Lawmakers want to delay skyrocketing flood insurance rate hikes

Bill Capo / Eyewitness News

NEW ORLEANS -- After the National Flood Insurance Program lost billions in Katrina and other disasters, Congress ordered the agency to adjust rates so it doesn't keep losing money.

But there was shock among groups like the Metro Realtors Association when FEMA last week released guidelines showing staggering increases in premiums for property owners, even though they weren't as high as first feared.

"The fears are that the rates are going to skyrocket, and that people won't be able to pay their flood insurance premiums, so at that point, do they drop insurance?" asked Realtors Association Senior Governmental Affairs spokesperson Kelli Walker.

"$14,000 a year is really just as unaffordable as $28,000 a year for somebody who in the past was paying $600, and never flooded," said Michael Hecht of GNO Inc.

Greater New Orleans Inc. called FEMA on Monday with questions about how the agency spends the flood insurance premiums you pay.

"30 cents of every dollar goes to the insurance companies who write the policies, though they carry none of the risk. Only 43 percent of every dollar actually goes from premiums to payouts," Hecht said, adding that he also wants to know why an estimated 40 percent of Americans who live in areas where they should have flood insurance don't carry it, hurting the program financially.

The realtors association is on a task force working to find flood insurance discounts for property owners.

"What that's gonna do is correspond to a discount anywhere from 5 percent to 45 percent on flood insurance premiums for all policy holders," said Walker.

Sen. Mary Landrieu drafted a letter Monday, signed by Sen. David Vitter, Rep. Steve Scalise, Rep. Cedric Richmond and other Louisiana Congressmen. It was sent to the House and Senate leadership, asking them to delay the rate increases for at least a year.

"The delay is important, most of all because we need some time to figure out how to fix this problem," Hecht said.