Florida's insurance saga is deepening as more than 115,000 homeowners in the southwest portion of the state, still reeling from the destruction wrought by Hurricane Ian in 2022, are facing new challenges with a 25 percent increase in flood insurance rates.
The rate hike, according to the Federal Emergency Management Agency (FEMA), is attributed to local officials reportedly allowing substandard rebuilding efforts, failing to meet the stringent federal standards required for flood-damaged homes.
The latest development is part of a broader, intensifying crisis within the state's insurance sector, highlighted by escalating premiums, an exodus of insurers, and widespread dissatisfaction among policyholders over claim settlements. With FEMA penalizing Lee County for its laxity in enforcing rebuilding codes, residents are caught in a tug-of-war between striving for recovery and navigating the "punitive" measures of federal oversight.
The situation, according to Lee Board of County Commission Chairman Mike Greenwell, exacerbates the financial strain on already burdened homeowners who are recovering from the $112 billion in damages that Hurricane Ian caused.
"For the federal government to have made this decision without any prior discussions seems punitive," Greenwell said in a press release issued on Friday of last week. "Ian was the third costliest hurricane to hit the United States, and many of our residents are still reeling financially from its impacts," he said.
In the aftermath of the Category 4 hurricane that leveled much of Fort Myers Beach, Sanibel Island, and Pine Island, a litany of regulatory challenges have emerged.
Local officials in Lee County and surrounding municipalities find themselves at odds with FEMA's stringent rebuilding requirements, with FEMA saying that the local officials allowed many policyholders to stay below the 50 percent mark and avoid a total rebuild and elevation, while the local officials say the federal government's sudden change in the NFIP's discount policy, without direct communication or detailed justification, feels unduly harsh, especially given the ongoing recovery efforts.
Newsweek has reached out to the Lee Board of County Commission Chairman Mike Greenwell, as well as FEMA by email for comment on Monday.
The conflict centers on FEMA's Community Rating System (CRS), designed to incentivize communities to exceed the minimum floodplain management practices by offering insurance premium discounts. However, enforcement of the guidelines has become a point of contention. FEMA's decision suggests a failure on the part of local governments to uphold the standards, particularly in the wake of Hurricane Ian's destruction.
The agency has cited instances of unpermitted rebuilds and insufficient documentation as key factors leading to its measures against Lee County and its cities, according to a report issued Monday by Insurance Journal.
The response from local government leaders has been one of frustration and defiance.
Roughly 699,000 residents that live in areas affected by Hurricane Ian will be impacted by FEMA's decision, local officials said in the joint press release, with town Mayor's and city managers from Bonita Springs, Cape Coral, Estero, and the Town of Fort Myers Beach each advocating for FEMA to suspend their decision.
The local officials have emphasized their commitment to the CRS program, outlining the measures taken to secure lower insurance rates for their constituents. Efforts include maintaining accurate floodplain management documents, enforcing higher regulatory standards, and preserving open spaces to mitigate flood risk, according to the press release.
Yet, FEMA's stance reflects a broader federal effort to ensure that local rebuilding efforts align with national flood risk management objectives. FEMA said that it identified issues shortly after Hurricane Ian when inspections revealed unpermitted work and insufficient documentation on properties likely to have been substantially damaged.
According to a report issued Friday by the Miami Herald, FEMA's concern extended to the lack of provided information on substantially damaged homes and whether they were elevated to meet new codes. The report noted that the agency had sent Lee County three letters throughout 2023, seeking data on damaged properties and warning of the consequences of non-compliance, which included losing flood insurance discounts and potentially facing removal from the flood insurance program.
As the October 1 deadline for the increased flood insurance rates approaches, the affected communities are bracing for the financial impact that can see them pay roughly $300 more per year for the average flood premium, while local officials say they will explore potential legal and administrative remedies.
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Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
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