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Changes to flood insurance program to go into effect in 2020, SC rates will change

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New rates for single-family homeowners with policies under the National Flood Insurance Program will take effect next year, under a new plan announced Monday. But it's unclear what that will mean for policyholders in South Carolina. 

Currently, the Federal Emergency Management Agency uses flood zone maps as the primary tool to determine rates. Under the new system, rates will be determined by also factoring in variables such as the distance a building is from the coast or another water source and the cost to rebuild the home or building.

The new rates for single-family homeowners will go into effect Oct. 1, 2020, said David Maurstad, FEMA's deputy associate administrator for insurance and mitigation.

“Yes, some people’s rates will increase," Maurstad said Monday during a conference call with reporters. "Other people’s rates will decrease. We don’t know what that looks like at this time."

Many specifics about the rate system changes were not available.  

The adjustment to single-family home policies could impact homeowners in coastal Lowcountry communities, which face flooding risks from the Atlantic Ocean, inland rivers, storm surge, heavy rains and high tides. 

Changes to the program, which allows homeowners, business owners and renters in certain areas to buy federally backed flood insurance, have impacted rates for local residents before. In 2013, when a new law related to the insurance program was implemented, rates for many South Carolina policy holders increased. 

Nearly 70 percent of the National Flood Insurance Program's 5 million policies were for single-family homes as of November, according to FEMA. South Carolina had more than 200,000 flood insurance policies as of September. Florida, by comparison, had the most in the country with more than 1.7 million. 

Maurstad said that the flood insurance program will continue to use flood maps in determining rates. It will also keep using the Community Rating System, which gives policy holders discounts on their rates based on rules set by communities that exceed minimum program requirements. The discounts can add up to as much as 45 percent. 

Currently, Charleston city officials are considering whether to require homes built in flood hazard areas be raised 2 feet above FEMA's minimum elevation, which could affect its rating. Charleston County already follows that standard. 

FEMA has struggled with keeping the flood insurance program financially sound while also providing affordable rates to policy holders, according to the Government Accountability Office.

The flood insurance program had $20.5 billion in debt as of September, said a GAO report from this month. That comes despite Congress canceling out $16 billion from the program in 2017.

"Without reforms, the financial condition of NFIP could continue to worsen," the report said. 

Reach Stephen Hobbs at 843-937-5428. Follow him on Twitter @bystephenhobbs.