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Thousands of Pennsylvanians await word in delays in flood insurance premium increase

| Monday, Feb. 3, 2014, 11:27 p.m.

The first time Robinson Run Creek flooded Michelle Franchek's Oakdale home in September 2004, Hurricane Ivan dumped enough rain to fill her living room with 18 inches of creek water.

“It was right before Thanksgiving when we finally got back online,” she said.

When she bought the three-story home 16 years ago, she purchased a policy from the National Flood Insurance Program for about $200 a year. It later increased to about $450, and the next time her policy renews, it will be $1,700 a year, she said.

Even though the program covered flood damage to her home in 2004 and 2013, Franchek doesn't know what to make of the increasing premiums.

“I'm absolutely concerned about the additional premium, whether it's worth it or not,” she said.

The Senate voted last week to delay a rate increase to support what analysts say is a flood insurance system reeling from an overwhelming number of claims from Hurricanes Katrina, Ike and Irene, and Superstorm Sandy, which resulted in record losses.

Ivan caused $264 million in damage to Allegheny County properties.

About 74,000 Pennsylvanians, Franchek included, have a federal flood insurance policy, and about 34,000 could get delayed increases in premiums because of Senate legislation passed last week that reverses increases Congress passed in 2012.

The Biggert-Waters Act of 2012 was an attempt to help chip away at the program's $24 billion in debt to the U.S. Treasury. The law caps the program's borrowing capacity at $30 billion.

Ratepayers who received subsidized policies for high-risk properties, second homes or business properties would've had to pay annual increases. When the increases started, they would have been dramatic, up to 100 percent in some cases.

The Senate voted 67-32 to delay the increases for at least 4½ years on Thursday. Sen. Bob Casey, D-Scranton, voted for the delay, saying preventing increases will aid homeowners and give the Federal Emergency Management Agency time to complete an affordability study. But lawmakers might need a contingency plan, he said, as they look to make the fund solvent.

“There's a lot of work to do,” he said. “The job is not done with this legislation.”

Sen. Pat Toomey, R-Lehigh Valley, opposed the delay. He proposed an amendment to slow the rate increases, but it failed. In addition to being fiscally insolvent and “a huge drain for taxpayers,” Toomey said the program incentivises subsidizing homes built in flood-prone places.

A looming fear involves what would happen to the fund if a new large-scale flood overwhelms the system with claims. In a recent analysis, the Congressional Budget Office said the program's borrowing capacity is limited.

“In the absence of sufficient borrowing authority, CBO expects that the program would be forced to delay payment of insurance claims until additional resources became available,” the report said.

Barry Denk, executive director of Center for Rural Pennsylvania, said new data from FEMA about affordability and flood zones could determine a way to replenish the fund that doesn't overburden homeowners.

“We know the history of this commonwealth and flooding is going to happen again,” he said.

Melissa Daniels is a staff writer for Trib Total Media. She can be reached at 412-380-8511 or mdaniels@tribweb.com.

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