Homeowners fear astronomical flood insurance rate hikes; FEMA responds
FEMA’s Risk Rating 2.0 Program slated to begin in October
NEW ORLEANS (WVUE) - Some Louisiana homeowners say they are about to be hit with astronomical flood insurance premiums because of FEMA’s new Risk Rating 2.0 Program. But FEMA disputes statements that claims will rise for some by 1000%.
Ross Fayard is building a new home in Slidell.
“We’re building a house in Slidell and the builder called and said that he had heard with the new flood rates that it would insanely crazy and basically it would just totally annihilate any new construction on people that’s trying to build,” said Fayard.
Neighborhoods near water could see significant flood insurance hikes. Fayard is an insurance agent in Slidell and says he checked what the new rates are under Risk Rating 2.0.
“Our flooding policy was in effect and I had a great rate, it was only $796 but my rate was prior to October 1st, so I said let me just check it after October 1st, so I had my flood agent here with the family business check it and she came back and she says, wow, it’s pretty high, Ross,” said Fayard. “When she told me, I said what is it like a thousand, two-thousand and she goes what, a thousand percent rate increase; it went from$796 to $8,000 a year.”
U.S. Sen. Bill Cassidy, R-Louisiana agrees some property homeowners will be hard hit by the increase in premiums.
“I think their concerns are well-placed. Risk Rating 2.0 will allow premium increases even for those who’ve never flooded,” said Cassidy.
He said he knows of people in Lake Charles which is southwest Louisiana who have similar stories.
“Has never flooded, in Flood Zone X and their premium would go from $500 to $5,000, obviously there will be a lot of people who can’t afford premiums like that. That will cause them to drop their insurance, that will decrease the viability of the program. It is if they are trying to program NFIP to go into a death spiral,” said Cassidy.
But as it stands now the October 1 start date for Risk Rating 2.0 has not been delayed as Cassidy and some others in Louisiana’s congressional delegation have requested.
“We’re still pushing for that but correct, if they choose not to change their mind it can go forward but that said we’re pushing hard that they will delay, by the way we’re also putting in reforms that would put a cap on the amount of that the premiums can rise,” said Cassidy.
But FEMA disputes statements about a 100% flood insurance increase.
A spokesperson issued the following statement:
“Flood insurance rates, by law, cannot increase by 1,000%. Existing statutory limits on rate increases require that most rates not increase more than 18% per year. For more information please visit, Risk Rating 2.0: Equity in Action | FEMA.gov.”
This chart related to premiums under the new program appears on FEMA’s website.
Fayard acknowledges that because he already has a flood insurance policy his premiums would not increase to $ 8,000 per year immediately but instead over time given the annual rate hikes.
“I was reading on their website it’s going to be an 18% increase for people that have their policy prior to October 1st, so every year my premium is going to go up 18% until it reaches its maximum insurable interest,” Fayard stated.
Still, he says the increases new home buyers will face are daunting.
“That’s scary, you know, I mean I understand you have to protect your investment, you know, I mean, that’ s a lot of money,” says Fayard.
FEMA says Risk Rating 2.0 aims to deliver flood insurance rates that more accurately reflect flood risk and also ensure that the National Flood Insurance Program will be here for generations to come.
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