Some in the area could find that the premiums are simply too high to be able to afford it.
According to Coast officials in Mississippi, the increases to the flood insurance rates could lead to financial disaster for some residents living in areas that are at a higher risk of flooding.
Many are worried that the impact of this change will be a considerable one, and won’t just affect one or two.
According to the planning director of Jackson County, Michele Coats, “I think it’s going to be huge.” Coats went on to say that “You’re going to see a lot of people who can’t afford this. I don’t think anybody here can afford the rates (the National Flood Insurance Program is) talking about ….We got the impression after Katrina it wasn’t going to change that much, the rates were going to go up a little. This is catastrophic.”
The flood insurance premiums will be starting this year with a small percentage of policyholders.
Those flood insurance rates will occur in waves, starting with a smaller percentage. However, another, larger wave will occur in 2014, and this will reach a much larger part of the population. The floodplain managers have stated that some of the residents of certain areas that are at a higher risk could be priced right out of their homes or businesses, but will not be able to sell those properties.
They caution that the impact on the economy is just starting to kick in for many communities along the coast that have a considerable percentage of their populations living and working in areas that are at a high flooding risk, where the flood insurance rate increases will be the highest.
This is the outcome of the raising of the premium cap, which occurred last year under the Biggert Waters Flood Insurance Reform Act of 2012. In it, Congress increased the overall limit to the premiums increases for flooding coverage from having previously been 10 percent to its new cap of 20 percent per year.
The act also permits the National Flood Insurance Program (NFIP) to charge an assessment in order to create a reserve fund. However, the most powerful struggle is expected to be caused by the removal of the coverage subsidies that had been an element of the program since it was created in 1968.