NAR Pressures Senate Over Flood Insurance
The rising costs of flood insurance are posing "significant hurdles" to small businesses and home owners, David McKey, 2016 Vice Chair of the National Association of REALTORS®' Insurance Committee, testified to a Senate committee this week. Potentially, up to 1 million properties may be affected.
A Flood of Problems, Solutions
"Despite everything that's been done on this issue, the threat of a $30,000 flood insurance premium still looms," McKey testified to the Senate Small Business and Entrepreneurship Committee on Thursday. "A few years ago, the uncertainty over future rate increases was enough for buyers to direct REALTORS® not to show them any listings in the floodplain. That's enough to worry business owners and home owners alike, and it's something that needs to be addressed."
McKey said that rates continue to rise significantly by up to 25 percent each year until policy-holders reach their "full-cost rate." In order for businesses and home owners to prove they've reached that threshold, they must hire a licensed surveyor and provide the Federal Emergency Management Agency with an elevation certificate. Once the certificate shows the property owner has reached the full-cost rate, the owner can then request an optional full-risk rating to end the 25 percent increases, or the increases will continue, NAR explains.
McKey testified that it is an "endless escalator" of rising costs, and he asked the committee to consider changes.
McKey offered NAR's support for several possible solutions, such as reauthorizing the National Flood Insurance Program, which sunsets in October 2017. McKey also said NAR supports using advanced technology to improve the accuracy of flood maps, which can help better determine who will face escalating rates and reduce the number of property owners who have to file pricey appeals.
McKey also asked the committee to consider authorizing the use of funds to proactively mitigate properties in hazard areas, such as by flood proofing, elevating, or strengthening a property against the risk.
"Unfortunately, while funding is currently available for mitigation efforts, funds typically aren't accessible until after a flood event, when costs are higher and the damage has already occurred," McKey stated. "REALTORS® see the effect of rising flood insurance rates firsthand in their businesses and in the local communities. But commonsense solutions to the problem are well within reach."
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