Skyrocketing Flood Insurance Rates Bring Financial Chaos

When Superstorm Sandy slammed into New York and New Jersey last fall, it sent massive floods through the streets of coastal towns and cities across the Northeast, turning areas like Toms River, N.J., into something like a war zone.

But nearly a year later, residents there and in many other coastal communities across the U.S. face a potentially far more devastating menace: a nationwide revamp of flood insurance rates, forcing premiums that were once around $500 per year into the $5,000-, $10,000- and even $20,000-a-year range and higher.

“The adverse effect of [this] would be more devastating than Hurricane Katrina,” Louisiana Insurance Commissioner Jim Donelon said in an interview with weather.com, noting the crippling economic damage the historic 2005 storm left behind on the Gulf coast. “Because it will render literally thousands of properties in my state worthless.”

What’s prompting reactions like this is the Flood Insurance Reform Act of 2012, passed by Congress last summer and often called “Biggert-Waters” for its two Congressional sponsors: former Illinois Rep. Judy Biggert and Rep. Maxine Waters of California.

The act made sweeping changes to the National Flood Insurance Program (NFIP) – which has been the only provider of flood insurance for homes and businesses across the U.S. since its creation in 1968 – with the goal of raising rates to reflect the true actuarial risk of properties in flood zones.

(Excerpt) Read more at weather.com …

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