BelmanInsuranceAdvisor.com is Concerned About Future Flood Insurance Premiums and the Affect they May Have on the Industry
New York, NY (PRWEB) July 20, 2013 -- Mortgage rates recently took a turn for the higher. They had been at historic lows until just a few weeks ago. According to Lisa Prevost of The New York Times, in an article dated 7/11/13, flood insurance rates will rise as well in the next few years in order to fall in line with mandates issued by Congress. Belman Insurance Advisor is very concerned as to how these two changes will affect the entire insurance industry.
FEMA is in the process of updating flood hazard maps. It will most likely take a couple of years to get them finished, but until then and in light of devastating climatic events like Hurricane Sandy, housing recovery is seeing a push-back, particularly in coastal communities. New mortgage laws mean that lenders have to, by law, take into account a person’s ability to repay the loan, throughout the life of the loan. This repayment calculation takes into account the taxes and all insurances on the property as well as the borrower’s liabilities (items like life insurance policies or auto insurance are usually not included in those calculations). The problem comes for lenders trying to calculate those payments – what will the insurance premiums be for flood coverage? How can they calculate the borrower’s ability to repay? Additionally, with the flood maps changing, chances are that properties that didn’t require flood insurance now will.
These changes will prove difficult for the industry. If, because of higher flood insurance premiums borrowers cannot prove payment ability, it means the number of homeowners’ policies may fall as borrowers won’t be able to purchase a home. That coupled with rising mortgage interest rates may prove very difficult indeed for the industry in the coming months and years.
Belman Insurance Advisor reviews a recent report regarding flood insurance rates and is very concerned about the ripple effects of increased mortgage rates and impending increases in flood insurance.
About Belman Insurance Advisor:
BelmanInsuranceAdvisor.com proffers perspective and advice for the insurance industry as a way to maintain profitability.
Belman Insurance Advisor, BelmanInsuranceAdvisor.com, (708) 320-8567, [email protected]
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