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Indiana braces for flood insurance subsidy changes

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Thousands of Indiana homeowners who live in flood-prone neighborhoods are bracing for insurance premium increases, despite Congress' latest fix for the government's debt-saddled flood insurance program.

More than 13,300 Indiana homeowners can expect annual increases of up to 18 percent in their flood insurance premiums in the years ahead, according to an Associated Press analysis of government data.

Another 3,200 owners of second homes and businesses will see annual increases of 25 percent.

A bipartisan measure signed Friday by President Barack Obama offers relief to many people whose premiums soared thousands of dollars overnight under a 2012 overhaul of the taxpayer-subsidized National Flood Insurance Program.

But that relief isn't permanent for all. Rates are still set to rise as officials try to rid the program of $24 billion in debt.

Among the Indiana residents affected by the legislation are Chris Buckley and her partner, Cindy Norman, who've lived for more than 20 years in Indianapolis' Ravenswood neighborhood.

Their two-story home has a scenic view of the White River, lined with towering sycamore and oak trees, and they have a small dock with two boats. But it comes with the burden of frequent flooding that periodically sends water sloshing up to their foundation — a situation to which they've become accustomed.

Buckley said their home's annual premium had been about $3,100 but will increase to more than $3,500 this year and threaten their standard of living as it climbs higher in coming years.

"If I'd known the flood insurance was going to do this, I never would have bought this place," Buckley said as she surveyed her backyard. "I'm 57 years old. I've been working for 40 years — all my life. I can't get a better job. I can't afford any more."

Buckley said she and Norman, 55, have filed only one flood claim, in 2005, when heavy flooding damaged some of their home's floor joists.

The owners of about 16,600 Indiana homes and businesses currently pay subsidized rates that will be steadily whittled down. Collectively, people getting those discounts and many more already paying risk-based rates pay about $25.3 million per year in premiums. Those premium increases are going to create "a real mess" for both home sellers and buyers in some flood-prone areas, said Dean Doughty, sales manager for Century 21 Breeden Realtors in Columbus.

The south-central Indiana community was hit hard by flash flooding in 2008, soaking hundreds of homes, and also causing $171 million in damage to Columbus Regional Hospital and more than $100 million in damage to a Cummins Inc. research center.

Doughty said his office has been getting calls from some home sellers who are worried about the rising premiums and asking if their property will be affected.

"It's obviously going to hurt the sellers in some of these flood zone areas because now all of sudden their property values are going to go a lot lower," he said. "It will absolutely impact the industry."

Residents of the northwestern Indiana town of Munster have collected more claims of any Indiana community over the program's life — more than $24 million, according to the AP's analysis. That likely reflects the impact of September 2008 flooding after torrential rains damaged more than 17,000 homes and businesses along the Little Calumet River.

Congress's move to delay the phase-out of the tax subsidies is good news for some Munster-area homeowners, said Michael Repay, president of the Lake County Board of Commissioners.

"My constituents probably won't be happy about it being raised at all, but the fact that it will be phased in could give people some relief," he said.

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  • You Pay the Price
    To Leslie - It is your choice to live where you do but I don't want to subsidize your insurance. You take the risk, you pay the price.
  • Pay the Freight
    All of us who are in high & dry locations have been subsidizing flood-prone properties through a variety of emergency relief programs and artificially low insurance premiums for a very long time. I'm sure there are big problems with the implementation of new rules. After all, it is a federal program. But the core concept comes from the fact that the U.S. Gov't. has paid out far higher damages than it has received in flood insurance premiums, leaving the majority of taxpayers to wonder why they are footing the bill for the few. It is especially galling to see the same properties get flooded again and again. I am also not interested in subsidizing the insurance premiums for second homes in hurricane-risk areas. Many of the people who buy these luxury items are people who chafe against government subsidies to the poor, not realizing that they are also receiving a subsidy of artificially low insurance premiums that do not reflect the actual risk of damage claims. Let the market set the rate for insurance premiums based on claims and property home values and investment decisions can properly follow. This is bitter medicine for current owners who bought properties under a prior understanding of cost and value. Maybe the rules can be tweaked a bit to reflect that, and the fact that many people of modest means are being caught in re-evaluations of the flood risk of their properties. However, going forward with new owners, the premiums should reflect the risk of damage claims. Otherwise we in Indiana will continue to pay for someone's desire to live close to an ocean.
  • Flood Insurance - Not Always Flood Prone
    We are in a 100 year flood plain in the Warfleigh area (north of Kessler & south of the White River). We haven't seen flooding since that time but have to buy flood insurance until the Army Corp of Engineers deems the enhanced entire levy system complete. So our area either needs the long-over due project to be completed or changes to flood insurance laws. Otherwise drops in our property values will jeopardize this great neighborhood.

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