FEDERALSBURG — Changes in the federal flood insurance program are likely to mean higher premiums for thousands of Maryland residents, and not just those living in Ocean City or along the Chesapeake Bay.
Residents of smaller inland towns like Federalsburg, where the percentage of policies facing premium increases is among the highest in Maryland, also are facing significantly higher rates.
For many years, the federal government offered subsidized flood insurance on homes and businesses across the country. But the combination of discounted premiums and a series of catastrophic storms in recent years has left the National Flood Insurance Program deeply in debt, prompting Congress to pass a law two years ago requiring policyholders to start paying rates based on the true risk of flooding at their properties.
Although President Barack Obama signed a law last week easing some of the dramatic rate hike provisions of the 2012 legislation, many policyholders who have been paying subsidized premiums are still going to be hit with steady rate increases over the next several years.
Records obtained by The Associated Press from the Federal Emergency Management Agency show that of the more than 73,000 flood insurance policies in effect in Maryland as of December 2012, some 12,000, or 17 percent, have been subsidized in the past and are facing rate increases. Those rate increases can range up to 18 percent for primary residences and apartment buildings. Premiums for vacation homes and businesses will increase 25 percent annually.
But it appears that many policyholders in Maryland may not be aware of the impending rate increases. That includes residents of Federalsburg, where almost 80 percent of policies will be affected by the rate increases but local officials say they’ve not heard any feedback from residents.
“Clueless,” is how Mayor William Beall described the situation.
Beall lives on Main Street, which runs parallel to Marshyhope Creek and lies within a federally designated flood plain that spans both sides of the waterway, a tributary of the Nanticoke River. He pays flood insurance on both his home and a rental property he owns a block farther away from the creek.
“FEMA is broke, and they’re charging us these exorbitant rates to bail them out,” he said.
Beall said he doesn’t believe his premiums have been subsidized, so he may be spared from the rate increases tied to the federal legislation. But he nevertheless has seen his premiums steadily increase, even though there have been no problems since a flood control project several years ago that included diverting the course of Marshyhope Creek.
The premium for Beall’s home has increased from $983 in 2008 to $1,578 today, even with a $5,000 deductible.
Kenneth Abner, a Federalsburg councilman who lives a few doors down from Beall, pays even more for his flood insurance.
“It’s ridiculous,” he said. “… My flood insurance, which doesn’t cover all the contents of my home, is twice as much as my homeowners insurance, which does cover the contents.”
“The excuse we always get is FEMA’s broke, so you’ve got to pay more,” Abner said.
According to federal data, flood insurance premiums in force in Federalsburg as of December 2012 totaled $105,503. That’s roughly 60 percent of the $176,904 paid in claims since the town joined the federal flood insurance program.
Statewide, there was roughly $43.2 million of premiums in force at the end of 2012, amounting to about 16 percent of the $272.4 million in claims paid in Maryland under the flood insurance program.
Jay Apperson, a spokesman for the Maryland Department of the Environment, said the agency, which provides technical assistance to local governments in developing revised flood plain maps related to the National Flood Insurance Program, is aware that people are concerned about potential rate increases.
But Apperson noted that MDE’s role is simply to provide technical support for local communities in mapping of flood plains and that the federal government is responsible for decisions regarding policies or premiums.