APRIL 2022
Southwest Florida BUSINESS TODAY ®
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What is the impact of Risk Rating 2.0 flood insurance? Submitted by Karen P. Moore, Publisher Special to SWFBT
The Horizon Council, Lee County’s publicprivate advisory board to the Lee County Board of Commissioners, presented a panel of experts at the end of February to discuss the impact of the recent change from the current National Flood Insurance Program to the new program, Risk Rating 2.0. Panelists included Stephanie Missert, principal/manager of Policy & Regulatory Affairs, Ferguson Group, Washington D.C.; John Gardner, Lee County Insurance; Chris Heidrick, Heidrick & Company Insurance; Shawn McNulty, Lee County Community Development Department building official; and Danielle St. Onge, Coldwell Banker real estate agent. The panel was moderated by Joan LaGuardia, Lee County Manager’s Office performance analyst. According to FEMA informational materials, “Over the last 50 years, FEMA has collected $60 billion in NFIP premiums, but has paid $96 billion in costs. Taxpayers and policyholders are adversely impacted when the program does not generate the revenue needed to pay claims. Risk Rating 2.0 allows FEMA to calculate premiums more equitably across all policyholders based on the value of their home and individual property’s flood risk.” Phase One of the new program was completed in October 2021, according to Missert. “Phase Two, which includes the rest of the policies, is scheduled to be implemented April 21, 2022,” she said. “While action may be taken to extend the current program, we do not expect Congress to roll back the new pro-
“Roughly two-thirds of policyholders with older pre-Flood Insurance Rate Map homes will see their premiums decrease ... Homeowners who previously were not required to have flood insurance will have to have it now.” — Chris Heidrick, Heidrick & Company Insurance
gram. Efforts to this end have not been successful so far, although taking measures like capping the rate increase and taking steps to help the lowest-income households may happen.” McNulty said: “There are currently 133,000 flood insurance policies in effect in Lee County and not all policyholders are affected by this change. Those homes most impacted by Risk Rating 2.0 are 1) older structures, primarily those built before 2008 and 2) those closest to flooding sources. “We are going through the flood zone map updates now, and the new changes are supposed to go into effect in December of this year.” While informational materials provided by FEMA indicate, “Roughly two-thirds of policyholders with older pre-Flood Insurance Rate Map homes will see their premiums decrease,” Heidrick noted, however, “Homeowners who previously were not required to have flood insurance will have to have it now.” FEMA notes there are several ways policyholders can mitigate insurance increases, including 1) self-mitigating (i.e. by acquiring an elevations certificate,); 2) obtaining access to pre- and post-disaster grants that may be made available to states, tribes and communities and 3) ensuring their state and local
governments are enforcing building codes and zoning regulations, applying for assistance grants, maintaining a revolving loan fund for flood risk reduction projects, etc. Gardner shared, “My personal flood insurance policy, which is separate from my homeowner—increased from $500/year to $2,000/year after a zone change a few years ago. I was able to get it lowered to $1,000/year with an elevation certificate. In October 2021 it would’ve jumped to $7,800/year under RR 2.0 but because I already had coverage I’m capped at an 18% increase every year until I hit that $7,800. And I’m not on the water.” St. Onge stated, “2.0 will greatly affect homeowner home purchases because it affects the buyer’s buying power. For example, the cost was a few hundred dollars/year and now it is $4,000/year. So when the homebuyer can only afford to invest $220,000, the insurance then impacts the value of the home and the lower-end buyers are pushed out of the market.” She added, “And while you can purchase private flood insurance, these private policies are not as accepted by banks and lenders: federally-backed policies are better to have.” INSURANCE See page 4
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