Here’s a rundown on the changes of keenest interest to insurance advisors...
BRUNSWICK | A couple of representatives of the federal flood insurance program came to College of Coastal Georgia Tuesday to discuss new higher rates that will be phased in coming years.
They were hit by a flood of angry people, some who said the new insurance rates would make their property unsalable and others who predicted a wave of foreclosures and a devastated real estate market because few will be able to afford flood insurance.
With the National Flood Insurance Program about $24 billion underwater from hurricanes Katrina and Sandy, Congress passed the Biggest-Waters Flood Insurance Reform Act of 2012, which eliminates subsidies to policy holders and increase rates to levels to reflect the actual risk. That will affect about 20 percent of the policy holders, some of whom bought houses built before the insurance program even existed.
Policy holders will see 25 percent increases in their premiums each year until the payments reach the level FEMA considers commiserate with the risk. The owners of non-residential property, such as vacation homes and commercial property, have already been hit; the average homeowner will see their polices jump in October.
Much of that is based on new digital Flood Insurance Rate Maps that put homes at risk that were once deemed safe, and therein lies much of the problem, Glynn County Commissioner Dale Provenzano told the Times-Union.
"They think the only people with flood problems are rich people living on the coast, so who cares?'' Provenzano said of the members of Congress who voted for the higher rates.
They justified the bill by asserting that average Americans were paying rich people to build dangerously close to the coast.
Congress failed to realize that a lot of low- to middle-income people live in rental property in areas that new FEMA maps designate as flood zones, and their landlords won't be able to pay the higher rates without jacking up the rent, Provenzano said.
Those renters are going to be displaced, as are people who will see flood insurance rates higher than their mortgage payments, Provenzano and others complained.
The coast of Georgia, which hasn't had a serious storm in more than 100 years, is getting lumped in with high-risk areas like the Gulf states, the coasts of South Florida and areas near Cape Hatteras, N.C., critics say.
"It's going to kill the real estate market,'' Provenzano said.
It's already killed Helen Morton's attempts to sell her house on the marsh north of Brunswick.
"We've had four contracts on our house that have gone bust because we informed the buyers'' of the coming hike in flood insurance premiums, Morton told FEMA representatives Susan Wilson and Janice Mitchell. Wilson is in the Floodplain Management and Insurance Branch and Mitchell is an insurance specialist.
Morton said the buyers backed out because she was truthful and warned them about the rate hikes.
Unless she is able to sell her house, Morton told Wilson and Mitchell, the public "is going to be paying Medicaid for me to be in a nursing home'' because her money is tied up in her home.
"Why don't you just outright condemn our properties?'' she asked. "You're going to have foreclosures out the wazoo because people cannot pay."
Several predicted that people with mortgages would simply walk away from their homes, leaving a lot of vacant houses and sending property values plummeting all along the coast.
Ken Tolleson, who is a partner in waterfront commercial property, told the Times-Union, "The only option is to not have flood insurance. I don't know how the banks are going to feel about that."
One property is Skipper's, a restaurant on the Darien River "probably a foot above normal tides."
Tolleson said he and his partners may be compelled to pay down loans so they can avoid buying the flood insurance that lenders require.
The new maps won't be the only consideration for setting rates. Experts will look at other factors to base premiums on "velocity zones,'' where properties would be hit by rising water and waves in a storm.
"I don't think FEMA looked at the velocity that's going to happen to us,'' said Judith Roche, who said she believes her flood insurance could go to $13,000 a year but likely higher.
It would cost $122,000 to elevate her house enough to avoid the high premiums, she said.
She also questioned Mitchell and Wilson about FEMA changing the rules. She cited as an example people whose homes had been lost in a storm who began building at elevations set by FEMA only to see the agency increase the elevation by two feet as they were building.
In spite of taking FEMA's advice, they no longer are covered, Roche said.
"This community is going to be devastated,'' she predicted.
St. Simons Island resident Jack Caldwell pointed out that coastal Georgia communities already have paid more than twice in flood insurance premiums than they have ever gotten back.
"Quite frankly, that's the way we want to see it,'' Wilson said, drawing howls from the crowd.
One man, who lives a mile west of Interstate 95, said, "I can pay for my house again in 10 years in what I'm paying in flood insurance. Does it make any economic sense to pay y'all a dime?"
Another man griped that his insurance premiums had skyrocketed while the flood insurance payout has remained frozen at a maximum $250,000.
"Why are we paying more for the same coverage we had 10 to 15 years ago?" a man asked.
Wilson replied that the payouts were set by Congress, which has not seen fit to change them.
When Hal Hart pointed out how hurricanes have spared Georgia's coast, Wilson and Mitchell said that most people have a misconception about probabilities and said just because there hasn't been a storm doesn't mean there won't be.
There could be two 100-year storms in a matter of a couple of weeks, Wilson said.
"It can happen in any given year any number of times,'' she said.
The mood of the crowd became clear when a woman stepped to a microphone and said, "We're looking at purchasing a house on the island ...''
"Buy mine,'' a man called out as hands shot up all over the auditorium.Terry Dickson: (912) 264-0405