Follow James Linkedin Facebook
Email James Email
Financial
May 1, 2016

Expect To See An Increase In Flood Insurance Premiums

Sponsored Content provided by James Moore Jr - President , James E Moore Insurance Agency Inc

As of April 1 of this year, flood insurance premiums have increased again. Here is a little history of flood insurance and who will likely be hit the hardest by changes in their premiums.
 
Small cottages. Many years ago homes on North Carolina’s beaches were mostly small cottages with no heating or cooling. At the time, flood insurance was not available so most people were unwilling to expose themselves to potentially catastrophic flood losses by building expensive homes on or near the ocean.
 
Uncle Sam steps in with subsidized flood insurance premiums. At some point our elected officials in Washington decided that it would be a good idea to create a federally insured flood insurance program. There was probably some logic behind their decision; maybe they thought we would be better off requiring people who live in flood-prone areas to pay something (premiums), rather than paying nothing and getting federal aid whenever there was severe flooding. Anyway, the national flood insurance program was created and policies were sold with heavily subsidized premiums.
 
Uncle Sam wakes up. Fast forward several decades and a different set of elected officials began to realize that our federal government was spending much more than it was collecting in taxes, and started looking for ways to stem those losses. One of the programs they found that was losing a lot of money was the Federal Flood Program. Of course, they wanted to do something, and they did. They commissioned some studies and determined that premiums would need to be increased substantially to collect enough to cover projected claims.
 
We’re hooked. Although they didn’t talk about it, they soon realized that over the years they had created a “captive audience” that would have no choice except to pay whatever level of premiums they thought would be needed to cover the claims. This was the case because they had created a law that said that anyone having a federally insured mortgage in a high hazard flood zone would be required to carry a certain amount of flood insurance. With almost all loans being federally insured, that meant that almost everyone would have to carry flood insurance to insure the large and expensive homes they had built on beaches as a result of the availability of relatively cheap federally subsidized flood insurance.
 
Premiums are going up. Fast forward to today and we are seeing large premium increases, with the latest round of increases going into effect April 1, 2016. The overall nationwide increase is supposed to be 9 percent this year, but those increases vary depending on whether buildings are primary homes, were built prior to the 1980s or are in flood hazard zones, or if property owners have been paying artificially low premiums since flood zone maps were created in the 1980s.
 
A few details. Hardest hit are pre-FIRM business properties and pre-FIRM non-primary residences which will receive premium increases of 25 percent per year until FEMA determines that they are no longer subsidizing the rates. Pre-FIRM primary residences will see increases up to 18 percent, as will properties that are not homes or businesses, such as churches, nonprofits and schools.
 
What to do? Depending on the particulars of your case there will be some things that you can do to reduce the impact of the current premium increases. I’m not even going to try to list those here because too much depends on the particulars of your situation. My suggestion is for you to have a serious discussion with your insurance agent to determine what, if anything, you might be able to do.
 
Jim Moore is the president of James E. Moore Insurance Agency. Established in 1954, it has become one of the most trusted independent insurance agencies in North Carolina. The James E. Moore Insurance Agency is a family-owned business and offers homeowners, automobile, life and health, employee benefits, and commercial insurance products. For more information, call 910.256.5333 or visit the agency’s website at www.jamesemoore.com
 

Jem 13feb bnr v21
Ico insights

INSIGHTS

SPONSORS' CONTENT
Lynnwhitesellheadshot

Culture is Foundational to Organizational Success

Lynn Whitesell - Harris Whitesell Consulting
Dave sweyer 300 x 300

Preparing Your Property for Cooler Weather

Dave Sweyer - Sweyer Property Management
Img 1576c1

What’s Next for Equity Investors?

Eddie Nowell - South Atlantic Capital Management Group

Trending News

Vacating Wilmington Business Leaves Large Industrial Space For Lease

Christina Haley O'Neal - Oct 15, 2019

Here's Who's In Advisory Group On Potential NHRMC Deal

Cece Nunn - Oct 14, 2019

City Staff Recommends Moving Forward With $90M Proposal

Christina Haley O'Neal - Oct 14, 2019

How A $90M Gateway Project Could Impact The City

Christina Haley O'Neal - Oct 16, 2019

South College Sandwich & Deli Ranks On BuzzFeed List

Jessica Maurer - Oct 16, 2019

In The Current Issue

Opioid Addiction Program Enters Second Year

A program to help opioid-addicted mothers, The Tides, recently signed another contract with New Hanover County for this fiscal year....


NHRMC Releases Smartphone App

New Hanover Regional Medical Center recently launched a smartphone app to help patients get around its main South 17th Street campus and to...


5-year Regional Job Numbers Released

North Carolina’s Southeast has helped spur more than 1,600 jobs in the past five years for the Wilmington area, according to a report....

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

August 26, 2019 Power Breakfast: A Healthy Sale?
WILMA's Leadership Accelerator
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`