Flood Insurance Changes Could Mean Sharp Premium Hikes

Published 10/25 2013 05:23PM

Updated 10/25 2013 07:13PM

ROCKAWAY BEACH, Mo. -- A resort may have to close its doors in the face of massive flood insurance premium hikes.

Rainbow Haven, a 10-room resort and marina less than 50 ft. from Lake Taneycomo, is considered a high-risk property in the area's flood plan. Such properties are the target of the 2012 Biggert-Waters Act, designed to reform the National Flood Insurance Program.

The act ends many of the insurance subsidies in an effort to accurately reflect risk through premiums. But it means Craig Hicks, the owner of Rainbow Haven, will have to pay more than $42 thousand to cover his insurance last year. Last year, his premiums were less than $5 thousand.

"The profits weren't much," he said. "But it was manageable and you could grow the business. But we can't grow past $42 thousand."

In the next five years, Hicks' premiums will increase 25 percent each year, until they reflect what the government considers the market rate for the insurance. By then, Hicks will have paid a sum nearly equal to the appraised value of his property.

He said the rate increases will force him to choose between paying on his business loan and covering the mandatory flood insurance premium.

"I think their intention of the law is good," he said. "I agree, something has to be done that is equitable for everybody in the country. But I don't think this is the solution."

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