The federal government might soon allow the cost of enrolling in the National Flood Insurance Program to increase significantly, meaning that consumers might have to pay thousands of dollars more per year for the same coverage they have now, which is a change that may affect the businesses of many insurance agents. However, a number of federal lawmakers are opposed to such an increase, and have spoken out against it ahead of a vote that would keep prices at roughly their current levels.
Already, the U.S. Congress has approved changes to the NFIP that allow pricing for coverage through it to be based more on a market-related system, but that came with a huge hike in proposed premium costs, according to U.S. Sen. Elizabeth Warren, a Democrat representing the state of Massachusetts. While there is currently a bill in Congress to delay these increases for a short time, many lawmakers believe that there is a need to overhaul the entire NFIP pricing system to make sure that homeowners in at-risk areas don’t end up facing huge increases from one year to the next again, and recently introduced the Homeowner Flood Insurance Affordability Act, which passed the Senate last week.
“This important legislation will help homeowners across Massachusetts by delaying implementation of the new flood rates until the FEMA completes an affordability study and provides a plan to lessen the impact of these unacceptable rate increases,” Sen. Warren wrote. “This bill also provides the government with the time it needs to make sure the new flood maps are accurate, reliable, and reflect the best available scientific data.”
What impact would higher rates have had?
Many experts say that coastal areas and other places where flood tables were redrawn had been significantly impacted by the hikes. A number of places saw many homeowners and even businesses move away from their properties as a means of avoiding the potentially massive increases in their annual insurance expenses.
Many insurance agents may need to keep close tabs on these changes, and others in the insurance industry, because if there is an appreciable increase in costs, many consumers may need to find new ways to save on their home insurance policies overall. That could lead many homeowners in areas where flood insurance costs are expected to increase most heavily to shop around for more affordable coverage.