New FEMA flood risk ratings affect Cape Coral residents' insurance

Federal Emergency Management Agency changes to the way it determines flood risk will soon affect all flood insurance policies.

It is a move some say trigger a need for more transparency as they worry about higher premiums.

Don Apking is one of many Cape Coral residents voicing concerns on high flood insurance rates that he says will impact new residents especially.

Apking, the beautification committee director for Southwest Cape Coral Action Committee, said "it's going to be tough" for new residents to afford a home.

According to policy documents made public by FEMA, the agency claims it is making insurance premiums more equitable and easier to understand and to better reflect a property's individual flood risk.

According to FEMA spokesperson Crystal Paulk-Buchanan, Cape Coral has 27,671 national flood insurance policies in 2021.

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.

However, one insurance agent told The News-Press that he questions the methodology used by FEMA to determine flood risk, calling it "flawed."

"I think that they're trying to get to a system where they're rating each individual risk, so each individual house is being rated instead of just a generic set of rates," said Brian Chapman, CEO of Chapman Insurance Group and licensed insurance agent for almost 20 years.

He added that he's already dealt with many cases where hopeful new homeowners were caught off guard by high costs.

"What would have been $1,000, $2,000 policy is now $4,000 to $7,000," he said. "And that happened in literally one snap of a finger."

He also worries that Southwest Florida is being unfairly impacted by the new ratings.

According to Chapman, the region pays $95 million in flood insurance premiums every year, but FEMA has paid only $135 million in claims since 1978.

"That makes zero sense. Either one, your rating is wrong, or two, you are telling us your rating with this new rating information, but what you're really doing is taking advantage of Southwest Florida," Chapman said.

Federal law requires flood insurance for all homes with federally backed mortgages in the area.

An estimated 80% of Florida ratepayers should expect an increase in their policies, according to FEMA's state profile for Florida.

The increase will also affect the city of Cape Coral, as 42 city-owned structures have premiums for a total of $130,000 per year.

According to Cape Coral spokesperson Kaitlyn Pearson, the premiums from the new ratings have not been calculated.

New flood insurance rates went into effect last October, and existing flood policies will have to pay new rates starting April 1.

Councilmember Jennifer Nelson said she's been encouraged by the response from state and federal lawmakers trying to make FEMA more transparent about how it calculates flood risk and bring the 18% cap down to 7%, but she'd like more attention on the issue.

"Any of our coastal states needs to be really paying attention to this because it can affect them just like it's affecting us," Nelson said.

She said she believes lowering the potential cost residents might incur is the best-case scenario and warns residents against switching their insurance right now.

"Don't cancel your current flood insurance that you have," Nelson said. "It's very important to keep what you have because if you cancel it and try to get back in later, it could potentially cost a lot more money."