Sharp flood insurance hikes across south Louisiana detailed in new data

Overall, Louisiana is projected to see a 134% hike in rates for single-family homes on average, phased in over years, according to the data released by FEMA last week on its new system for setting rates. That compares to an average 104% increase nationwide, with the numbers including fees and surcharges.

That means the current average single-family home premium in Louisiana of $813 would rise to $1,904, increasing by 18% per year until it hits that target — a process that would take six years. Especially flood-prone areas will experience much higher hikes.

The data includes policies for single-family homes that had transitioned to the National Flood Insurance Program's new rating system, known as Risk Rating 2.0, by Sept. 30, 2022.

While that means the data remains incomplete, a significant percentage of homeowners are included, since Risk Rating 2.0 began for new policies in October 2021 and for renewals starting in April 2022. The projections may also change based on new factors, including those related to climate change.

The Louisiana projections are slightly higher than those FEMA previously provided to The Times-Picayune | The Advocate following a public records request. That data was based on 2020 projections, and showed average increases of 122%.

It was unclear what percentage of homeowner policies remained outside of the data. The data includes 284,095 policies in Louisiana, nearly 60% of all policies in effect in the state in September 2022.

Louisianans are more likely to hold flood insurance policies than residents of any other state.

Local officials have long pushed for the release of the information and welcomed the disclosure, but expressed deep concern over the effect the increases will have across south Louisiana. State Attorney General Jeff Landry, a leading candidate for governor, has called the new formula for setting rates "arbitrary and capricious." Landry is said to be preparing a lawsuit against FEMA over the changes.

"Unfortunately, significant rate increases in communities across the country remain largely unexplained," the Coalition for Sustainable Flood Insurance, which is led by the local economic development organization GNO Inc., said in a statement.

FEMA defended the new system in response to questions.

"Risk Rating 2.0 not only corrects pricing inequities for close to a million policyholders living in low- and moderate-income communities, but it also positions the program for the future by making the new rating system adaptable to the challenges posed by climate change," NFIP senior executive David Maurstad said in a statement.

'American dream'

While low-lying Louisiana will be especially hard-hit, it is not the state with the highest percentage increases in the data. That title belongs to Maine, with Louisiana at No. 5, also trailing West Virginia, Hawaii and Mississippi. Louisiana has by far the highest number of policies among the top five states, however. Gulf Coast neighbors Florida and Alabama will be hit with the next-highest increases on average after Louisiana.

Some of the expected hikes are punishing. At the top of the list is Plaquemines Parish, where homes are projected to see the sharpest increases by far in Louisiana at 545% on average, from $842 annually to $5,431.

The parish, which straddles the Mississippi River down to its mouth, is at particular risk of flooding. FEMA's data says 99.96% of the parish's 2,413 policies included in the analysis are at risk of storm surge.

Plaquemines also includes the ZIP code with the highest projected increases in the nation. Homes in the Pointe a la Hache area, in the 70082 ZIP code, which has 18 policies included in the data, are projected to see a 1,098% boost, to an average annual premium of $8,058 from the current $673.

The parishes following Plaquemines include St. Mary at 386%, Lafourche at 321%, Terrebonne at 305% and Vermilion at 255%. Orleans is slated to see 99% increases on average, Jefferson 150% and St. Tammany 126%.

While St. Charles Parish is projected to see major increases of 239%, a closer look at specific ZIP codes reveals eye-popping numbers in some sections. Increases for the 70030 ZIP code, in the Des Allemands-Bayou Gauche area, are put at 752%.

St. Charles Parish President Matthew Jewell said the rate for his own home in Luling is projected to rise around 400%, to nearly $5,000 per year. He said his parish, like others, is supplying the attorney general with details in preparation for the lawsuit against FEMA. Jewell has also testified in Congress and spoken with FEMA Administrator Deanne Criswell on the issue.

"The people who are going to be hit first are the poorer people," he said. "The people who have achieved their vision of the American dream. They got into a house, they make just enough money to provide that home for their family and live in a good school district and make those ends meet, maybe save a little bit of money."

Jewell, like other local leaders, is calling for more transparency from FEMA on how the new rates are being set. He accuses the agency of not sufficiently accounting for levees and other flood protection measures communities have built.

FEMA disputes that and says the new system is fairer for everyone. They say it is designed to accurately price the risk of each individual home rather than rely on the imperfect system of flood maps that had been used in the past.

'Sounding the alarm'

The new system marks the biggest change in how rates are set in the NFIP's 55-year history. It is intended to measure the flood risk of individual properties by incorporating a range of factors, including rebuilding cost, distance from water, levee strength, height of the building's first floor and ground elevation.

The data is then fed into a complex algorithm to determine a rate. Critics of the new system say that process is too opaque to allow homeowners to understand it. FEMA says it has provided hundreds of briefings to explain the new system and has posted technical details of its methodology online. Some of the data employed is however proprietary and not publicly available.

The system is designed in part to stop the long-criticized practice of older, less expensive homes essentially subsidizing lower rates for pricey beachfront houses. But local officials in Louisiana point out that nearly everyone lives near water here. Many of those on the coast are working-class families, not jet-setting vacationers, they note, including those employed in the internationally important energy sector.

FEMA says rates rose each year under the old system and that around 20% of policyholders are seeing decreases under the new one. But increases in the old system averaged around 10% per year, according to FEMA, and decreases under Risk Rating 2.0 are occurring only once, in the first year.

Risk Rating 2.0 is meant to bring the flood insurance program more in line with private-sector practices by setting actuarially sound rates. That would help set the program on a more sustainable path, since it currently carries debt of around $20 billion. Much of that was the result of flooding following the Hurricane Katrina levee failures, which produced more than $16 billion in paid claims.

Peter Waggonner, GNO Inc's public policy manager, said Congress should cancel the NFIP's debt, allowing it to start fresh. The CSFI coalition his organization leads also favors assistance for homeowners in need, based on income, as well as a calculator that residents can use to determine how their rates can be adjusted under the new system. Louisiana's congressional delegation has offered a range of proposals as well.

FEMA also favors an assistance program and has proposed it to Congress, which must approve it. The agency said it will "continue to work with Congress to examine flood insurance affordability options."

Jewell said he and other parish leaders have been "sounding the alarm."

"It's going to kill southeast Louisiana," he said.

Jeff Adelson contributed to this report.