Concerned about the impact of rising flood insurance costs, the National Association of REALTORS ® addressed congress to outline potential solutions. On June 30, 2016, David McKey, 2016 Insurance Committee vice chair, testified before the Senate Small Business and Entrepreneurship committee.
A NAR news release gave an overview of the testimony, which began with a description of the issue at hand. Though the “Homeowner Flood Insurance Affordability Act” enacted in 2014 curbed some of the excessive rate increases, many homeowners continue to face 25 percent increases annually until their “full-cost rate” is reached, and uncertainty about how high their premiums could rise, and how that could impact property values.
“Despite everything that’s been done on this issue, the threat of a $30,000 flood insurance premium still looms,” said McKey. “A few years ago, the uncertainty over future rate increases was enough for buyers to direct Realtors® not to show them any listings in the floodplain.”
McKey mentioned several ideas for solutions to this problem. Some of these include:
- Reauthorizing the National Flood Insurance Program
Currently set to sunset in October of 2017, this is the only option for flood insurance coverage for many homeowners.
- Improve the accuracy of flood maps
Currently the burden is on the homeowner if they feel their property is not at the risk of flood indicated on government maps. NAR advocates making use of advanced technology currently available to revise these maps.
- Foster a private insurance market
While according to a post on thehill.com NAR sees the National Flood Insurance Program (NFIP) as “a critical part of the future landscape for homeowners and taxpayers alike,” the organization believes it would be beneficial for more private companies to enter this part of the market so that consumers have more choices.
- Work to prevent flood damage
Money can be saved by minimizing losses due to flooding. As stated in the release, “while funding is currently available for mitigation efforts, funds typically aren’t accessible until after a flood event, when costs are higher and the damage has already occurred.” Proactive measures could include flood proofing, elevating properties so that living areas are out of the flood plain, or strengthening homes in other ways.
Photography by [ANTONIO BALAGUER SOLER] © 123RF.com
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Tags: Flood Insurance