Congress should make sure flood insurance is affordable

The Times-Picayune: EDITORIAL:

May 9, 2013

 

Hurricane Isaac spared 86-year-old Addie Riley's home in Bohemia last fall. But new federal flood insurance rules have put her and her daughter Johnetta Simpson, 64, in a difficult spot: Either elevate their home 18 feet to abide by new FEMA flood maps or face tens of thousands of dollars per year in additional insurance costs.

They and many others in Plaquemines Parish can't afford to do either of those things, but they don't want to leave. And, even if they did decide to leave, selling their home would be quite difficult because anyone who bought it would face the same insurance burdens.

Unless Congress intervenes, thousands of residents along the Gulf Coast and up the Eastern Seaboard will face the same dilemma. Many people could end up uninsured against disaster because they can't afford the policy costs.

U.S. Sen. Mary Landrieu filed an amendment Tuesday to the Water Resources Development Act that temporarily would halt the flood insurance premium increases Congress approved last year. She wants FEMA to conduct an affordability study and report back. "I agree that the National Flood Insurance Program needs to be self-sustaining, but this is not the right way," she said.

Sen. David Vitter, who was a member of the conference committee that finalized flood insurance changes last year, is co-sponsoring Sen. Landrieu's amendment. She also got all four senators from New York and New Jersey to sign on, which reflects concerns prompted by Hurricane Sandy's devastation of that region in late October.

Sen. Landrieu's idea of a time-out to look at ways to keep policies affordable is reasonable, and Congress ought to go along with it. Some policyholders are already feeling the effects of the Biggert-Waters Flood Insurance and Modernization Act, but many more will be hit with steep increases in 2014.

A delegation of parish officials from South Louisiana won an important concession from the head of the flood insurance program Thursday. David Miller, the associate administrator of the Federal Insurance and Mitigation Administration, agreed in a meeting in Washington to give communities credit for locally built levees in the agency's new flood maps. Originally, the maps only took federally built levees into consideration in assessing risk.

That should help reduce flood insurance costs for some communities, but "we don't know yet whether that's our salvation," Terrebonne Parish President Michel Claudet said.

The change certainly won't be the salvation of everyone who needs flood insurance. So, Sen. Landrieu's amendment is crucial.

To her credit, Sen. Landrieu predicted last year that the repercussions of Biggert-Waters would be overly harsh and needed more debate. "People are struggling to pay flood insurance now. I think this is very steep," she said last June on the Senate floor.

Because the flood insurance provisions were included in a transportation bill that was hammered out in conference committee, she wasn't able to offer an amendment providing assistance for residents on fixed incomes.

When Congress passed Biggert-Waters, it was sold as a way to bring stability to the flood insurance program by phasing out federal subsidies and rates that had been grandfathered in. As Sen. Landrieu said, it is important to reduce the flood program's $24 billion debt.

But that shouldn't be done in a way that will put tens of thousands of homeowners and businesses under water financially.

Under Biggert-Waters, homeowners living in V or A zones subject to flooding from a 100-year storm will see their rates increase to reflect actual risk in 20 percent steps over five years. The rate hike will be dramatic.

A FEMA official provided a hint of what is coming at a public meeting in Morgan City in late March: A $200,000 home with $80,000 in contents in a high-risk flood zone costs $2,235 to insure today. Under Biggert-Waters, the insurance costs will vary depending on how many feet above or below base flood elevation the house sits. People who've elevated their homes enough will see a drop in costs. But a home 10 feet below base flood elevation would get a bill topping $25,000 per year. Anyone with a mortgage is required to have flood coverage, so the housing market in some communities could take a hit.

The higher rates are already going into effect on second homes, homes that have experienced four or more floods or for which insurance payments have equaled or exceeded the building's cost. According to FEMA, 49 percent of Louisiana's 486,233 flood insurance policyholders are currently subsidized.

For coastal residents in Louisiana and Mississippi, the rates will be accelerated by the massive storm surge from Katrina and subsequent hurricanes reflected in updated flood maps.

The six-figure cost of raising a home or business is out of reach for many people, and thousands of them in our region rebuilt to the old standards after Hurricanes Katrina and Rita. They abided by the rules at the time, with FEMA's blessing. It's unfair of Congress to change the rules so drastically on them.

The cost of the flood program to taxpayers is a serious concern, but the cost to individuals shouldn't be ignored.