Much remains to be determined after FEMA announced Monday (March 18) it will tie premiums to the actual flood risk facing individual properties, instead of to whether the property is inside or outside a much broader "100-year" flood plain. The new rules, not yet written, are to take effect in October 2020.
"The devil's in the details," Michael Hecht, president and chief executive officer of GNO Inc., said Tuesday. The regional economic development group has taken a lead role in voicing the New Orleans area's interests as the flood insurance program has been scrutinized in Washington.
"On the one hand, more accurate mapping is a good thing and one we have been advocating for years," Hecht said. "On the other hand, it's critical that we understand how the risk is going to be calculated and how affordability is going to be preserved."
FEMA's National Flood Insurance Program underwrites almost all flood insurance in the United States, about 5 million policyholders. It's especially important in low-lying coastal states such as Louisiana, but major disasters over the past 14 years — Hurricane Katrina and the Louisiana Flood of 2016, among them — have driven the program into debt of more than $30 billion.
Reformers demand changes to eliminate the debt to taxpayers and discourage building in high-risk areas. Coastal interests anguish that rising premiums will cripple property owners.
Congress is in a pickle. Having failed in the past 17 months to enact long-term changes, it's passed 10 temporary extensions of the existing program, the current one expiring May 31.
Now FEMA is moving forward on its own, but President Donald Trump's administration can expect lawmakers to try to influence the rules.
"My first priority is to ensure any proposal changing the National Flood Insurance Program is sustainable and affordable for Louisiana homeowners," Sen. Bill Cassidy, R-La., said. "It needs to accurately account for local flood protection structures when determining the risk profile for homes."
A spokeswoman for Rep. Steve Scalise, R-Old Jefferson, said: "While Rep. Scalise welcomes reforms to the NFIP that bring more transparency to how FEMA sets flood insurance rates and improves the mapping process, he would be strongly opposed to efforts by FEMA that would result in massive rate shocks that would decimate communities in south Louisiana and harm families and small businesses."
Hecht said two things seem clear even this early in the rule-making process:
- FEMA will calculate risk at the granular level of individual property, instead of whether the land is within a bigger area considered to have a 1 percent chance in any given year to flood. A briefing document the agency used in October offered the example of two houses in a 100-year flood plain: The first house, at the edge of that zone, would face a lower risk and see premiums fall 57 percent, while the second faces a higher risk and premiums more than doubling, Bloomberg News reported.
- The agency will use not only its own mapping but some calculations from the private sector. Those recognize not just sea level rise and surge from tropical storms but also rainfall.
Drew Broach covers Jefferson Parish politics and education plus other odds and ends. Email: dbroach@nola.com. Facebook: Drew Broach TP. Twitter: drewbroach1.
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