States say flood insurance battle should continue

TALLAHASSEE - Florida and other states are trying to fend off an attempt by the Biden administration to end a lawsuit challenging changes to the National Flood Insurance Program that have led to higher premiums for many property owners. Attorneys for 10 states and local government agencies in Louisiana filed a 44-page document Tuesday urging a federal judge to reject arguments that they lack legal standing to challenge the changes, which became fully effective April 1 after being phased in. U.S. Department of Justice lawyers filed a motion last month to dismiss the case.

Tuesday's document pointed to "crippling effects" of changes in the program, which is the dominant provider of flood insurance in the country. "Plaintiffs do not dispute that, under the legacy rating system (previous system), many individuals experienced slight annual increases as permitted under (a federal law)," said the document, submitted by Louisiana Attorney General Jeff Landry and joined by the other plaintiffs. "But policyholders have never seen rate increases like the ones they are seeing" under the changes.

The legal fight is playing out as areas of Florida's Gulf Coast clean up from flooding caused by Hurricane Idalia, which barreled up the gulf last week before making landfall in the Keaton Beach area of Taylor County. A document in the lawsuit said the National Flood Insurance Program included about 1.391 million Florida policies, with total coverage of nearly $367 billion. Many homeowners who have mortgages are required to carry flood insurance.

The lawsuit, filed in June in the federal Eastern District of Louisiana, centers on changes known as "Risk Rating 2.0: Equity in Action." Federal officials contend that the changes, which gradually started taking effect in October 2021, are designed to make the flood-insurance program "actuarially sound" and reflect the risks of each property.

"These changes all reflect best practices in the insurance industry, which is precisely what Congress charged FEMA (the Federal Emergency Management Agency) to do under the NFIA (National Flood Insurance Act)," Justice Department attorneys wrote last month. "Furthermore, the geographical distribution of premium payments has been stark: Under the legacy rating approach, taxpayers and policyholders in landlocked states were covering the cost of flood risk in a few coastal states. Risk Rating 2.0 charges every policyholder their fair share based on their property's true flood risk and thus accomplishes the stated purpose of the NFIA."

But the lawsuit alleges, in part, that federal officials violated a law known as the Administrative Procedure Act by making changes that were "arbitrary and capricious." In trying to prevent dismissal of the case, the plaintiffs raised a series of arguments about having standing to challenge the changes, including saying they will suffer economic harm "It (the overhaul) imposes unreasonable and unexpected costs across the board, and as a result, it imposes distinct and direct harms on each plaintiff," the document filed Tuesday said.

Along with Florida and Louisiana, other states in the case are Idaho, Kentucky, Mississippi, Montana, North Dakota, South Dakota, Texas, Virginia. While the National Flood Insurance Program dominates the market, a commentary released Friday by the AM Best financial-rating agency said an increasing number of Florida property owners are buying private flood-insurance coverage. "Given the rise in average pricing of flood policies provided through the National Flood Insurance Program, private flood insurance in Florida has seen notable growth, with the number of policies up 30% in 2022 from 2021," the commentary said.