Increase for flood coverage possible

The president's budget plan would phase out subsidies for second homes and raise some premiums.

By BILL ADAIR, Times Staff Writer
© St. Petersburg Times
published February 6, 2002

WASHINGTON -- President Bush is proposing sweeping changes in federal flood insurance that could lead to drastic rate increases for thousands of coastal homeowners.

In his new budget, Bush is again seeking to phase out subsidized policies for second homes and vacation properties. He also wants to raise premiums for any home that might be jeopardized by coastal erosion.

No figures were available Tuesday night on how many second homes and vacation properties would be affected, but officials said Bush's proposals would raise premiums for hundreds of thousands of homes around the nation.

About 4.3-million homes in the nation have federal flood insurance. About 29 percent of them have subsidized policies, which means the rates are too low for the actual risk of flooding. The additional risk is absorbed by the federal government.

Nationwide, roughly 100,000 insured homes are in the coastal "high-hazard" zones that would be most affected by Bush's erosion proposal. They tend to be the first few rows of homes near the coast, although that could vary widely around the nation. Florida numbers were not available Tuesday night.

Howard Marlowe, a lobbyist who represents coastal towns around the country, estimated that premiums for people who own second homes could go up 300 to 500 percent. The rate increases could also be large for homes the government determines are threatened by coastal erosion.

To figure out which homes are threatened by erosion, the government must update its flood projection maps and make estimates about the costs to replace homes that wash away. The budget includes $350-million for the government to modernize its maps.

The new effort is the latest of several attempts by Bush and President Clinton to reform the federal insurance program. For years, critics have complained that it provides expensive subsidies for wealthy beach dwellers.

David Conrad, water resources specialist for the National Wildlife Federation, on Tuesday applauded the president's proposal. He said owners of homes threatened by erosion should pay a realistic cost for their insurance coverage.

"That kind of change is what is needed to help put this program on a realistic financial footing," Conrad said. "People whose homes were at risk of washing away would have to pay more."

The plan is likely to face strong opposition in Congress.

Coastal lawmakers have resisted prior attempts by Bush and Clinton to reform the program. They say the flood insurance provides crucial coverage for natural disasters such as hurricanes and floods.

Rep. C.W. Bill Young, R-Largo, said he was skeptical of the proposal but wants to hear more from the Bush administration. He is wary of raising insurance rates.

"We're trying to keep fees and taxes down rather than make them higher," he said.

Bush proposed the change for second homes and vacation properties last year, but it died in Congress.

Marlowe, the lobbyist for beach towns, said the new proposal is "yet another example of coastal residents being treated as if they are somehow living in sin because they choose to be near the coastline. Coastal property owners consistently pay more in flood insurance premiums then they receive in damage payments, effectively funding the National Flood Insurance Program for riverine flooding victims."

Marlowe said that most flood claims go to people who live inland and that it is unfair to treat coastal residents "like second-class citizens."

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