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No Joke. Flood Insurance Rates Increase On April 1

STEVE INSKEEP, HOST:

Today, about a million Americans will see their flood insurance payments double. There is a reason for this rate hike. It is supposed to help pay off the flood program's $24 billion debt to the U.S. Treasury. Charles Lane reports from our member station WSHU.

CHARLES LANE, BYLINE: After Sandy and Katrina, Congress hiked rates, but some of the homeowners paying the new rates are actually nowhere near the ocean.

GEORGE KASIMOS: There's flood zones in every state. There's flood zones in the desert. There's flood zones in Colorado.

LANE: George Kasimos heads a very vocal group opposed to the rate hikes called Stop FEMA Now. He says after FEMA redrew its flood maps in 2009, millions of people who had never seen a flood had to buy flood insurance through the federal government. If they don't, banks will buy it for them and add it to their mortgage.

KASIMOS: Think about in the middle of the country where a house is worth $150,000 and the flood insurance premium is more than the actual mortgage. These properties are virtually worthless.

LANE: Most homeowners, however, will see no rate increases and only a $250 annual surcharge. But for those who live in the most flood-prone areas, the idea is to align the cost of insurance with the actual flood risk. Eli Lehrer is a conservative policy analyst who helped Congress draft the rate increase.

ELI LEHRER: We encourage enormous numbers of people to live in areas where they really shouldn't be living because we provide them with subsidized flood insurance.

LANE: After Superstorm Sandy, the flood program's debt got so big that premiums barely covered the interest payments, so Congress raised rates. But Lehrer, who advocates for taking the government out of the insurance business, says it wasn't enough.

LEHRER: The program still has enough built-in subsidies that it will be another decade at least before we can even have a hope of bringing all or almost all rates to actuarial soundness.

LANE: That is if Congress doesn't roll back rate increases. The flood program is up for reauthorization in 2017. And policy holders like George Kasimos are organizing.

KASIMOS: We can't just vacate every flood zone. It can't happen. If you're just going to give everybody a 10, 20 or $30,000 flood insurance premium, what is that going to do to the housing market?

LANE: Kasimos says the last time Congress debated the rate increases, staffers couldn't keep up with the pleas from constituents. He says now that more people are affected, it will be an even bigger fight. For NPR News, I'm Charles Lane in New York. Transcript provided by NPR, Copyright NPR.