The impact of newer, actuarially sound National Flood Insurance Program rates will mostly be felt by lower- and moderate-income homeowners, and the new rates will not pay off the program's debts, a FEMA official said today.

In a wide-ranging briefing on the Biggert-Waters Act—the law that extended the NFIP for five years—Edward Connor, deputy associate administrator for the Federal Insurance and Mitigation Administration, the FEMA sub-agency that manages the NFIP, estimated that only 1.1 million of the 5.5 million homes in the NFIP will be affected by the phase-out of subsidized rates over four years mandated by the new law.

But while he contends that the new rates will not provide enough money to pay off the NFIP's debt, he says it will provide greater stability to the program.

Connor also said that people on subsidized rates who drop out of the program because they don't want to pay the higher rates will be forced to pay the actuarial rate if they decide to rejoin the NFIP in the future.

Connor deflected responsibility for the higher rates when responding to a comment by a reporter from a Gulf Coast-area media outlet, who contended that people in that area believe the agency is raising rates for people with so-called "serial claims" because it wants to force them out of their communities. His response was, "All these changes were mandated by Congress, not the agency."

Connor acknowledged that the impact of the new rates will mostly be felt by moderate and lower-income homeowners, and will also mean higher premiums for those in areas hit by Sandy who will be required to elevate their properties in order to retain their existing rates.

But he said dropping out of the program won't work because flood insurance in areas prone to flooding is required for those who have federally-insured mortgages.

"If you have a mortgage that is federal insured, and you drop your policy, the mortgage holder will force a policy on you that has a rate equal or higher than those charged by the NFIP," he said.

For those who own their homes and decide to drop their flood insurance, Connor said, depending on payments from the government, post-flood is not such a good idea. "Payments for those without flood insurance with a home worth $150,000 to $200,000 post-flood won't work," he said, "because the payments are unlikely to exceed $3,000."

Also during the briefing, Connor said customers who want to pay premiums on an installment basis will have a while to wait because the agency will have to go through a notice-and-comment process before creating the system.

Moreover, the Federal Emergency Management Agency has started work on studies about program affordability, privatization and reinsurance, 3 of the 16 studies it is mandated to undertake under the July 2012 legislation that provided long-term certainty for the NFIP.

"Those are the studies we think are priorities," said Connor.