Flood insurance rates could spike as homeowners recover from Ida

Flood insurance premiums are set to rise for hundreds of thousands of Louisianans, including many of those whose homes and businesses were destroyed by Hurricane Ida last month and by Hurricanes Laura and Delta last year.

Louisiana's two U.S. Sens. Bill Cassidy and John Kennedy are asking President Joe Biden to delay the Federal Emergency Management Agency's implementation of its new pricing schedule, known as Risk Rating 2.0, for the National Flood Insurance Program.

"Risk rating 2.0 is set to go into effect Oct. 1 while many policy holders are still recovering from Ida," Cassidy said in a conference call with reporters this week. "(President Biden) should direct FEMA to stop implementation if not postpone it."

Implementation of the new rate schedule was already delayed once in 2019 for two years.

Cassidy said about 500,000 Louisianans currently have flood insurance policies. FEMA said 77 percent of policies will increase in cost, while 23 percent will decrease in the first year.

"Now these aren't rich people ... with a home on the beach getting subsidized flood insurance," Cassidy said in a press release. "These are middle-income families and working families whom the president ... pledged not to increase the cost on those earning less than $400,000 a year. These folks don't make $400,000 a year, they make far less. They have a hard time paying their gasoline bill or their food bill with the inflation we've had recently and now they're about to be socked with a Risk Rating 2.0."

FEMA said the new rate plan "leverages industry best practices and cutting-edge technology" that will allow it to apply rates that are more equitable and fair because they will be based on individual structures rather than flood maps.

The agency said annual increases will be capped at 18 percent on "most" policies, but Cassidy's staff said constituents have reported anecdotal increases of considerably more than 18 percent.

Cassidy and Kennedy, both Republicans, and a group of their colleagues sent a letter this week to FEMA Administrator Deanne Criswell requesting a postponement.

"We write to urgently request that you delay the new FEMA National Flood Insurance Program," they wrote.

New policies beginning Oct. 1 will be subject to the new rating methodology. All remaining policies renewing on or after April 1, 2022, will be subject to the new rating methodology.

Cassidy said he is also concerned that the non-partisan Congressional Budget Office projects nearly 20 percent of policy holders will drop NFIP coverage as a result of Risk Rating 2.0, threatening the program's viability.

"At the end of the day, flood insurance should be affordable and accessible," Cassidy said.