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To the editor:
If Hurricane Sandy had never struck our state, residents and businesses in our shore areas would still have encountered a huge financial challenge.
A recently enacted federal law that overhauled the federal flood insurance program is having a dramatic impact on the cost of insurance for property owners and in some areas threatening the ability of residents to stay in their homes and of businesses to remain afloat.
Signed into law in last July, the Biggert-Waters Flood Insurance Reform Act of 2012 reauthorized the National Flood Insurance Program for five years but also made significant changes to the program in order to shore up the fund.
While I understand the need to make the federal flood insurance fund solvent, I am deeply concerned about the effect the sudden, drastic changes to the program will have on New Jersey property owners, who are already facing so much hardship as a result of Sandy.
The federal law will phase out flood insurance subsidies for certain properties – including second homes, businesses and homes substantially damaged or improved – and increase premiums on them by 25 percent until they reach their full actuarial cost. It will also raise the annual cap on premium rate increases for all other properties from 10 percent to 20 percent; require minimum deductibles for flood insurance and impose stricter requirements for obtaining flood insurance.
In short, this act has the potential to cause serious economic harm to the shore. The potential for flood insurance premiums to rise so quickly and significantly, on top of the damage created by Hurricane Sandy, is more than our coastal economy can tolerate.
The National Flood Insurance Program was originally intended to underwrite flood insurance costs because we knew it would always be excessive. The federal government viewed waterfront commerce as so vital to our economy that the investment would be worthy because of our shipping ports, travel, and tourism. The Flood Insurance Reform Act of 2012 will have a drastic affect on these industries and could hinder our economic recovery.
Our residents and businesses don’t need higher costs. They need relief.
That is why I am drafting a resolution requesting that Congress reevaluate the economic impact of the federal reform law and consider a more deliberative approach to implementation. I have also sent a letter to members of our Congressional delegation requesting that they consider the impact this legislation will have on our residents.
Especially given the state of the national economy and, in particular, the state of the economy in New Jersey, this has to be a priority. We cannot allow homeowners to be priced out of areas where they and their families have lived for years, and in some cases for generations. And we cannot allow this to force the closure of businesses in our shore areas that are struggling in this economy to remain afloat.
I look forward to working with our Congressional delegation on this important issue. Hopefully, we can persuade our elected officials in Congress to do the right thing and to take another look at this federal law and the affect it will have on our state.
I understand the worthy goal of attempting to save the federal flood insurance program, but in the process and attempt to save the program, we could lose the economic viability of the Jersey Shore.
State Sen. Jeff Van Drew