The U.S. Senate’s passage of a flood insurance bill that will phase in all increases on flood insurance rates should stop the spoiled deals that the new program created.
The bill now needs only President Obama’s signature to become law. White House officials told The Associated Press that he’ll sign it.
The intention of the increases are to stop the generous government subsidies to those purchasing flood insurance, making property owners pay the full actuarial rates as do owners of other kinds of property insurance. The subsidies paid for flood insurance have resulted in a $24 billion deficit in the program, and the new system is intended to fix that.
While the Senate’s approval of House action likely will result in an end to home sales that went sour when prospective buyers learned of the insurance hammer that hung over their purchase, it also will give the time needed to complete new flood maps and to do studies on the impact of the new rates on homeowners, said Laura Crowther, CEO of the Coastal Carolinas Association of Realtors.
The affordability study was mandated by the Biggert Waters Act that is to end the flood insurance rate subsidies, but it hadn’t been done by the first of the year, when the new system kicked in.
The Act always provided a phased-in rate increase for current homeowners, it would have made new buyers pay the full, unsubsidized rate immediately. Now, new buyers will pay increasing rates just like everyone else until their rates reach actuarial levels.
Crowther supports ending flood insurance subsidies, but she sides with many others who believe a gradual phase-in for all will be less disruptive to the market.
Contact STEVE JONES at 444-1765.