Flood insurance costs spike

Doris Crary, who owns six properties in Scituate and Marshfield with her husband, says flood insurance is becoming unaffordable.
Jonathan Wiggs/Globe Staff
Doris Crary, who owns six properties in Scituate and Marshfield with her husband, says flood insurance is becoming unaffordable.

HULL — Property owners in flood-prone areas across the state are seeing up to 25 percent increases in their flood insurance premiums this year — and can expect similar hikes for the next four years — as a result of legislation geared toward making the federal program more financially stable.

“We are getting killed on this,” said Lois Stezelecki, owner of Hull Nantasket Insurance. “The average increase is almost $400, which is staggering. Everyone is complaining about it.

“That’s the price you pay if you want to live near the water, but it is out of control,” she added.


The increases started taking effect for some property owners in January, and will roll out at varying times and varying amounts for some of the approximately 60,000 policy holders in Massachusetts, according to Richard Zingarelli, the state coordinator for the national flood insurance program.

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The changes affect thousands of people in coastal communities such as Hull, Marshfield, Quincy, and Scituate, according to statistics from the Federal Emergency Management Agency, which administers the insurance program.

Hundreds of residents in land-locked communities like Brockton, Dedham, and Stoughton also are affected because of flooding risks from rivers or ponds.

“It’s complicated, [but] for pretty much all policies, the premiums will be going up,” Zingarelli said. He said the average annual premium in Massachusetts currently costs $1,160.

An added complication is that the federal government is redoing the maps that show which properties are in flood-prone areas — triggering requirements for flood insurance. While final figures aren’t available, “there is generally more increase than decrease” in the number of parcels that will be included in the flooding zones, Zingarelli said.


For example, Marshfield Town Planner Paul Halkiotis said the new map means he’ll need flood insurance for the first time.

“Historically, the flood insurance maps have always been very difficult to interpret, but I think my house is now in” the 100-year flood zone, Halkiotis said. “I’m in this boat with everyone else.”

Congress created the flood insurance program in 1968, to provide coverage not available privately. FEMA reports the program currently has about 5.6 million policies nationwide, covering about $1.3 trillion in property in almost 20,000 communities that have adopted rules aimed at lessening flood damage.

“This program, in theory, is supposed to be self-sufficient. It’s supposed to charge enough in premiums so it wouldn’t be a burden on the taxpayer,” said FEMA’s New England insurance specialist, Robert Desaulniers.

However, catastrophic damages starting with Hurricane Katrina in 2005, and more recently from Hurricane Sandy in 2012, decimated the program’s finances, according to a February 2013 report by the Congressional Research Service; the report estimated the program’s debt at more than $20 billion.


Congress passed the Flood Insurance Reform Act of 2012 to deal with the financial crunch — primarily by increasing costs to policyholders.

“The new law eliminates some artificially low rates and discounts which are no longer sustainable,” FEMA said in a fact sheet issued in March. “Most rates for most properties will more accurately reflect risk.”

The most immediate changes are for homes built before a community adopted flood plain ordinances or received federal flood zone maps, according to Desaulniers. Those buildings have been charged rates lower than their actual risk would allow, he said.

Starting in January 2013, homes in that category that are not primary residences will see their insurance premiums go up 25 percent annually — until the rates reflect actual risk, an estimated four to five years, he said. FEMA defines a primary residence as one lived in 80 percent of the year.

Starting in October 2013, 25 percent increases will kick in for any business built before a community joined the flood program and any home in that category that has experienced “severe repetitive loss” from flood damage.

Desaulniers said FEMA doesn’t yet know how many properties will be affected locally, although he expects the number will be high since New England has the oldest housing stock in the country.

Regardless of when a property was built or whether it has suffered flood damage in the past or is a primary or second home, starting Oct. 1 all in the federal flood insurance program will see their bill go up at least about 5 percent to help build a reserve fund for the program, he said.

And in 2014, the program will start phasing out its “grandfathering” policy, which charges premiums based on the flood maps in effect when the policy was first issued.

“These increases, in theory, are to get the premiums to an accurate level, so that the deficit won’t keep on building,” Desaulniers said. “These are where they think the rates should be, and they’re going to get to them gradually. Although, if you’re getting the bill, you might not think it’s gradual.”

Officials in the peninsula town of Hull, where about half of the households carry federal flood insurance, are so concerned about the potential impact on residents that they’re asking the state attorney general to investigate.

“A significant number of property owners will see very steep increases in flood insurance over the next couple of years,” said Hull Town Manager Philip Lemnios. “Initially it affects second homes, but eventually it will affect everyone. We’re going to be petitioning the AG’s office to take a look at it, to see if there’s anything that can be done at the state level.”

Anne Herbst, Hull’s conservation administrator, said most local residents pay from $2,000 to $5,000 annually for flood insurance and 25 percent increases will hurt.

“Particularly for people on fixed incomes or more moderate incomes — which is a good percentage of Hull’s population — [those increases] are going to be pretty difficult for people. It’s going to be a really big deal,” Herbst said.

In Marshfield, where nearly 1,400 residents have federal flood insurance, town officials plan to hold a public hearing to let people know about the changes, according to Town Administrator Rocco Longo.

“It’s not a surprise, if you start thinking about all the costs from all the damage from storms,” Longo said. “Unfortunately, people are not going to be happy. And people will be surprised by the [expanded] area that has to get flood insurance.”

Among those unhappy with the new rules is Doris Crary, who owns six properties in Scituate and Marshfield with her husband, Dennis Badore. They put their oceanfront Scituate home on 23-feet-tall pilings to protect it and reduce the flood insurance premiums. She said her premiums will go up.

“I’ve paid [flood] insurance for 40 years and I’ve paid in more than I’ve ever got out. They’re restructuring it to make it unaffordable,” she said.

Zingarelli recommended that people talk to their insurance agents to see how they will be affected and if they can do anything about it. “It’s a very complex issue,” he said.

Johanna Seltz can be reached at