Along the Coast: Fewer residents carrying flood insurance even as threats grow

By Charles Elmore

For all the headlines about rising seas, king tides and other climate threats, homeowners in most cities and towns across southeastern Palm Beach County stand less prepared than they were eight years earlier when it comes to flood coverage from the National Flood Insurance Program, records from the program show.
Fewer folks have NFIP policies in nine municipalities in the region, compared to three cities with more.
In Delray Beach, residents shed about 10% of NFIP policies between 2012 and 2019. Boynton Beach residents with policies dropped almost 30%. Policy counts fell more than 40% in Briny Breezes.
After years of NFIP rate increases and added surcharges, some homeowners chose not to renew policies if, say, they were not required to carry flood coverage by a mortgage lender.

Briny Breezes resident Linc Musto said he dropped flood insurance for about four years, but resumed coverage after Hurricane Dorian hit the Bahamas in 2019, narrowly veering from Florida.
“Seeing the widespread devastation in the Bahamas made me realize what we would have faced had its path brought it over to Briny,” said Musto, 85, who worked in the insurance business for more than 50 years.
Paying premiums for flood insurance “might be painful for the homeowners, but it does leave them vulnerable if they don’t have it,” said Jim Wrona, a Realtor with POSH Properties in Ocean Ridge.
The average flood claim runs about $43,000, federal officials say, but crucially, it requires a flood policy to collect. A standard homeowner policy does not cover flooding caused by rising water from lakes, rivers, canals and the ocean.
NFIP, backed by the federal government, accounts for all but 3% to 4% of flood policies in the county, though private insurers have recently ramped up efforts to underwrite more flood coverage. 
Florida residents buy the most NFIP policies of any state by far — about 35% of the nation’s total. But a common refrain heard around the state is that Florida has received only a little over 7% of the NFIP’s payouts during the past four decades. Records show that hundreds of thousands of Florida’s homeowners over the last decade have balked at shelling out more as debts piled up for disasters occurring largely in other states.
The average annual cost of an NFIP policy, including various surcharges, pushed past $1,000 nationally by 2019, federal reports show.
Pricing can vary over time as flood maps are updated and redrawn, and the cost for an individual home can vary widely from the average. John G. Backer, one of the owners of the Gracey-Backer Inc. insurance agency in Delray Beach, recalled an example where the premium was $500 for one property and $5,000 for next door.
“There’s a lot of sticker shock,” Backer said.
In effect, some homeowners choose to self-insure, meaning they watch what happens with flooding threats in their neighborhoods over time and decide whether to shoulder the financial risk themselves.
Flood policies come on top of standard home insurance costs that are in some cases rising even faster, to protect against threats such as fires, hurricanes with high winds and plumbing leaks.
As of December, the average cost of a standard policy climbed above $3,000 annually for the first time in Palm Beach County for Florida’s second-largest insurer, state-backed Citizens Property Insurance Corp.
“At this rate,” said homeowner Marie Berman in Boca Raton, “no one will want to buy in South Florida as insurance is way out of whack. I think this is a huge issue that will affect property values in a huge way.”

Rates being analyzed
Difficult financial decisions for homeowners are likely to get tougher in the months ahead.
The Federal Emergency Management Agency, which oversees NFIP, announced that beginning on April 1, renewal premiums will increase an average of 11.3%. That does not include the effects of proposed risk-based pricing, postponed to 2021, which could raise costs even more for some property owners in places designated to carry higher risks. Others could see lower costs.
“FEMA continues to conduct a comprehensive analysis of the proposed rating structure planned for implementation and effective as of Oct. 1, 2021,” an agency spokesman said. “It is premature to speculate on any changes in premium rates.”
The NFIP remains the dominant player in a realm of insurance where private companies have historically feared to tread because risks are so high. Private insurers have recently dipped a cautious toe further into flood insurance waters, and Backer said he has begun selling more policies from private carriers.
As of Sept. 30, 2019, there were 4,564 policies from private insurers providing a property’s primary source of flood coverage in Palm Beach County, up about 33% from 3,424 a year earlier, according to data supplied by the industry-funded Insurance Information Institute.
The group’s Florida representative, Mark Friedlander, said the data available to him did not show the cities or ZIP codes where the policies were located.
Private agents and companies can also sell and administer NFIP policies through established programs. 
Nationally, the number of NFIP policies has decreased from 5.7 million in 2009 to fewer than 5.1 million as of June 30, 2019, federal records show.

Measures may lower costs
Several local cities are taking steps to strengthen seawalls, improve drainage systems and otherwise reduce flooding risks in ways that can help lower NFIP premiums for their residents.
In December, for example, Delray Beach announced its improved Community Rating System score would save residents about 5% on NFIP policies, or about $450,000 citywide.
In early January, Ocean Ridge Town Manager Tracey Stevens reminded residents that FEMA scheduled an open house for Feb. 4 and 5 in West Palm Beach for property owners to see the latest flood maps and discuss their options.
Ocean Ridge had fewer NFIP policies in 2019 (1,243) than it did in 2012 (1,301), though records show a slight uptick from 2018 (1,237).
Boca Raton, Gulf Stream and Manalapan showed a slight increase in 2019 NFIP policies compared to 2012. Delray Beach, Boynton Beach, Briny Breezes, Highland Beach, Hypoluxo, Lake Worth Beach, Lantana, Ocean Ridge and South Palm Beach registered fewer NFIP polices in that span.
In early 2020, thousands of local homeowners can decide how a flood policy looks in the light of a new year.
“As flood events are one of the costliest disasters each year, FEMA reminds homeowners that anywhere it can rain, it can flood,” a FEMA spokesman said. “On average, 1 inch of rain can cost nearly $25,000 in repairs.”
Federal officials say they’re trying to apply the latest and best technology to the problem.
“FEMA’s goal is to make flood insurance significantly easier for agents to price and sell policies, and in turn, help customers better understand their flood risk and the importance of flood insurance,” the spokesman said.

Public open house on flood insurance
The Federal Emergency Management Agency is hosting a public open house Feb. 4-5 in West Palm Beach on flood maps and rates. No appointments are necessary and members of the public can drop by at any time during two three-hour windows.
Where: Mary V. McDonald-Wilson Center, 1505 N. Australian Ave., West Palm Beach
When: 4 -7 p.m. Tuesday, Feb. 4, and 9 a.m.-noon Wednesday, Feb. 5

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Comment by Hobart Gapp on January 30, 2020 at 8:29pm

Some believe FEMA is corrupt.  Full of political cronyism and sweetheart contracts.  Insurance premiums are not clearly linked to flood risk.  When people see this - they pull back and refuse to pay.  Doesn’t really matter, they will beg for a public bail out when the storm hits...and most certainly get it.  

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