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Last spring, the Federal Emergency Management Agency jolted southwest Florida communities – most of which were still recovering from Hurricane Ian in 2022 – when it announced that the areas would lose their community discounts on flood insurance due to improper rebuilding in flood zones.

Over the next few months, local officials in Lee County and the Fort Myers area scrambled to produce documentation showing that many structures were, in fact, rebuilt properly, meeting elevation and other requirements, or were not required to comply.

FEMA last month relented and announced that four of the five flagged communities would be able to keep their 25% flood insurance discounts, provided they address some issues and pledge to rebuild better in the coming years.

Except for the 5,000-population Fort Myers Beach.

In a Nov. 21 letter, FEMA’s regional administrator told town leaders that they had failed to meet three of five criteria needed to retain the National Flood Insurance Program discounts for property owners. The town had submitted a plan to address deficiencies and ensure compliance, but it had not adequately assessed rebuilding after Hurricane Ian and had not removed “noncompliant structures that were incorrectly permitted and should not have been placed in the Special Flood Hazard Area,” the FEMA letter explains.

“Effective April 1, 2025, the town will be retrograded to a Class 10 in the Community Ratings System and policy premium discounts will not be applied to new or renewing policies,” a FEMA spokesperson said in a statement to Insurance Journal. “The Town is not eligible to reapply to the Community Rating System for a higher-class rating until the Town’s probationary period is concluded, the Town is in full compliance with the minimum requirements of the National Flood Insurance Program, and at least two years has passed since the Town was placed in probationary status.”

The beach town now faces a $50 fine for each flood policy opened or renewed, going forward; the loss of the discount; and a two-year probation, the Miami Herald and other news outlets . If Fort Myers Beach allows improper rebuilding after the recent hurricanes, residents of the beleaguered island could lose National Flood Insurance altogether, stymying building and development, news sites reported.

“The Town is not eligible to reapply to the Community Rating System for a higher-class rating until the Town’s probationary period is concluded, the Town is in full compliance with the minimum requirements of the National Flood Insurance Program, and at least two years has passed since the Town was placed in probationary status,” reads the letter from FEMA Regional Administrator Robert Salman.

Town officials did not comment to the Herald.

Some in the industry have welcomed FEMA’s action as a sign that the agency is finally cracking down on communities that allow non-elevated building in flood zones, which can lead to repeat flood insurance payouts.

The FEMA rule requires that a home with storm damage that exceeds 50% of the value of the home to be demolished and rebuilt to newer standards and current building codes. Until recently, though, many cities had not strictly followed that rule and FEMA has not fully enforced it, due in part to the high cost to homeowners and push back from state officials, critics have said.

Top photo: Part of Fort Myers Beach after Hurricane Ian in 2022. (Adobe Stock images)

Related: More Than 30,000 Homes, Many in Florida, Now Face Triple Threat of Flood, Wind, Wildfire

Topics Flood