FEMA set to cut flood discounts
FEMA set to cut flood discounts | Insurance Business America
Catastrophe & Flood
FEMA set to cut flood discounts
Unpermitted work, lack of documentation to hit some policyholders hard
Catastrophe & Flood
By
Kenneth Araullo
Nearly 18 months after Hurricane Ian’s devastation, the Federal Emergency Management Agency (FEMA) has announced a significant change that could affect many homeowners in Florida.
FEMA has unveiled plans to reduce the discount on flood insurance premiums for some homeowners under the National Flood Insurance Program (NFIP), a move that has sparked concern among residents and local officials alike, Wink News reports.
In parts of Lee County, including Cape Coral, Bonita Springs, Estero, Fort Myers Beach, and unincorporated areas, homeowners currently enjoy up to a 25% discount on their flood insurance premiums. However, this discount is at risk of being eliminated starting October 1.
Several residents from Cape Coral have expressed their frustration, foreseeing a divide between those who can afford the impending increase and those who cannot.
One homeowner highlighted the financial strain this decision could impose, estimating a potential increase of $5,000 a year in flood insurance costs for her family.
“The villain in this nightmare”
Local leaders have also voiced their dissatisfaction, pointing out that they received no justification for FEMA’s decision.
The agency has cited the reduction in discounts as being a response to widespread unpermitted work, insufficient documentation, and inadequate monitoring of special flood zone areas. Despite this, FEMA has expressed a commitment to assist Lee County in regaining eligibility for Community Rating System discounts in the future.
In detailed communications, FEMA explained that the reassessment of discounts follows its obligation to ensure communities comply with floodplain management regulations to mitigate future flood impacts.
This compliance is essential for communities to benefit from the Community Rating System, which offers premium discounts to policyholders, it explained. The agency noted that recent site visits revealed failures in enforcing locally adopted floodplain management ordinances, leading to the decision to revoke the discounts.
Residents and officials in affected areas, including Cape Coral Mayor John Gunter, have criticized FEMA’s actions, urging the agency to halt its decision until further discussions can take place.
“Make no mistake, FEMA is the villain in this nightmare,” Gunter said.
Those affected argue for a chance to rectify the issues cited by FEMA and maintain their current Community Rating System class, which affords them the 25% insurance discount.
In March, the agency has leveraged the reinsurance markets to enhance the NFIP, securing its seventh procurement of reinsurance coverage through insurance-linked securities (ILS) reinsurance.
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