Feds overhaul of national flood insurance program could create massive sticker shock for coastal residents

Flood waters from a Texas-sized beast like Tropical Storm Imelda in 2019 led to $5 billion in damages as concerns surfaced on global topics such as climate change, sea level rise and storm surge.

Just this week, some of the worst flooding in years stretched from Ohio, across West Virginia and into parts of Kentucky and Tennessee.

But, in the lyrics from John Fogerty, “Who’ll stop the rain?”

Now, the Federal Emergency Management Agency (FEMA) is preparing to open the floodgates on even more apprehension when it overhauls the National Flood Insurance Program (NFIP), reportedly increasing premiums in high-risk flood zones anywhere from 379% to as much as 1,215.9%.

“When you hear (reports of a) $24,000 flood insurance premium, it’s simply horrifying,” said Dr. Roland Samimy, the Chief Resilience and Sustainability Officer for the Village of Key Biscayne. “But that’s the reality of living in a coastal community.”

FEMA has not publicly shared how its new “Risk Rating 2.0” overhaul will impact individual premiums, but studies by the Brooklyn, NY-based nonprofit research group, First Street Foundation, revealed in its “The Cost of Climate Report” that some 265,000 properties could see annual premiums climb $10,000 or more to match the actual risk. The increase would gradually be rolled in for existing policyholders.

What’s that mean for Key Biscayne?

First of all, the island is just three feet above sea level (Miami Beach is at 4, Miami is at 6.562 and Fort Lauderdale is at 9).

In the 33149 Zip Code, of the 1,371 homes on the island, 82.3% are at risk for a 1-in-100 year flood, although scientists in an E&E News report from Politico’s Environment and Energy publishers revealed last year that “100-year Florida floods” could occur every few years in many locations.

Other reports have concluded that Miami would become the most vulnerable major coastal city in the world under storm surges, coastal flooding and sea level rise, which is increasing at a rate of an eighth of an inch per year, according to the National Oceanic and Atmospheric Administration. But some reports say it could be as early as 2050 when much of Florida’s coastline is underwater due to high tide flooding up to 75 days a year.

Add that statistic to the Miami skyline area actually sinking half a millimeter annually, according to a report by The Travel, and it further threatens over $100 billion in real estate value.

Surprised? You shouldn’t be

Those are just some of the reasons Samimy, a veteran coastal systems and water resources scientist, was brought on last year to the Village of Key Biscayne -- to study the area’s habitat and offer immediate suggestions and solutions.

“All this is not particularly shocking,” said Samimy, after spending Friday morning on Key Biscayne’s beaches with officials and engineers from Miami-Dade County, Oceana and the Ritz-Carlton discussing upcoming beach nourishment plans. “We’ve been engaged in this issue (flooding) for decades ... We know of the potential storm surges and sea level rise. It’s not a matter of when or where. It’s a matter of what magnitude.”

Currently, only about 65 percent of homeowners in Florida’s riskiest flood zones carry flood insurance in addition to their standard homeowners policy, although policies with mortgages in those areas often require the add-on.

One example, according to First Street estimates, includes Miami, where the average annual flood insurance premium is reportedly $1,069 with the potential to hit $20,000. However, the higher rates would only be a Band-Aid to FEMA’s financial woes.

“The reality is, FEMA is bankrupt ... they don’t have a choice (but to raise rates),” Samimy said. “For Key Biscayne residents, it’s a horrifying proposition. It makes work for me really challenging. ... Honestly, wherever they hear the news first, whether it’s from you, or scientists, or me, it doesn’t really matter. It’s troubling any which way.”

The Insurance Journal reports that the federal flood program has lost more than $36 billion since its inception by Congress 53 years ago, trying to offset personal damages caused by the most common natural disaster in the US. Now, it is bailing water, hoping to stay afloat while still offering protection -- but with less financial risk.

According to First Street, FEMA will now base its flood insurance premiums by calculating specific properties, its foundation type, the height of the lowest floor relative to base flood elevation, the replacement cost of the structure, the distance to water and the type of body of water it is closest to, and the elevation of the property in relation to nearby waters.

Apartments with more than four units, or condominiums, have not been figured into the First Street equation as of yet.

Florida’s flood insurance rates

Florida’s current flood insurance premiums reportedly average less than the nation’s $800 average annual cost (although the state’s standard homeowners insurance averages $1,960, second-highest in the country).

Currently, the FEMA program bases rates on the amount of insurance purchased for a home rather than its replacement cost. And, identical premiums also fold in both cheaper and expensive properties in the same flood-risk area.

Key Biscayne has less than 10 residences valued below the $2 million range, according to Ron Shuffield, president and CEO of nearby Berkshire Hathaway HomeServices EWM Realty.

Based on First Street’s calculations, Key Biscayne homeowners could face a 1,215.8% increase in flood insurance rates, which would be enough to cover the average annual estimated cost of $44,468 for FEMA to break even on repairs to a home on the island. That, of course, far outweighs the current estimated NFIF premium of $3,379 for the island’s residents.

Two specific areas of interest using First Street data were pointed out in a USA Today report:

- In the historic waterfront city of Charleston, SC, nearly four in 10 flood-prone homes would need to pay an average premium of $18,211 to cover the anticipated costs of flooding compared to the current average NFIP rate of $2,264.

- And, on the barrier island area of unincorporated South Patrick Shores, less than 30 miles south of Kennedy Space Center in Brevard County, residents would need to pay an average of $24,724 a year to adequately cover their risk. The average rate there now is $491, First Street data shows.

“It’s the challenge of living in a coastal climate,” Samimy said. “People are becoming more savvy as they ponder their real estate investment. But, keep in mind, some segment of the population can afford to absorb these costs to live where they choose.”

Part 1 of 2 parts -- Next week: Challenge of protecting Florida’s coast