Group raises concerns over flood insurance proposals


A group fighting to keep flood insurance costs manageable for residents of Louisiana and other states says it is concerned about a reform measure beginning to gain support in the U.S. House.

“The House legislation is the biggest concern right now and it’s the only thing that’s moving,” said Caitlin Berni, vice president for policy and communications with Greater New Orleans Inc.

She also represents an offshoot of that group called the Coalition for Sustainable Flood Insurance. It was formed after flood insurance reforms passed by Congress as part of the Biggert-Waters Act of 2012 threatened to cause policy costs to skyrocket, leaving them out of reach for thousands of residents across the Louisiana coast.

Lawmakers in both the House and Senate have introduced proposals that would renew the National Flood Insurance program before it expires Sept. 1 and make changes to keep it solvent.

Critics say the program, administered by FEMA, keeps rates artificially low and encourages people to live in harm’s way at taxpayers’ expense. The imbalance, coupled with payment of massive claims for disasters such as hurricanes Katrina, Sandy and Matthew as well as last summer’s Louisiana floods, have left the program an estimated $24.6 billion in debt.

Berni has testified before the Financial Services Committee, which has been working to combine several proposals into a bill it can send to the House.

One of the coalition’s major concerns is that current proposals would phase out “grandfathering.” As it stands, homeowners who have built to FEMA flood standards are able to maintain lower insurance costs if new elevation maps put them at higher risk of flooding.

“This is exactly what caused so many of the crazy premium increases we saw after Biggert-Waters, and it’s going to potentially play out again if the House package is put into law,” Berni said.

The coalition wants assurances that the lower rates would apply to people who switch to private flood insurance policies that would be allowed under House proposals.

In addition, the current House plan would also ban new construction in certain flood hazard areas, she said, which could stymie development and damage economies of coastal parishes.

Opening flood insurance to private companies also raises concerns, she added.

“We don’t necessarily have concerns with the private market coming in,” Berni said. “We don’t want a scenario where there is cherry-picking, where the private market comes in and takes all the low-risk properties off the NFIP bill and leaves the NFIP with nothing but high-risk properties.”

Two Senate bills, one pushed by U.S. Sen. John Kennedy and one by Louisiana’s other senator, Bill Cassidy, would accomplish more of what the coalition advocates, Berni said. Both keep grandfathering and extend the program long-term. Cassidy’s bill would extend the program by 10 years, Kennedy’s six.

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