The National Flood Insurance Program, the only source of coverage for 2.1 million Florida households, will raise its rates by an average of 5 percent in October and maybe as much as 20 percent in high-risk areas over the next few years.
Federal officials also have told Florida insurance agents they can no longer provide discounts of up to 15 percent for their customers.
The looming increases are another jolt to home ownership in the state, especially in coastal areas or along inland waterways near sea level, where lenders cannot finance a mortgage without flood insurance. Some of the riskiest areas may even be excluded from coverage, making further development untenable in those parts of the state.
Higher rates are inevitable as Congress lumbers toward revamping the insurance program, which is mired in more than $18 billion of debt.
"People who receive the most subsidies in risky areas will see big premium increases, probably phased in," predicted Eli Lehrer, national director of the Center on Finance, Insurance and Real Estate at the Heartland Institute in Washington. "Rates have to go up. The real question is: Will the program be sustainable? It cannot continue at the rates it has now."
The impact is especially significant in Florida, home to 2.1 million of the nation's 5.6 million flood insurance policies.
The most vulnerable areas to flooding are on the southern tip of the peninsula below Lake Okeechobee and along the Atlantic coast east of Orlando.
The Federal Emergency Management Agency has informed Florida insurance companies that as of Oct. 1 they will no longer be able to provide "rebates," or discounts that have sliced premiums for some customers by as much as 15 percent.
Ending rebates means that many Floridians will pay more, said Jerry Wahl, president of Statewide Condominium Insurance.
"Times are tough," he said, "and we believe all businesses should be permitted to conduct operations in accordance with Florida statutes."
Florida holds 37 percent of policies nationwide.