Louisiana suing feds over skyrocketing flood insurance rates

State Attorney General Jeff Landry announced a lawsuit against FEMA on Thursday over its new system for setting flood insurance rates, which is triggering steep hikes for Louisiana homeowners.

Louisiana is joining nine other states as well as a list of parishes, municipalities and local authorities in the lawsuit, which Landry said was being filed on Thursday in federal court in New Orleans. Landry has called the new formula "arbitrary and capricious," and on Thursday said it was a "disaster on its own."

Louisiana homeowners are projected to see average increases of 134%, phased in over years, in the new system, though those in especially flood-prone areas will see much higher hikes.

The highest projected percentage increase in the nation is in Plaquemines Parish's 70082 ZIP code at 1,098%, to an average annual premium of $8,058 from the current $673.

FEMA says the new system is fairer for everyone since it calculates the risk of each individual home through a range of factors, including distance from water, construction type, ground elevation and rebuilding cost.

But there have been concerns over unintended consequences in Louisiana, where nearly everyone lives near water and many of those families are working class. Louisiana has the highest number of policies per capita with the National Flood Insurance Program.

There are also concerns over transparency in how the rates are being set, with Louisiana officials saying they don't believe levees and other flood protection measures are being appropriately accounted for.

The aim of the changes is also to set rates on an actuarially sound basis and to help put the NFIP on a sustainable financial path, with the program in debt to the tune of $20.5 billion.

Premium increases are limited to 18% per year, but those hikes compound over time, adding up to substantial totals for many in Louisiana.

Landry made the announcement at the offices of local economic development organization GNO Inc., which leads the national Coalition for Sustainable Flood Insurance.

This is a breaking news story. Please check back to nola.com and theadvocate.com for further updates.