GREENVILLE — Henry Nathaniel has escaped the rising tide of flood insurance costs for now, but he’s still worried.
The retired 70-year-old owns a 1,650-square-foot house valued at less than $50,000 on Greenville’s north side. He was already paying a relatively steep $550 a year to the National Flood Insurance Program. Then he got a notice in the mail saying his premium would rise to nearly $2,500 a year.
Nathaniel said that, with his fixed income and his wife’s reduced hours at work, there was no way he could afford to pay that much, so he threatened to let the bank foreclose.
“I went to my bank after that and I told them I simply wasn’t going to pay that kind of money,” he said.
Instead, after the bank intervened and he paid nearly $500 for an elevation survey, the bank was able to secure a new policy for less than $500 a year.
To halt those types of steep increases, Congress overturned key parts of a 2012 law that phases out subsidies on flood insurance in an attempt to rid the federal program of $24 billion in debt.
But the new law still allows price hikes of up to 18 percent per year on primary residences getting the subsidies. Vacation homes, businesses and properties that have flooded multiple times will see annual premium spikes of 25 percent until the owners switch to a rate based on the actual risk of flooding.
An analysis of Federal Emergency Management Agency data by The Associated Press shows that more than 10,000 of Mississippi’s nearly 74,000 flood insurance policies could see a steady climb back toward the territory Nathaniel found unbearable.
Many at risk are in the city of Jackson, where nearly 2,500 properties could be affected, and in Greenville and surrounding Washington County, where more than 1,000 policies could be affected. In both cases, affected homes were built before flood maps went into force in the 1970s.
Homes built to required elevations after flood maps were in place will see their grandfathering restored by the law. That puts them less at risk, although they could still see increases.
“It’s much better, but clearly policyholders will still be facing rising costs,” said Angelyn Treutel Zeringue, a Bay St. Louis insurance agent.
She said she still expects coverage costs to climb steadily, if more slowly.
“The only thing I wish it had was an end, an end to the annual increases,” Zeringue said.
Because 2005’s Hurricane Katrina damaged or destroyed so many homes along the Mississippi Gulf Coast, many homes there were repaired or built new to flood standards. That means cities and counties there are likely to be more sheltered by the new law, even though 14 coastal cities and counties have nearly two-thirds of all the flood policies in Mississippi and nearly 70 percent of the total value insured statewide.
That’s good news for people like Long Beach resident Stephen Nicosia, who rebuilt his home just north of U.S. 90 after Katrina. He built to the elevation required by the flood map, but two years later FEMA published a new flood map that called for higher elevations.
The 2012 Biggert-Waters law threatened to send his premium soaring, because it would offer lower rates only for structures at the current required elevations, even if people had followed the map in effect at the time they built a house. Nicosia found that provision “blatantly unfair” and became one of the activists who fought Biggert-Waters.
Nicosia testified in a lawsuit brought against FEMA by Mississippi Insurance Commissioner Mike Chaney, who said FEMA had ignored a congressional mandate to conduct an affordability study of rate changes. FEMA wants the lawsuit dismissed, and Chaney said he’s considering dropping it, because the new law “will mean some relief for Mississippi.”
U.S. Rep Steven Palazzo, R-Miss., says the new law will force FEMA to conduct more study of rates and what people can afford, spokeswoman Laura Chambers said.
“There are measures in here to address the overall affordability, as well,” Chambers said.
Bay St. Louis real estate agent Stephen Crawford said the threat of rising costs had chilled the market in waterfront property.
Crawford himself was trying to build a new real estate business in Covington, La., for fear of the impact in coastal Mississippi. Now, he said, some clients who were trying to flee high insurance costs have taken their homes off the market and decided to stay.
“People are actually trickling back into the market,” Crawford said.
But others fear constant increases, even if they might be smaller. Greenville homeowner Nathaniel said he had planned on relatively stable insurance rates when he bought his house.
“How long do you think people are going to be able to sell their houses?” he wondered.