With FEMA set to make changes to the NFIP, a Miami-based lawyer is warning that a sudden and sharp increase in insurance premiums could financially ruin all of South Florida even before a flood hits.
A spokesperson for FEMA confirmed last week that the agency plans to announce a risk-rating “redesign” next year that would allow FEMA “to better reflect the resilience and vulnerability of homes and other structures covered under the NFIP.”
Wayne Pathman, managing partner of Pathman Lewis in Miami, believes that FEMA’s so-called “risk-based assessments” will result in the cost of flood insurance rising to that of wind-storm insurance – or even more – in the next five to 10 years. According to him, rates for South Floridians could increase from 25% to as much as 60% in the near term.
“This is a big game-changer,” said Pathman, who also chairs the Miami Beach Chamber of Commerce. “South Florida is ground zero, in many studies, for the economic impact of sea-level rise. So, I’ve said many times that the tip of the spear of this economic issue is insurance.”
Pathman was present at a meeting in José Martí Park in Little Havana earlier this week to discuss FEMA’s plans for the country’s flood insurance program, WLRN reported.
He warned that the planned risk-rating readjustment could cause real estate in areas of high flood risk to shoot up in price. This phenomenon, in turn, could cause a negative ripple effect that could be felt in the region’s banking, bonding and taxation. He prefaced that all of this could cause investors to avoid South Florida even before disaster strikes.
“Once risk-based assessment takes hold, it sends a message to the world that this place is too risky,” Pathman explained at a community meeting.
During the meeting, Pathman advocated a 40-year action plan that would show investors that the city is capable of handling the risks of future flood damage.
“We do not control what ultimately the insurance companies, banks, bonding companies and institutional investors will do. But what we can do is try to assess risk and let them know that we have potentially a 40-year plan that we will put in place,” he said.