Flood insurance prices may soon skyrocket
Parts of New Jersey could face flooding issues as the northeast brings heavy rain and strong winds to the state on Tuesday.
With flooding a growing concern in New Jersey, as well as in many other parts of the country, the Federal Emergency Management Agency (FEMA) has adopted a new pricing system that will soon increase the cost of federal flood insurance for most of the insured.
It is an increase in the rise that Senator Bob Menendez (D-NJ) hopes to stop.
According to Menendez, FEMA’s 2.0 risk rating, which went into effect this month, immediately increases the cost of flood insurance for all new policies and will increase policy premiums for 77% of current policyholders. of the Garden State from April 1, 2022.
Menendez said that under this new system, what a homeowner pays for flood insurance will be based on the risk of a single-family home.
âIt’s not based on flood maps. It has a series of different determinants that are really going to create a real challenge for policyholders, âhe said.
Menendez said the result would be such a strong rate shock that it is estimated that 900,000 policyholders will abandon their flood insurance over the next decade because they simply cannot afford to have it – a scenario that is simply not acceptable.
âInsurance is about spreading risk. The bigger the pot, the lower the cost, the smaller the pot of people insured, the higher the cost – so this goes against the whole idea of ââa national flood insurance program. âSaid Menendez.
The senator is part of a bipartisan group of lawmakers who recently sent a letter to the Biden administration asking for a delay in adopting the new system, especially because it does not make sense to start increasing the rates for owners if they are not in flood. zoned.
In addition, new legislation being introduced will put a statutory cap on the amount of flood insurance policy rates that can be increased on an annual basis and cap the profits of private insurance companies that write policies. The legislation also calls for more money for mitigation, including building protective sand dunes, raising homes, and expanding the Blue Acres program which offers homeowners in flood-prone areas.
Menendez said it was especially important to increase the Blue Acres program. âFor every dollar of mitigation we spend, the government saves $ 6 on the back end, which helps put the program on the path to solvency. “
The legislation also calls for flood maps to be used to determine who is most at risk and what should be the cost of different policies.
Menendez stressed that the national flood insurance program should “provide coverage to policyholders, put us on the path to sustainability and keep people safe.”
You can contact reporter David Matthau at [email protected]
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