In the Face of Flood Threats, Most Louisiana Communities Opt for Federal Flood Insurance | Insurify

It's been nearly 20 years since Hurricane Katrina struck Louisiana's coast, but the devastation the storm caused hasn't been forgotten.

Katrina ultimately ranked as one of the five deadliest hurricanes in United States history, killing 1,833 people and causing $108 billion (based on 2005 figures) in damage, according to the National Weather Service.

Much of the staggering damage Katrina caused stemmed from flooding. Residents who didn't carry flood insurance were left vulnerable in the hurricane's aftermath.

Standard home insurance doesn't cover flood damage. Instead, property owners must purchase separate flood insurance from a private insurer or federally through the National Flood Insurance Program (NFIP).

Communities in the state of Louisiana have a high rate of participation in the NFIP compared to other states. To date, 316 communities are enrolled in the program, and only 36 have chosen not to participate, most of them existing in low-risk areas.

It's this participation, while voluntary, that could be a valuable safety line when the next storm strikes Louisiana.

How the NFIP works

FEMA oversees the NFIP, which makes flood insurance available directly and through more than 50 insurance companies. NFIP participation is voluntary, and individual communities can choose whether to partner with the NFIP. Residents in communities that participate in the NFIP then have the option to purchase flood insurance through the federal program.

In some cases, a homeowner's mortgage company may require them to buy flood insurance if the home is in a high-risk area.

But, if a community chooses not to participate in the NFIP, residents in the area lose the ability to purchase flood insurance through the program. The community itself also loses the right to receive federal disaster assistance and federal loans for development in identified hazard areas.

To participate, communities must adopt a resolution of participation intent and follow FEMA guidelines. They must also submit a formal floodplain management ordinance that meets or exceeds NFIP criteria.

Louisiana at a glance: Participation is high

Louisiana residents are familiar with the danger of flood damage, and the enrollment of communities statewide into the NFIP demonstrates that.

A total of 316 Louisiana communities are enrolled in the NFIP, according to FEMA data. Thirty-eight have joined in the 20 years since Katrina.

Only 36 communities across the state have not enrolled in the program.

These participation figures far exceed states like Michigan or Missouri, which have 190 or more communities not participating in the NFIP.

"My guess is that the frequent flooding events and high claims data speak to why so many belong to the NFIP," Susan Veillon, statewide program manager with the Louisiana Department of Transportation and Development, told Insurify when discussing the state's high participation rates.

Of the parishes where communities have chosen not to participate in the NFIP, only Caddo Parish, in the northwest corner of the state, has a relatively moderate flood risk, according to FEMA data. FEMA also classifies the county as having relatively moderate community resilience, which measures a community's ability to rebound following a flood.

All the other parishes with multiple communities choosing not to participate in the NFIP have a flood risk index of low or relatively low.

Why do some communities choose not to participate?

Communities across the country can choose not to participate in the NFIP for many different reasons beyond just their flood risk.

Smaller communities that lack planning and engineering departments, for example, often find themselves without the staff necessary to create and manage a floodplain ordinance. Three of the communities lacking NFIP membership in Caddo Parish are Gilliam, Hosston, and Mooringsport, with populations of 115, 238, and 707, respectively.

Cost can also be a factor, as flood insurance is an extra expense that goes above and beyond a person's home insurance. This is particularly true in Louisiana, where home insurance rates have climbed 23% this year, according to Insurify's home insurance report. The median home insurance rate in the Pelican State is now $7,809 per year, the second-highest median rate in the country and $3,977 above the national average, according to Insurify data.

The median risk-based cost of insurance for Louisiana residents is $1,470 per year for NFIP coverage.

What's next? Options for consumers in non-NFIP communities

People who live in communities not participating in the NFIP and who still need flood insurance may have options through the private market. But not all insurers offer coverage in non-NFIP communities, and consumers should be aware that those that do may charge higher rates for this risk-based coverage.

Residents can also reach out to their community leaders to encourage them to enroll the community in the NFIP and join Louisiana's already strong list of participating communities.

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