Flood insurance coalition, created to fight premium spikes, turns to long-term fix

As FEMA rolls out measures to limit flood insurance premium increases for homeowners, the United States must find a long-term, permanent fix for the National Flood Insurance Program that is up for renewal in Congress in three years, the head of Greater New Orleans Inc. said Friday. “Now, in many ways, the real work is still ahead of us,” Michael Hecht said.

To that end, Hecht announced that the Coalition for Sustainable Flood Insurance, a group launched by GNO Inc. to combat skyrocketing premiums, has formally incorporated into a national, 501c6 nonprofit and will begin the search for a board of directors. Hecht said the coalition has until 2017, when the National Flood Insurance Program will be up for reauthorization, to help figure it out.

The group’s research will focus on “the economic philosophy as well as the human psychology behind flood insurance and determine what the best answer is for America to protect people and property and to be financially responsible,” he said.

The announcement came after a symposium hosted by GNO Inc. with David Miller, associated administrator of the Federal Emergency Management Agency, for an update on how the agency is putting into place measures to limit premiums spikes for policyholders.

The rising rates resulted from a 2012 law, the Biggert-Waters Act, intended to make the financially troubled federal flood insurance program solvent. Some 5.5 million flood insurance policyholders faced huge increases with rates doubling, tripling or even going up by 10 times current costs.

But after a tough battle in Congress, legislation that limits increases to no more than 18 percent a year was signed by President Barack Obama in March. The Homeowner Flood Insurance Affordability Act also calls on FEMA to “strive” to keep most policyholders’ premiums at no more than 1 percent of the value of their coverage — such as $2,000 for a $200,000 policy — and mandates refunds for some homeowners.

“We really have just gotten back to where we were before Biggert-Waters,” Hecht said Friday. “The question of flood insurance for the nation, the specter of the financial challenges to the program and the increasingly volatile weather are still out there.”

The coalition will examine several options: improving the current program, privatizing the system or expanding the government program to a national catastrophic plan, which would cover damages from other disasters beyond flooding.

The meeting Friday, which was closed to the news media, gathered real estate agents, bankers, home builders, flood mapping experts and political leaders including U.S. Sen.Mary Landrieu, D-La., and U.S. Rep. Bill Cassidy, R-Baton Rouge, and local politicians such as St. Tammany Parish President Pat Brister.

Miller did not participate in a briefing with news reporters after the meeting. Hecht said he was encouraged by the administrator’s responses to questions from the community.

“We got the sense they are moving toward implementation of the program, including new mapping procedures, refunds for people who overpaid, and also one of the key provisions, which is that they were going to strive to keep most of the policies below 1 percent of the policy cost, that that was going to be a plausible outcome for us going forward,” Hecht said.

Hecht said policyholders who benefited from the Biggert-Waters Act and saw their costs go down won’t be forced back into higher rates under the changes.

Landrieu praised the recent effort as an “extraordinary and bipartisan and rare but important victory that we achieved together.” She said the newly incorporated coalition will have her support, “as we look froward to build even a better flood insurance or catastrophic insurance program.”

Cassidy, who is running against Landrieu for her Senate seat, said “thank you most to those homeowners who called us to serve, helped us serve, and hopefully we’ve been able to serve.”

Officials did not discuss Miller’s briefing Friday in detail. Refunds will begin this fall for people who bought homes after Biggert-Waters became law and were suddenly charged higher, unsubsidized rates, officials said.

Meanwhile, Landrieu said she plans to hold a July 23 hearing as chairwoman of the Senate Homeland Security appropriations subcommittee to focus on FEMA’s flood risk mapping process. Communities around Louisiana, including Jefferson Parish, have complained that updated maps are using erroneous or outdated information. Hecht said Miller indicated that FEMA will be working with communities to improve accuracy and include more local, granular data.

Miller has previously said his agency is using pilot programs to give credit for non-accredited levees that weren’t considered in previous flood risk maps.

Read the full article here: http://www.nola.com/business/index.ssf/2014/06/flood_insurance_coalition_forg.html