Florida Braces Over Flood Insurance


The $47,000 Question

Owing to Fort Myers Beach being a barrier island in the Gulf of Mexico, flood insurance for our home and business owners is of paramount importance.

A big part of that coverage comes from the National Flood Insurance Program (NFIP), managed by the Federal Emergency Management Agency (FEMA). The NFIP aims to reduce the impact of flooding on public and private structures by providing affordable insurance, as well as encouraging communities to adapt and enforce floodplain management regulations. Overall, it reduces the socio-economic impact of disasters by promoting the purchase and retention of general risk insurance.

The NFIP, however, is due to expire on September 30, with the possible result being substantially increased flood insurance premiums for the most at-risk communities like Southwest Florida, and in particular places like Fort Myers Beach, Sanibel and Captiva. Chris Heidrick, principal of Heidrick & Company Insurance on Sanibel, is a national expert on the NFIP as well as Southwest Florida flood insurance.

“The NFIP expires on September 30, though there is some progress,” says Chris. “The House of Representatives introduced a few bills, and the House Financial Service Commission started working on this about a year-and-a-half ago when I testified before them. They set up a series of draft talking points and the Senate had a couple of hearings. My concern is there are less than 50 days left in this session to act, and that means filing legislation, getting it through the committee, agreeing on language, passing it on the floor and having the President sign it, all while lawmakers wrestle with healthcare, tax reform and the new budget – that is a crowded calendar! I hear that several members of the Senate and House understand its importance and will pass a short-term authorization by September 30, to allow more time to pass a long-term bill.”

Out of Sync, With Different Rates

If Congress does not act by September 30, those who want to buy a Southwest Florida home will not be able to purchase insurance from the NFIP, though existing policies remain in force, explains Chris. “You can obtain coverage for new buyers from the private Florida insurance market that, while still small, has enough capacity to fill that void during any lapse. In fact, private flood insurance is often a better option pricewise on Fort Myers Beach and Sanibel than the NFIP, as Lloyds of London believes the current rates for older structures should be more competitive. The NFIP and private insurers are not in sync with each other, with very different premium rates.”

As for island home owners who are receiving notices that their flood insurance will increase 5 to 18 percent annually until reaching their property’s true risk of flood damage unless you receive an Elevation Certificate, Chris says that “the Elevation Certificate allows FEMA to go through the rating to determine the full risk rate, and you as the policy holder can chose the lesser of the two. That makes sense if you are above the flood elevation, but Fort Myers Beach and Sanibel are barrier islands that are so far below the base elevation that those structures with an Elevation Certificate would be much higher than through private insurance, so it makes more sense to explore private insurance than acquiring an Elevation Certificate with a higher NFIP rate. You really have to talk to an agent to help figure out what policy is best for you.”

Chris would like to see as part of any government extension or legislation a provision that allows policy holders to move seamlessly between the NFIP and private insurance carriers. “Right now, there is an unintentional barrier that keeps some people from pursuing a better alternative in the private market.” As for what a lapse in flood insurance may do to the Southwest Florida real estate market and corresponding property values, “I am not a realtor so this is out of my area of expertise, but any buyer in any transaction hates uncertainty, and uncertainty translates into lower prices, but I don’t want to be an alarmist. Of course, Fort Myers Beach actually has the poster child for a lot of these issues and concerns with Jacki Liszak.”

After I Got Done Crying

Liszak, the executive director of the Greater Fort Myers Beach Chamber of Commerce, co-owns the Sea Gypsy Inn with husband Scott. “We bought the Sea Gypsy in November 2012,” she recalls. “Our flood insurance was $2,700 on a $180,000 flood loss valuation; the next year when I got my bill, it skyrocketed to $47,000 because we were in a high-risk area, even though our property had no loss on record, going all the way back to when the building went up in the 1940s as the original beach library. After I got done crying, I went to Town Council, Lee County Commissioners and our State and Federal Representatives to alert them to this situation, as in Florida, if you have a mortgage, you need flood insurance. No one I spoke with could explain this to me from a common-sense perspective where that premium made sense!”

Chris Heidrick became our area’s unofficial-official leader, continued Liszak. “He took my information to share with Congress in Washington DC, in a concentrated effort on reasonable hurricane and flood insurance. That $47,0000 bill totaled more money than all our other obligations – mortgage, utilities and the rest – combined. It was akin to buying a $30,000 car and paying $10,000 for insurance.”

One of the NFIP problems, she said, is that other states raid the program for non-flood catastrophes. “When there is a tornado in Kansas, they reach in to cover the loss, even though Tornado Alley is nowhere near any coast. It’s frustrating the government came up with a program to insure everybody who lives near or on a body of water, then uses that mechanism for other things. Florida pays the vast majority into the NFIP, yet only takes out about 30% of the subsidies, and that is not fair.” Nationally, 1.8 million of the 5 million homes and businesses covered by the NFIP are in Florida, but its program usage have been small over the past several seasons. Floridians from 2012 to 2016 filed slightly over 11,000 claims for $183 million, less than a quarter of other flood-ravaged states like Louisiana. Florida residents pay four times more into the program than they receive in claim payments.

Heidrick adds that “we have a lot of interaction with Congressman Francis Rooney, and he absolutely understands the important of this reauthorization, and his thoughts are right on! He is already making himself a leader on this, to cut through the chaos for us in Washington.” For additional information, contact Heidrick at 239-579-0660 or at Chris@sanibelinsurance.com.

“Flood insurance needs to be made reasonable for the future,” concludes Liszak, “so we are not back in this situation again and again, as this is crazy. I have an offer in to Congressman Rooney to go to DC, as I am, for better or worse, the face of what happens to folks when our leaders foolishly push through legislation without looking at how these decisions affect real-life people.”


Gary Mooney