Louisiana Congressional delegation united in skirmishes over National Flood Insurance Program

WASHINGTON — After a series of skirmishes over changes to the National Flood Insurance Program, Louisiana’s congressional delegation is showing a united front as negotiations heat up on Capitol Hill over a long-term reauthorization of the program.

An emergency package of federal disaster funding, which sailed through the U.S. House of Representatives on Thursday and is now awaiting action in the Senate, has bolstered their hand by defusing a potential showdown over the NFIP’s borrowing cap. The bill would wipe away $16 billion of the NFIP’s debt, freeing up cash to pay billions of new claims from hurricanes Harvey, Irma, Maria and Nate.

Without the debt forgiveness, the NFIP was hurtling toward insolvency, with its cash reserves exhausted and no permission from Congress to borrow more money. A number of staffers and members of Louisiana’s congressional delegation had worried that fiscal hawks on the other side of the bargaining table — who’ve pushed for substantial changes to the NFIP that would hike rates and limit access to coverage — would use the program’s dire financial straits to extract concessions.

Instead, Republican leaders in the House decided to provide debt relief without any strings attached.

That leaves Louisiana’s U.S. senators and representatives, who’ve remained largely on the same page about potential changes to the NFIP, in a strong negotiating position with less than two months remaining before the federally run program expires. The NFIP requires periodic congressional reauthorization.

The general agreement in the Louisiana delegation gives the state an advantage when it comes to protecting homeowners and businesses in the low-lying, hurricane-and flood-prone state, said Caitlin Berni, vice president of policy and communications for Greater New Orleans Inc., a regional economic development group that has focused extensively on flood insurance issues.

“I think we’re very fortunate as a state to have our members unified on this,” Berni said.

The state’s situation stands in contrast to situations in other states, such as Texas, where deep divisions exist over the future of the program. Several conservative budget hawks from Texas — most notably U.S. Rep. Jeb Hensarling, R-Dallas — have consistently pushed changes that would trim the program by kicking out structures that have flooded multiple times, restrict new policies and hike premiums.

Others in the Texas delegation have joined Louisiana lawmakers and those from other at-risk states in expressing alarm over how those types of changes would affect homeowners in higher-risk areas.

Both sides of the sharp divide in Congress over the National Flood Insurance Program largely agree that its current financial state is unsustainable and that changes are needed to put the program back on firmer footing.

While budget hawks like Hensarling have pushed for cutbacks to the NFIP, Louisiana’s delegation and others from flood-prone states are looking to shore up the program’s financial footing by growing it.

That means pushing for stricter enforcement of federal rules requiring flood insurance for home mortgages in flood zones and potentially encouraging — either voluntarily or with policy tweaks — others outside the highest-risk flood zones to buy in as well.

“The program would be flush with money if you had compliance,” said U.S. Rep. Clay Higgins, R-Port Barre.

“We’ve got to strike a balance between sustainability and affordability and I’m confident we can,” said Sen. John Kennedy, R-Madisonville, a member of the Senate Banking Committee, which oversees the program. “But in return for that, we need to ask the people who need the insurance to buy it. I’m not much for the nanny-state, but I’m very much interested in the American economy. You need to have this insurance if you flood.”

Changes being pushed by Louisiana’s delegation include requirements for companies handling NFIP claims to turn around decisions faster and streamline the process.

One particular sticking point in negotiations over the future of the program is the role of the private insurance market. Federal regulations currently make it difficult for private companies to offer homeowners flood insurance and the NFIP was created largely because of the reluctance of private insurers to take on flood risk at affordable rates, largely because of the difficulty of calculating risk and the massive wave of claims that can follow a devastating storm.

Most of Louisiana’s delegation express support — at least in theory — for reopening the flood insurance markets to the private sector. But concerns over how such changes would be rolled out have triggered opposition thus far to most efforts to make it happen.

A top concern is the risk of so-called “cherry picking,” where private insurers might swoop in and take on only relatively low-risk properties by offering rates lower than the NFIP currently does.

While that might benefit the homeowners who’d pay less for private coverage, it’d potentially leave the NFIP with a far riskier pool of policies — and fewer premium dollars pouring in to cover claims.

“Even though we love the policy, it has to be embedded with different options to provide coverage,” Sen. Bill Cassidy, R-Baton Rouge, said in a late-September interview.

Cassidy also noted that privatization, taken alone, would potentially cost political leverage. Fiscal hawks have strongly advocated private options — making it a potential bargaining chip when consumer-oriented reforms important to Louisiana are on the table.

“If you only pass the privatization, you lose your leverage to get the other parts in which are so necessary for the program to be whole,” Cassidy said.

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