MAJOR CHANGE IN FLOOD INSURANCE PREMIUM PRICES (2021-22)

MICHAEL SEAN QUINN, Ph.D., J.D., C.P.C.U. Etc.*

FEMA (the Federal Emergency Management Agency) has indicated that hundreds of thousands of persons and entities owning property in flood zones will pay substantially more for property insures than they have been paying for years. Its new method of determining premiums will be phased into the National Flood Insurance Program (NFIP). 

It appears that wealthy homeowners will bear the brunt of price increases, and some of more modest means may get a reduction. FEMA has said that the premiums on at least 200,000 policies will increase by at least 4%, though 1.15 million owners will pay loss, FEMA has said that this will be more equitable pricing.  (Property owners of limited means might wish to “check” with their agents, since some might say that it is not in the interest of agents to simply reduce prices.)

New policies will be governed by the new calculative methods on October 1, 2021, while existing policies will be affected beginning on April 1, 2022, according to FEMA.

NFIP needs money. It has been around a while (since 1968); it provides $1.3 trillion in coverage through more than 5 million policies. NFIP has been losing money for quite a while now and is in the red for $20.5 billion. 

It has been reported that this is the first increase in relevant premium prices in 50 years.  If NFIP has been losing billions of dollars for quite a while, this fact entails that it has been subsidizing some people and some persons more than others. If so, then it is virtually certain that high-powered lobbying has been active for a long time.  One wonders for whom the lobbyists are advocating? Some radical left-wing progressives like AOC might advocate that it was not those of more modest means. 

A nonprofit foundation that keeps track of flood insurance prices has estimated that the average price of annual insurance premiums in flood zones for flood insurance will nearly $8000 per year–$7895 to be precise. It is not clear whether this outfit has a political orientation. 

Obviously, this whole matter is important to the coastal regions of Texas, especially since some major property insurance companies are pulling out of this market.  Imagine! Some say that climate change aka global warming is a hoax.

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*Michael has practiced insurance law for nearly 40 years, has written and lectured on it many times, has taught it in two Texas law schools, and has appeared as an expert witness many, many times. His “Long Resume” can be easily found on the Internet, as can a shorter one.  More recently, he has taken up mediating insurance disputes through the firm of Quinn and Carmona.  

Michael Sean Quinn, PhD, JD, CPCU, Etc

Michael Sean Quinn, PhD, JD, CPCU, Etc. (530)

One of Texas's leading insurance scholars, Michael Sean Quinn is a past chair of the Insurance Section of the State Bar of Texas and has a broad legal practice.

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