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Fla. backs Miss. lawsuit to block flood insurance hikes

Gov. Rick Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater announced that Florida would file an amicus brief, or “friend of the court” brief, in the Mississippi Department of Insurance’s lawsuit aimed at delaying flood rate increases outlined in the Biggert-Waters Flood Insurance Reform Act.

The lawsuit asks a federal judge to find that the Federal Emergency Management Agency (FEMA) failed to deliver a homeowner affordability study of higher flood insurance rates by April 2013 as required under Biggert-Waters – and it asks a judge to block the current rate increases until that study has been completed.

Bondi says Florida decided to support the Mississippi lawsuit rather than file its own lawsuit on the off chance that the federal government will quickly address the situation, which could impact about 270,000 Florida property owners. However, the state may take other actions in the future.

“We haven’t ruled anything out at this point, but right now we’re joining Mississippi, and hopefully they’ll be successful,” Bondi says. “And again, Congress needs to take action and the White House needs to take responsibility for this and to protect Floridians.”

The 2012 act requires FEMA and other agencies to make a number of changes to the way the National Flood Insurance Program is run, including raising rates to reflect true flood risk and to make the program more financially stable.

But Realtors and bankers have expressed concerns about the effects a phase-out of federal subsidies could have on the housing market – notably older properties – and the state’s economy.

The Mississippi lawsuit names the U.S. Department of Homeland Security and FEMA, one of its agencies.

However, FEMA Director Craig Fugate told a U.S. Senate Banking subcommittee on Sept. 18 that the study would take about two years to complete, and he said his agency is powerless to stop the flood rate increases.

“I need help,” Fugate told the subcommittee. “I have not found a way to delay (the rate increases) … without some additional legislative support.” Fugate, a former Florida emergency-management director, told the subcommittee members there is “no provision for affordability in (the Biggert-Waters) law.”

In June, the U.S. House voted to delay parts of the act, including putting a one-year hold on the rate changes FEMA is rolling out. The House also approved a delay in the removal of a longstanding grandfather clause that has allowed subsidies to be carried over when properties are sold.

However, a bipartisan Senate proposal to delay the rates for one year remains on hold.

Because of federal inaction, the Florida Senate Banking and Insurance Committee floated the idea that Florida could withdraw from the federal program, either by altering regulations to attract more private insurers to provide the coverage or through establishing a state-backed agency similar to the Florida Hurricane Catastrophe Fund.

Source: News Service of Florida