Rising flood insurance rates risk drowning economy
By: Michael Hecht | The Advocate | 11/8/2013
President Barack Obama, welcome to the new New Orleans. The progress of our region over the past five years has been rapid and dramatic; the publisher of Forbes called it “one of the great turnarounds in American history.”
Greater New Orleans has not only come back from Hurricane Katrina, but has come back better than ever. We are delighted that you are delivering a speech today from the No. 1 region in the country for exports per capita, as exports (up more than 400 percent since 2005) have played a pivotal role in the recovery of greater New Orleans.
In economic development, we are at the highest point, in every ranking, in our history. The Wall Street Journal placed New Orleans as the No. 1 most improved metro area for business in the United States.
With a sustained increase in job creation, greater New Orleans has been lauded as the No. 2 “Boomtown in America” by Bloomberg and the No. 3 “Big City Winning the IT Jobs Battle” (after Silicon Valley and San Francisco), according to Forbes.
There are many reasons to consider Louisiana a role model for economic recovery — in fact, we live in the No. 1 state for economic growth potential in America, according to Business Facilities.
At the same time, long-standing quality of life challenges — from education to flooding and beyond — are being transformed into models of reform. School performance scores were recently released, and in New Orleans the number of students attending failing schools has been reduced by 92 percent over the last eight years. And the RESTORE Act is poised to bring billions for coastal stabilization, preserving our resources for generations to come.
New Orleans has made remarkable progress.
But progress is not yet success. Our gains are fragile. And recent changes to the National Flood Insurance Program are threatening not only the economic resurgence in greater New Orleans, but the economic recovery of an entire nation coming out of the Great Recession.
A confluence of the Biggert-Waters Act of 2012 (which was meant to stabilize NFIP), incomplete and inaccurate FEMA maps, and questionable financial structure and calculations has led to premium increases of up to 3,000 percent and more — for policyholders who have built as the government instructed them, maintained insurance and often never flooded.
Unless addressed, changes to NFIP will do grievous harm to the very people the program was designed to protect. These changes do not affect just greater New Orleans; dramatic flood insurance increases are being felt across the country. From Louisiana to New York to Oregon to North Dakota, flood insurance premiums are skyrocketing. And as new FEMA flood maps are rolled out across the country, the threat of runaway NFIP rates is to all of America.
NFIP rates suddenly jumping up 3,000 percent in the middle of a mortgage — when the owner had no reason to anticipate this unaffordable increase when the original contract was signed — utterly contradicts typical insurance practice and reasonable expectation. And businesses and individuals do not have a choice — flood insurance along our coasts and rivers is almost always government-mandated.
If unchecked, the consequences are clear and devastating. Owners will lose everything, values of unsellable properties will plummet, real estate markets will freeze, bank mortgages will go into default, local tax bases will erode, and economies will be eviscerated.
Mr. President, we urge you to act immediately to protect the American economy and investments of taxpaying Americans by administratively delaying problematic portions of the Biggert-Waters Act.
To implement Biggert-Waters as it currently stands would be both economically unwise and morally unjust.
Michael Hecht is the president and CEO of Greater New Orleans Inc. He can be reached at [email protected] or (504) 527-6900.
Read the full article here: http://theadvocate.com/news/opinion/7521173-123/guest-commentary-rising-flood-insurance