Flood Insurance Premiums Going Up In Gulf Coast

Jan. 16--Many Coast residents will be paying higher flood insurance premiums soon, according to a summary of a bill President Barack Obama signed in 2012.

The increases, the result of the Biggert-Waters Flood Insurance Reform Act of 2012, will be based on individual circumstances, Pascagoula Operations Manager Stephen Mitchell said.

The act also reauthorizes the National Flood Insurance Program until Sept. 30, 2017.

By August, subsidized flood insurance policies around the nation will be eliminated and rates based on risk will be implemented, Mitchell said.

The NFIP is administered

by FEMA, which plans to phase out grandfathering of insurance policies beginning in January 2014.

A policy's rates will then be based on a property's elevation and risk factors according to the flood zone maps for their areas.

Mitchell said many Coast homes built prior to Katrina have flood insurance rates based on 1984 maps. After Katrina, maps around the Mississippi Coast were updated, putting some residents in flood zones but at grandfathered rates.

FEMA also must collect surcharges from policyholders to build a reserve fund "in a separate account to meet expected future claims or other NFIP obligations with at least 1 percent of the total program's potential loss exposure," according to a House of Representatives Financial Services Committee summary of the act.

Mitchell said the changes to the program will lessen the need for mitigation grants because the rate increases will come closer to covering actual losses and damage.

"The homeowner will actually be shouldering most of the burden of paying," Mitchell said.

Ninety-five percent of Pascagoula residents are in flood zones. In Bay St. Louis, 80 percent of properties fall in flood zones, and 48 percent of Biloxi's homeowners are in the "special flood hazard area."

As of December 2011, 6,242 Gulfport residences had flood coverage, although not all of those policyholders are considered to be in the flood hazard area, city public information officer Ryan LaFontaine said.

Local real estate agent Brenda Kaye Ramm said the act will affect the market along the Coast south of Interstate 10.

"We're still dealing with insurance increases after Katrina," she said. "I'm not sure how residents on a fixed income budget are going to keep going forward if these things keep happening."

Mitchell said although the local governments and the state Legislature can't do anything to prevent the changes, being part of programs such as the community rating system, which Pascagoula participates in, can reward the city with discounts on flood insurance for its residents.

Ramm said she expects to see fewer property sales in coastal counties because people simply can't afford them.

"We're going to see more and more of people commuting to the Coast for work from northern counties," she said. "It's going to be a lot harder to sell (real estate) down here."

Mitchell said the act is designed to make the NFIP solvent, and he believes from a fiscal responsibility standpoint, it probably needs to be done.

"But personally, I have mixed emotions about it because of the effects it will have on the citizens of my city," he said. "There is going to be an increased cost of living in the area."

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