Fla., for help to ward off "the potential impact to Florida's economy" of the act.

Among the concerns that the Florida House subcommittee will review, Bryan Nelson said, is that while many Floridians are receiving subsidies through the federal program, the state collectively pays $4 into the program for every $1 that has come back to Florida.

As for the suggestion that the state could create its own means to provide insurance to those unable to get private coverage, Nelson pointed out the difficulties.

"We know how hard it is to set up an insurance company. Now you're talking about a whole new program based on a set of criteria," Nelson said. "Who is to say the federal government doesn't come back and tweak it and get us back. And here we spent all this time ramping up."

St. Petersburg Mayor Bill Foster on Tuesday urged the Scott and the Cabinet for help getting Congress to "just hit pause" for one year.

Realtors told the subcommittee on Wednesday they are already starting to see impacts of the act, which they say will cause a nightmare scenario for about 15,000 homes in Pinellas County.

With scenarios that flood insurance for some properties could jump from $3,000 to more than $30,000, Florida Realtors President Dean Asher said the act will be "devastating for Florida's economic rebound."

Kenneth Pratt, senior vice president of government affairs for the Florida Bankers Association, said the higher costs could eventually impact lending.

"If it's not available and affordable, we can't close loans," Pratt told the subcommittee.