Louisiana braces for shock of flood insurance stickers

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BATON ROUGE – Hundreds of thousands of homeowners in Louisiana, many of whom are still digging after the destruction of Hurricane Ida, will soon see their flood insurance bills rise.

But the federal government provides few details on the extent to which its rate recalculation will increase premiums beyond the first year.

Insurers, homeowners and politicians who get their first glimpse of the rising costs people in southern Louisiana and other coastal areas could see from the national flood insurance program are starting to sound the alarm bells. . They say people could end up being billed thousands more each year after full implementation, and they suggest that the Federal Emergency Management Agency will not share information on the cost of the premiums on purpose.

They say such increases add insult to injury for Louisiana residents who are still trying to recover from hurricanes Laura, Delta and Zeta of last year and Ida’s new stroke in August.

“These are working families who are trying to make ends meet, and suddenly they are no longer able to protect themselves,” said Republican US Senator Bill Cassidy.

Earlier:US Senator John Kennedy of Louisiana calls on President Biden to halt rising flood insurance costs

Cassidy, other members of the Louisiana congressional delegation and lawmakers from other coastal states have urged President Joe Biden’s administration to delay the changes, to no avail.

The flood insurance rate recalculation – which has been on offer for years – began Friday for people looking for new policies and begins April 1 for policies that are being renewed.

The National Flood Insurance Program, the only place most homeowners can get flood insurance, covered nearly 27,000 homes in Terrebonne and Lafourche for a combined value of about $ 7 billion as of August 31. , according to FEMA statistics.

Prices can vary widely depending on your risk. In Louisiana, the average policy costs $ 726 per year, according to an analysis released this spring by ValuePenguin, an insurance research firm. The average police cost Houma $ 583 a year and $ 619 in the unincorporated Lafourche parish.

In Louisiana, up to 80% of the 496,000 policies in the National Flood Insurance Program are expected to experience price increases in the first year. Most face an initial annual increase of no more than $ 120, according to the Federal Emergency Management Agency.

But details are becoming vague on how many people will see additional price hikes in the years to come, and how big they are.

Louisiana independent insurance agents and brokers have asked federal officials for rate tables that show long-term price changes.

“They said, ‘We haven’t got it all in place yet,’” said organization CEO Jeff Albright. “How to make this decision without having all the information? “

Republican U.S. Representatives Steve Scalise and Garret Graves wrote in a letter asking for a delay that a Larose owner looking for a new flood insurance policy was offered a premium annual fee of $ 572 to take effect September 30. When the police switched to October 8. To date, the annual premium has been quoted at $ 5,531.

FEMA says the new pricing plan – called Risk Rating 2.0 – will more accurately reflect the flood risks of individual properties, respond to climate change, and end long-standing program inequalities. The agency said the updated calculations reflect the first changes in scoring methodology since the 1970s.

“We can no longer ignore the fact that some of our policyholders are unfairly subsidizing other policyholders,” David Maurstad, FEMA senior executive for the National Flood Insurance Program, told reporters on Sept. 24, according to a report. call transcript.

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Homes and businesses located in areas considered to be at high risk of flooding should purchase flood insurance if they have government guaranteed mortgages. Some lenders also require flood insurance in other areas. Most of this coverage is provided through the federal program.

FEMA said the program has collected $ 60 billion in premiums over the past 50 years, but paid out $ 96 billion in claims.

Louisiana officials warn that the new rate calculations could exclude people in low-risk areas from the flood insurance program, hurting its creditworthiness. They worry that rate hikes will make it harder for some people to stay in their homes or sell them to others, hurting the housing market. And they say kick people out of the program will increase other federal disaster assistance costs.

Maurstad said Congress has capped most annual flood insurance rate increases at 18%, so existing policyholders cannot receive price increases beyond them.

“It becomes very unmanageable after these 18% increases have accumulated continuously for years to come. In four short years, the cumulative 18% increases almost double the premium,” said US Senator Bob Menendez, a Democrat from New Jersey who joined Cassidy in criticizing the changes.

Maurstad said half of all policyholders would reach full price plus after five years of premium increases. Another 40% will see their costs increase for a decade before reaching the new rate, he said. Others will take even longer. Properties that grandfathered to previous flood insurance rates if the risk calculation was changed for the area will forfeit this premium rebate.

“The only way to stop this is if Congress stops it, and at the moment I don’t know if Congress can agree on anything,” Albright said.

– The Houma Courier and Thibodaux Daily Comet contributed to this story.


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