Issues to Watch 2014: Insurance costs

Longboat Key commissioners worry that rising flood and wind insurance costs will force people to sell their homes and move to the mainland.

They have reason for concern after Congressman Vern Buchanan, R-Longboat Key, lobbied unsuccessfully before the holidays to encourage Congress to approve a glitch bill to stave off insurance costs that have more than tripled for some policyholders.

The Federal Emergency Management Association’s (FEMA) National Flood Insurance Program (NFIP) went through an overhaul after Superstorm Sandy caused major destruction in the Northeast last winter, both to the area and the NFIP, which is responsible for paying out claims.

That overhaul and the Biggert-Waters Flood Insurance Reform Act of 2012 are now creating problems for property owners by jeopardizing some individuals’ ability to stay in their homes.

FEMA began to reduce areas it covers and went through a series of evaluations for certain coastal areas, including Longboat Key, which led the program to raise rates 25% for second homes and commercial properties.

But policyholders have reported that their rates are rising astronomically, whether they are full-time residents or not.

Buchanan, who supported the act’s approval when it passed in July 2012, tried to get the act suspended to return rising insurance hikes back to normal levels while alternative modifications were made to the NFIP and FEMA that did not deter buyers from buying homes on or near the water.

It did not work, although the Legislature may consider a future bill this year to get increases under control.
Congress adjourned for the year without agreeing on action to suspend large insurance hikes in flood insurance premiums.

However, a large bipartisan group in the House and the Senate is still pushing measures to slow the effects of the bill.

In the interim, Key residents and other property owners near the water are left to wonder how much worse it is going to get.

George Ceshker, of Secur-All insurance company on Longboat Key, said he has one customer in Country Club Shores who saw his flood insurance premium increase from $2,154 per year to $3,900 per year.

That customer was also forced to purchase and submit new elevation certificates.

For another Country Club shores home, the FEMA policy premium went from $2,100 annually for federal flood insurance to $7,000.

But Ceshker says at the end of 2013, his company secured the ability to write equivalent flood policies for older homes from an A-rated carrier at about half the cost of the federal program and that his customers are seeing relief.

“Up until last month there were no other options than the federal flood insurance program for these homes,” said Ceshker. “Other options are beginning to open up.”

Wind policies, though, are still a concern.

Some policies have risen 15% to 25% in the last two years, and the price to insure properties on the Key is becoming costlier every year.

Even Longboat Key’s mayor is seeking to sell his home because insurance costs are too high.

Mayor Jim Brown saw his wind insurance premiums for his home in Longboat Key Estates rise from $9,600 a year in 2011 to $55,000 in 2012 before he found a cheaper policy for $28,000 a year.

“Everyone’s insurance is going up dramatically, and it’s going to cause a real estate problem on coastal areas such as Longboat Key,” Brown told the Longboat Observer in August. “If people can’t buy real estate on Longboat Key or other coastal communities because they’re scared of insurance costs, we’re going to stop being able to sell our houses out here.”

BREAKDOWN
Overview: Longboaters have seen flood insurance and wind insurance policy premiums double and even triple in some cases. But one local insurance agent says relief is on the way, and options are opening up to reduce premiums.

Players: Longboat Key property owners

Timeline: Ongoing issue

Contact Kurt Schultheis at [email protected]