Flood insurance increases may have negative impact on real estate market

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SARASOTA FL,--- Homeowners with flood insurance are bracing for changes to the National Flood Insurance Program.

"Its a drastic increase it's really going to effect the retired clientele drastically," said Tony Grello.  He is one of many Suncoast residents worried about changes to the National Flood Insurance Program.  In 2012 congress approved the Flood Insurance Reform Act. It puts an end to federal flood insurance subsidies, which means come October 1st customers could see a 20% increase to their flood insurance premiums.

"I've owned this home for 22 years and I've never had a claim but not my insurance is going to go up 20 to 30%.  I don't think its fair." added Grello.

And, he isn't the only one who thinks the changes are unfair.  Governor Scott sent a letter to Senators Marco Rubio and Bill Nelson urging them to pass a law delaying the implementation of rate increases.  In that letter Scott also said,"This unfair consequence could devastate parts of Florida's real estate market, stymie our economic recovery and diminish the state's tax base.  Insurance agent Florence Conlan agrees, "Older charming Florida homes are not going to be able to sell because of the flood insurance," said Conlan.           

Flood insurance is required for all mortgages.  Conlan says changes to the National Flood Insurance Program would force the full unsubsidized flood insurance rate on homebuyers.  "When a seller is paying $1,900 flood premium and a buyer comes along and they get a quote for $9,000 they are not going to want to buy the house. They are not going to be able to pay for the flood insurance," Conlan added.

Those not purchasing a home would see as much as a 20 percent increase each year for the next 5 years --  until they are playing the full unsubsidized rate.

"Only the wealthy is going to be able to pay to live on the water. There's no way the average person who lives on the water can make that kind of a payments," said homeowner Nancy Grello. 

"You cant afford the insurance and we can't afford to sell our house, so I think its a double edge sword," said Tony.

Officials say only 20% of federal flood insurance customers will be effected by the rate changes but more than 35% of them are right in Florida.