Congress introduces bill to lower flood insurance prices [The Advocate, Baton Rouge, La.]

Jun. 22—WASHINGTON — As part of the legislation introduced Thursday to reauthorize the national flood insurance program for five more years, congressional sponsors included systemic changes that would lower premiums for many homeowners and businesses.

The National Flood Insurance Program Reauthorization Act of 2023 is sponsored by U.S. Sen. Bob Menendez, D-New Jersey. But he is joined by a broad bipartisan coalition of senators and representatives, including Sens Bill Cassidy, R-Baton Rouge, and John N. Kennedy, R-Madisonville, as well as Rep. Clay Higgins, R-Lafayette, over in the House.

About 4.7 million Americans buy the policies that pay for repairing water damage after floods and other natural disasters.

In Louisiana and elsewhere, the Federal Emergency Management Agency's new rate calculations, called Risk Rating 2.0, has dramatically increased the price of the policies for many. About 100,000 policyholders dropped their coverage, according to the Associated Press, and more are expected to do so because of higher prices, thereby weakening the program.

The legislation, known as NFIP-RE Act of 2023, would limit the price increases to 9%, down from 18%, help out low- and moderate-income homeowners and renters if prices get too high for them, and forgive interest payments on the debt that FEMA has accumulated because flood insurance revenues have been nowhere near enough to pay for damages incurred.

"Reforming the NFIP means making it affordable again," Cassidy said in a statement. "We need to ensure families are not priced out of the program."

Democratic Rep. Frank Pallone, of New Jersey, who along with Higgins is handling the legislation in the House, noted that FEMA's Risk Rating 2.0 is lowering costs for some, but it's causing thousands of households to drop coverage all together due to rate shocks.

"Millions of homeowners rely on NFIP as the only real option for flood insurance," Higgins said. "Forcing Congress to address the serious problems of Risk Rating 2.0 is a priority."

"Home builders in the Capital Region won't be able to build and sell homes if people can't buy them," said Karen Zito, president and CEO of the Home Builders Association of Greater Baton Rouge. "We need flood insurance policies that are transparent, accountable, and most importantly, affordable."

Over its half-century in existence, the National Flood Insurance Program has routinely stressed its reserves and relied on federal taxpayers to cover recovery costs. The program has $20.5 billion in debt, to which a million dollars of interest accrues daily.

For years, Congress members from interior states have complained about having to routinely repair coastal properties. Particularly galling, in their view, were the roughly 350,000 properties that had been flooded more than once but that NFIP restored each time.

FEMA stated that Risk Rating 2.0 would use enhanced "technological and mapping capabilities to determine and communicate a property's full flood risk." For most Louisiana homeowners and businesses, the pricing methodology translated into paying a little more or a little less for the annual policies.

But for many living in low-lying or flood-prone areas, even those protected by levees, premiums became so costly that homeowners and businesses couldn't afford the policies. Their properties lost value.

"Homeowners in the New Orleans area have seen their flood insurance rates double and even triple in the past few years, with more rate hikes to come," said Sandra Lindquist, President and CEO of the New Orleans Chamber of Commerce. "We need bold action by Congress to stop this."

The New Orleans Chamber of Commerce, Baton Rouge Area Chamber, Home Builders Association of Greater Baton Rouge, and Greater New Orleans, Inc., all issued statements in support of the legislation as did the National Association of Counties, the New Jersey Organizing Project, and the American Policyholder Association.

Kennedy added: "We must make sure that the NFIP works for the people who depend on it, and this bill would do that."

The legislation still must clear votes in a Senate committee and by the full Senate before the House can take it up.

The NFIP-RE Act of 2023 would:

— Caps annual rate increases at 9%.

— Provide means-tested vouchers for low- and middle-income homeowners and renters.

— Increase the maximum limit for Increased Cost of Compliance coverage to reflect the costs of rebuilding and implementing mitigation projects.

— Boosts funding for mitigation grants.

— Modernizes mapping to identify and reduce flood risks.

— Creates oversight measures for insurance companies.

— Provides FEMA with greater authority to terminate contractors that have a track record of abuse.

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