LITTLE ROCK, Ark. (AP) — More than half of flood insurance policyholders in the tiny northern Arkansas city of Norfork face premium increases, but Mayor Jim Reeves says the hardship will be felt by everyone.
Norfork, population 500 and change, is located at the confluence of the White and Norfork rivers. Of its 77 policies, 48 face premium increases by as much as 18 percent for primary homeowners and a mandatory 25 percent for businesses and vacation homes.
The federal government had for years subsidized flood insurance on homes and businesses constructed in the days before there was a laundry list of rules about building close to the water. Premiums collected haven't been sufficient to cover the payouts, leaving the National Flood Insurance Program billions of dollars in debt.
In 2012, Congress passed a law requiring 1.1 million policyholders to start paying rates based on the true flood risk at their properties. The overhaul was scaled back in face of a public outcry, and President Barack Obama signed that measure into law on Friday.
"It's going to cut the market for houses down there, just not going to be able to sell them," he said.
The mayor said he is worried about property values if prospective home buyers are socked with the full price of flood insurance instead of the subsidized rates current homeowners pay.
"If you buy a house and the government is giving you a special rate on insurance, you don't think they're going to pull it away from you, (but) they are," Reeves said.
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