Jim Beam column: Flood insurance costs rising

The cost of my National Flood Insurance Program (NFIP) coverage has doubled over the last six years. However, it's still affordable. Unfortunately, the same thing can't be said for homeowners who live closer to the coast in Louisiana and in other states.

The city notified me some years ago that my home was no longer in a high-risk flood zone, but I have continued to buy flood insurance. The annual cost was $450 in 2018 and it has gone up to $971 this year.

My wife and I bought our home for $85,000 in 1982 and its replacement cost is now $286,000 for the building and $215,000 for personal property.

Many Louisianans who live closer to the coast have much higher home replacement costs and some of them are having to drop their flood insurance coverage because of increasing costs.

Members of the state's congressional delegation have been strong advocates for reducing the cost of NFIP, but it has become a tough sell in Congress.

U.S. Sen. Bill Cassidy, R-Baton Rouge, is perhaps our strongest advocate. In an April 16 speech to the Senate, he demanded that Congress keep flood insurance affordable.

Cassidy met with Louisiana Realtors at a June roundtable. The Realtors discussed their concerns about the rising cost of flood insurance in Louisiana, saying it is one of the top barriers to home ownership in the state.

During a Senate Banking Committee hearing, Cassidy told members of the committee that FEMA's Risk Rating 2.0 program is causing the cost of some policies to rise by over 1,000%. Policyholders are dropping their coverage because flood insurance is higher than their mortgage payments.

In another Senate speech in June, Cassidy shared some individual Louisiana stories on flood insurance. He also appealed to his fellow senators for help.

"I urge my colleagues to come talk to me about NFIP reauthorization and reform," Cassidy said. "We are working on bipartisan legislation that fixes this mess, makes Risk Rating 2.0 transparent, and makes flood insurance affordable again. Let's discuss a way forward."

Cassidy said a resident in Larose switched from NFIP to private insurance that costs $2,200 dollars a year, which isn't cheap either. However, if he had stayed with NFIP the cost would have been between $4,500 and $5,000, and that was two years ago. And his house is six feet above sea level and his property has never flooded.

NFIP ignores a home's height, Cassidy said, because the program groups homes by zone instead of by elevation.

A retired couple living on Bayou Lafourche near Raceland dropped their NFIP policy because their premiums were rising from $500 to $2,400 annually. Their son who lives just down the road from them in Raceland has seen his flood insurance increase from $500 to $6,300.

Cassidy said a Korean war veteran and his wife — both in their 80s — took out a reverse mortgage on their home several years ago to help pay medical bills. They live behind a 12-foot levee, but their reverse mortgage required them to carry flood insurance.

That NFIP coverage is costing them $6,500 a year and that's on top of what they pay for homeowner's insurance. Cassidy said if their flood insurance continues to rise, they will need to give up their home.

Flooding is devastating families across the country, he said, "and in states that don't typically make you think 'flooding.'" He said Alabama, California, Florida, Louisiana, Mississippi, Missouri, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas and Virginia are all states that have had more than $1 billion in NFIP claims since 1978.

Cassidy said, "FEMA itself forecasted that over 20% of policyholders would leave the program within 10 years. We are setting the program up for collapse. Congress needs to do something before it's too late."

The NFIP was established in 1968 to help those living in flood-prone areas and news reports have continually said it has never been on a sound financial footing. All Congress has been doing is constantly renewing, not reforming, the program.

FEMA defends its new program, and why Congress continues to resist reforming the system is difficult to understand. As Cassidy said, over one-fourth of the states in this country have experienced major flooding problems.

Jim Beam, the retired editor of the American Press, has covered people and politics for more than six decades. Contact him at 337-515-8871 or [email protected].

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