Louisiana's challenge to new flood insurance rates can move forward, judge rules

While ruling that the lawsuit can move forward, U.S. District Judge Darrel James Papillion also declined a request to immediately intervene and halt the new system, known as Risk Rating 2.0, saying that would do more harm than good.

Papillion also limited the number of plaintiffs and claims that can be part of the lawsuit. Only the 10 states taking part in the suit as well as St. Tammany, Livingston and Washington parishes can now be included. Claims from a number of other parishes, municipalities, levee districts and other entities were dismissed.

A separate notice issued by the court in connection with the case encourages the states and federal government to try to reach a settlement.

Attorney General Liz Murrill, who had argued the case in court herself while still solicitor general, said in a statement "our fight is not over yet."

"We are disappointed in the ruling, which elevated the government's admittedly flawed program, over people who are facing the loss of their homes and their communities at the hands of FEMA," she said. "As we move through the next phases of litigation, we're hopeful the courts will recognize FEMA's unlawful behavior and hold it accountable."

FEMA, which oversees the National Flood Insurance Program, did not immediately respond to a request for comment.

Papillion, of the eastern district for Louisiana, explained his rationale for declining to intervene immediately, saying: "Any interest the public has in the need for federal agencies to follow the law is outweighed by the public's interest in the stability of the administration of the National Flood Insurance Program."

042323 Flood insurance rates

The lawsuit filed in June reflects deep concern from Louisiana officials that the flood insurance increases, combined with property insurance hikes, could provoke a raft of home foreclosures and gradually reshape parts of the housing market.

At a September hearing, Murrill called the new system "a hurricane" that was "catastrophic in its own right."

FEMA argues that the changes are necessary to better reflect the actual risk of each individual home and help set the deeply indebted flood insurance program on a financially sound path.

Projections released last year showed the average single-family home in Louisiana seeing a 134% increase. Especially flood-prone areas will see much higher increases, with Plaquemines Parish projected at the time to be hit with the state's highest at 545% on average. Orleans was projected to see 99% increases, Jefferson 150% and St. Tammany 126%.

The highest projected percentage increase in the nation at the ZIP code level in the April 2023 data was Plaquemines Parish's 70082, with average hikes of 1,098%.

Premium increases for existing policies are phased in over time at 18% per year. New policies are priced at the full rates immediately.

Risk Rating 2.0 began in October 2021 for new policies and April 2022 for renewals.

It uses an intricate algorithm to compute the premium, incorporating a range of data like cost to rebuild, distance from water, construction type and ground elevation. But much of the data is proprietary and not available publicly, leading to criticism that the new program lacks transparency.

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