Lawmakers push to delay huge flood insurance hikes

WASHINGTON (AP) — A bipartisan group of lawmakers is pressing for a four-year delay to changes to the federal government's flood insurance program that are threatening to sock thousands of people with unaffordable premium hikes.

The move comes as the government is beginning to implement a significant overhaul of the much-criticized program. That overhaul passed last year with sweeping support. The revamped program was backed by both liberals and tea party conservatives but has caused a panic in places like Staten Island, N.Y., and the New Jersey coast and in flood-prone areas of Louisiana, Mississippi and Florida, where higher rates threaten to push some people out of their homes.
Some of the most ardent supporters of delaying the premium increases are conservative Republicans from Southern states, where the new rules have sent some home values plummeting because of uncertainty over insurance rates and because subsidized rates can't be passed along to buyers. New flood maps threaten to saddle some homeowners who are paying a few hundred dollars a year now with annual premiums of more than $20,000.

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Last year's legislation promises premium increases to 1.1 million homeowners who've received subsidized, below-risk coverage and could sock even more homeowners whose homes met older building standards or were deemed at lower risk under previous flood maps. Under the old rules, they could retain their old rates since they followed the rules when they bought or built their home, but they will soon lose those "grandfathered" rates under the new law.
The new legislation, to be unveiled at a Capitol Hill news conference Tuesday, would delay the new rates for people purchasing homes from someone who currently has a subsidized policy or people who face higher rates when flood maps are updated. People with second homes or whose property has repeatedly been flooded would still have to pay the higher rates, which are scheduled to rise by 25 percent a year until their premiums reflect the true risk of flooding.
Last year's law protected subsidies for people who receive them if their houses hadn't been recently flooded. The new legislation would allow them to transfer the subsidy when they sell their home, thereby propping up home values.

SOURCE : http://www.businessweek.com/ap/2013-10-29/lawmakers-push-to-delay-huge-flood-insurance-hikes