Senate may delay flood insurance rate hike

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WASHINGTON (AP) — Flood insurance rate increases for
hundreds of thousands of people would be put off under a bill on track
to pass the Senate. Its future remains uncertain in the House, where a
more modest plan is under consideration.
The legislation, which
could pass the Senate as early as Wednesday, would delay for up to four
years premium increases set to phase in next year on homeowners facing
whopping premium increases under new flood maps. It also would allow
homeowners with subsidized insurance policies to pass them on to people
who buy their homes.
Other changes, including higher premiums for
frequently flooded properties and on 1.7 million second homes, would
remain in place. The White House is cool to the measure, but it has not
threatened a veto.
A sweeping overhaul passed in 2012 was designed
to make the federal flood insurance program more financially stable and
bring insurance rates more in line with the real risk of flooding.
However,
the new rates have caused panic among hundreds of thousands of people
who face big premium jumps as flood maps are updated in coming years.
The loss of subsidies when homes are sold has put a damper on the real
estate market and threatened home values.
The Senate measure to
delay some of the changes is likely to pass after votes on a host of
amendments, including a plan by Sen. Pat Toomey, R-Pa., to phase in rate
increases more slowly.
Its future in the House was uncertain at
best, where Speaker John Boehner, R-Ohio, and Financial Services
Chairman Jeb Hensarling, R-Texas, oppose the Senate bill but are
considering a far more modest measure that would leave more of the 2012
overhaul in place.
The federal flood insurance program, which was
established in 1968, has incurred big losses, most recently with
Superstorm Sandy in 2012, and is $24 billion in debt to taxpayers.
The
program helps 5.6 million policyholders, 20 percent of whom receive
subsidized policies for older homes built before communities joined the
flood insurance program.
Under the 2012 changes, owners of second
homes, frequently flooded properties and businesses in flood areas would
gradually lose their subsidies and pay 25 percent more a year until
they reach an actuarially sound rate. Others get to keep their subsidies
but can’t pass them on when selling their homes.
The 2012 law
also phases out below-market rates for owners of "grandfathered"
properties — those that were built in compliance with earlier flood risk
estimates but whose flood risks have increased under new maps. Those
homeowners would see their flood risks re-estimated and would see higher
rates phased in over five years. Other homeowners, whose premiums
subsidize those with grandfathered rates, could see their rates go down.
Copyright 2014 The Associated Press. All rights
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