Time is running out for a congressional compromise on steep flood insurance hikes affecting many policyholders now and millions more in October 2014. As attempts to push through legislation in the House and Senate fail, producers are giving up hope in a governmental fix and attempting to find ways to shield clients from the increases on their own.
“[Legislators] didn’t read Biggert-Waters before they voted on it,” said Sean Johnson, a sales manager for Gretna, La.-based Johnson Insurance. “It doesn’t affect the majority of the country in the same way, and I don’t think the representatives for Tennessee, Idaho and places like that are really concerned about us down here. How are they going to correct this? They sure as heck don’t know how.”
Johnson said several of his clients have already taken hits of $3000 annual premium increases, with one policyholder experiencing a jump from $890 to $9000 a year because her house fell “three or four feet below” the base flood elevation requirements.
To help clients avoid the worst, Johnson said he is tracking down homeowners who haven’t had an elevation survey and urging them to get one done that will meet new FEMA guidelines and potentially lower the outrageous premiums.
That’s a strategy Geoff Gordon, president of Norwell, Mass.-based Andrew G. Gordon, Inc., said has had some success up north.
“Elevation certificates are going to be valuable for anyone who wants to put things back in their own control,” said Gordon, whose agency borders several towns affected by the rate hikes. “Getting homes elevated runs between $600 and $800, but if you can save yourself money on flood insurance now, you’ve saved yourself a lot more than that two years down the road.”
Johnson said he is also “trying to work with coverage and deductibles,” with many clients choosing to take huge $5000 deductibles and eliminate contents coverage in an effort to afford the astronomical annual premium.
There is only so much producers can do, however, Johnson said.
“Once a person’s been affected, there’s very little that can be done. There is only so much fat you can trim off these things,” he said. “The agents are left feeling helpless.”
In Congress, an attempt last week to push through a bill delaying rate increases by four years ran aground when key Democrats refused to consider the issue before Christmas. In the Senate, Republicans are threatening to disallow a straight up-or-down vote on the issue in recompense for Democrats engaging in the so-called “nuclear option” to force through some judicial nominees earlier this month.
Meanwhile, an estimated 5.5mn Americans who live in floodplains will begin to face higher annual premium increases for the next five years starting Oct. 1, 2014.