Louisiana lawmakers push for flood insurance rate hike delay
By: Deborah Barfield Berry | The Town Talk | 11/19/2013
WASHINGTON — Democratic Sen. Mary Landrieu of Louisiana led a bipartisan group of senators Tuesday in a colloquy on the Senate floor urging colleagues to support legislation to delay increases in federal flood insurance premiums.
The lawmakers hope to attach the measure as an amendment to a must-pass defense authorization bill.
“This is a national issue,’’ Landrieu said. “It’s not a Louisiana issue. It’s not a Gulf Coast issue.”
The lawmakers urged bipartisan, bicameral support for the Homeowner Flood Insurance Flood Affordability Act by Sens. Robert Menendez, D-N.J., and Johnny Isakson, R-Ga.
The legislation would delay the premium increases for about four years from the date of passage until the Federal Emergency Management Agency completes an affordability study. It would apply retroactively to rate hikes that took effect Oct. 1.
“This is just giving us time to get it right,” Landrieu said.
Supporters include 24 senators and 128 House members, including lawmakers from coastal areas and land-locked states.
“This is about to be a disaster for property owners,” said Sen. Roger Wicker, R-Miss. Wicker said the “dramatic, unaffordable” premium increases will “unfairly” hurt property-owners and small businesses in his state.
Under a 2012 law known as Biggert-Waters, premiums for policies with the National Flood Insurance Program are set to rise 25 percent each year for four years to make up for deficits caused by massive storms such as Katrina and to bring the program more in line with its real costs.
The program, run by FEMA, has traditionally charged premiums at about 40-45 percent of their full cost, with taxpayers subsidizing the rest.
Some lawmakers and watchdog groups oppose the legislation to delay the premium increases, saying taxpayers should not have to subsidize coverage for homeowners who build or buy in high-risk areas.
FEMA Administrator Craig Fugate testified at a hearing before the Financial Services Subcommittee on Housing and Insurance on Tuesday that the National Flood Insurance Program is $24 billion in debt.
Fugate said most of the program’s 5.6 million policy-holders won’t see a change, but about 20 percent will experience rate hikes to reflect the actual risk to their properties.
“We want to work with Congress on how do we look at affordability for somebody who is in their home now, and how do we look at affordability from the standpoint if it’s means-tested, (based on) on ability and income,” Fugate said.
Fugate said the Biggert-Waters law requires FEMA to raise flood insurance premiums while the agency works on the affordability study. Changing that would require congressional action, he said.
Witnesses at Tuesday’s hearing, including officials from national groups representing real estate agents and home-builders, urged lawmakers to quickly approve the legislation.
Michael Hecht, president and CEO of Greater New Orleans Inc., said some homeowners in St. Charles have seen their property values drop 30 percent because of the premium hikes.
“None of us want perverse incentives for building in harm’s way, nor do we advocate for the continued subsidization of severe repetitive loss properties,” Hecht said in testimony. “However, we have a moral and economic duty to protect property-owners who have played by the rules and built as their government told them to, and in accordance with the government guidelines in effect at the time of construction. They should not lose their homes and businesses.”
Republican Rep. Bill Cassidy, who attended the hearing, called it an “important step forward” in addressing the problem.