Cape Coral Grapples With FEMA Over New Flood Risk Ratings

FEMA says it is making changes to its methodology to make insurance premiums more equitable, easier to understand, and to better reflect a property's individual flood risk.

In a letter to U.S. Sen. Marco Rubio's office, Mayor John Gunter commends Rubio on his effort to delay risk rating 2.0 implementation until Sept. 30, 2022.

"We sincerely hope that you will be able to achieve a delay in implementation so that this program can move forward in tandem with significant and sustainable reforms to the National Flood Insurance Program," Gunter wrote.

The letter also highlights that 40% of Cape Coral is in a special flood hazard area under the new rating system. Federal law requires flood insurance for all federally backed mortgages within the area.

New flood insurance rates went into effect on Oct. 1, and existing flood policies will have to pay new rates starting in April 2022.

Rubio and many other state officials are trying to delay the flood insurance increases from states like Florida, Texas, and Louisiana.

With the new rates, FEMA projects that 20% of Florida ratepayers will have a decrease, 68% an increase of up to $10 per month, 8% an increase of up to $20 per month, and 4% paying more than $20 per month.

Things that will not change under risk rating 2.0 include:

Limiting insurance increases to no more than 18% per year.

Using flood insurance rate map for mandatory purchase and floodplain management. If you are in a certain area and have a mortgage, you will need to get flood insurance.

Discounts from the community rating system, a voluntary incentive program that awards discounts on flood insurance premiums based on communities' efforts to mitigate flood damage. Cape Coral is a class five community, so policy holders in Cape Coral have a 25% reduction in flood insurance premiums.

Thirty-one city structures and 11 city charter schools have policies, estimated at $90,000 and $40,000 per year respectively.

The city estimates that it will have a premium increase of 3.4% from the city structures and 0.6% from the schools.

In 2020 there were 33,429 active flood insurance policies in Cape Coral that paid almost $24 million in premiums, according to a city report.

Councilwoman Gloria Tate is the point of contact for the city on this issue, and she reached out to Rubio's office a few weeks ago.

She also is encouraging policy owners whose premium is increasing by more than 18% to contact her office and document high quotes and increases.

"We are trying to document everything to fight this, just like with COVID when we documented loss of revenue," she said in an email.

Her district is located in a flood zone, and she presented the city's opposition during a public meeting last week.

Brian Chapman, owner of Chapman Insurance Group, said the new risk ratings are going to affect many in Cape Coral.

"I think it's going to have a huge impact, particularly if someone comes to our area, sees a home that they love and they pass on the house because of a $5,000 flood policy," said Chapman.

He said that the new cost will catch many existing policy holders off guard when they see the change in April.

"I can't even get a quote from my agent to find out what my flood insurance will go up to," said Mike Vidal, a resident of Cape Coral.

Though he doesn't have a mortgage to pay, he still pays for flood insurance and worries about being able to sell his house.

"Whoever wants to buy it might not be able to afford it," said Vidal.

Robert J. Lauson, a resident of Cape Coral and Florida real estate investor, said he doesn't see any other option than to pay the new rates.

"It sounds like other states are incurring the bills from the flood, but us here in Florida seem to be paying a disproportioned amount," Lauson said. "It doesn't seem fair."