Rising Flood Insurance PremiumsPlanned
WASHINGTON - (05/26/06) -- Millions of home- andbusiness-owners will pay higher flood insurance in the coming yearsunder a Senate plan to bail out the bankrupt National FloodInsurance Program. A bill approved Thursday by the Senate BankingCommittee would phase out billions of dollars in federal floodinsurance subsidies for businesses, vacation homes, properties withrepeat claims, and the wealthiest homeowners, part of a plan tofill a $21 billion deficit in the program created by the massivehurricanes of 2005. The bill would also expand 100-year floodplains, thereby requiring many more homeowners to buy mandatoryflood insurance; increase penalties for lenders who fail to enforcethe flood insurance requirement to $1,000 per incident (from $350),and allow The Federal Emergency Management Agency, whichadministers the flood program, to raise premiums 15% a year forresidences and 25% a year for businesses. For credit unions, thebill would mean more borrowers would need flood insurance beforetheir mortgages could be approved, with higher penalties hangingover the lenders for not complying with mandatory flood coverage."The next 15 months will also be critical to determine if FEMA isup to the task of administering this program, or if this programshould be reorganized into another federal agency," said BankingCommittee Chairman Richard Shelby, R-Ala., who drafted theproposal. FEMA has already paid out a record $23 billion in floodclaims for the 2005 hurricane seasons and is still as much as $21billion short of funding for claims for last year'sstorms.