"We need to reform the NFIP to ensure it is affordable and accessible for the homeowner, accountable to the taxpayer and sustainable for the future," said Sen. Bill Cassidy, R- La. "This bill is full of real solutions to achieve these goals."
Cassidy, John Kennedy, R- La., and Bob Menendez, D- N.J., are among a bipartisan group of nine senators sponsoring the National Flood Insurance Program Reauthorization and Reform Act.
The lawmakers say their goal is to ensure the program is sustainable financially, accountable to taxpayers and affordable to policyholders. The bill will place guardrails on FEMA's new Risk Rating 2.0. system, which stands to drastically increase many Americans' flood insurance costs, the sponsors say.
"Roughly half a million Louisianians depend on flood insurance to safeguard their homes and businesses," Kennedy said in a news release Tuesday. "The National Flood Insurance Program protects workers and families who need to take care of their biggest investments — their homes. We have to extend this program and protect it from political games."
The bill emphasizes flood prevention measures and addresses issues with the Federal Emergency Management Agency's management of the program, the lawmakers said. Those issues include low participation rates, inaccurate flood maps, indifference to the benefits of flood control infrastructure such as levees, unsustainable debt costs and contractor profiteering.
FEMA enacted Risk Rating 2.0 for new policies Oct. 1 and for renewals starting next April. The plan aims to bring insurance costs more in line with the actual risk of flooding and help reduce the program's debt, which hovers at just over $20 billion.
FEMA and insurance industry researchers say most of Louisiana's nearly 500,000 policyholders will see their costs increase, but not by much, at least for now.
Specifically, FEMA estimates 20% of the state's policyholders will see immediate cost decreases. Seventy percent will see their costs increase by up to $120 a year, 7% by up to $240 a year and 3% will see insurance prices rise by more than that.
Risk Rating 2.0 guidelines cap cost increases at 18% a year.
Louisiana lawmakers and others have complained that those increases, when compounded, will double the cost of flood insurance every four years, making policies unaffordable for many homeowners.
U.S. Reps. Steve Scalise and Garret Graves, Republicans who represent the Houma- Thibodaux area, sent a letter Sept. 14 to FEMA officials urging the agency to delay the new rates. The letter says a Larose homeowner seeking a new flood insurance policy was quoted a $572 annual premium to take effect Sept. 30. When the policy shifted to an Oct. 8 start date, to account for the standard 30-day wait period before coverage takes effect, the yearly premium was quoted at $5,531.
The NFIP, the only place most homeowners can get flood insurance, covered nearly 27,000 homes in Terrebonne and Lafourche with a combined value of roughly $7 billion as of Aug. 31, FEMA statistics show.
Prices can vary greatly depending on your risk. In Louisiana, the average policy costs $726 a year, according to an analysis released April 27 by ValuePenguin, an insurance research company. The average policy cost $583 a year in Houma and $619 in unincorporated Lafourche.
Among provisions, the Reform Act would:
— Reauthorize the program for five years instead of Congress' repeated short-term approvals.
— Cap annual cost increases at 9% instead of the 18% under Risk Rating 2.0.
— Provide means-tested vouchers for millions of low- and middle-income homeowners and renters if their flood insurance costs become overly burdensome.
— Freeze interest payments on the NFIP's debt and reinvest savings toward flood prevention efforts to reduce risk.
— Cap the fees private companies receive for administering flood insurance policies at the same rate FEMA pays to service its own.
— Provide more money for flood-prevention programs that are proven to reduce the claims FEMA pays for damage.
— Increase funding for FEMA to produce elevation maps it uses to calculate risk and, as a result, the cost of flood insurance policies. The goal is to make flood maps more accurate so they lead to more resilient building and wiser land use.
— Courier and Daily Comet Executive Editor Keith Magill can be reached at 857-2201 or keith.magill@houmatoday.com. Follow him on Twitter @CourierEditor.
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