Refunds for flood insurance premium hikes repealed by Congress will start flowing on Oct. 1

By Bruce Alpert, NOLA.com | Times-Picayune 

July 18, 2014

WASHINGTON -- National flood insurance policyholders eligible for refunds based on federal legislation that modified or repealed key provisions of a 2012 law that had raised rates, in some cases significantly, should start getting checks on Oct. 1.

FEMA estimates that 13.8 percent of policyholders should expect a refund check.

President Barack Obama signed the Homeowner Flood Insurance Affordability Act of 2014 in March. It repealed and modified provisions of the 2012 Biggert-Waters flood insurance law that Louisiana lawmakers said had led to unaffordable premium increases for many policyholders.

Rep. Bill Cassidy, R-Baton Rouge, said FEMA informed him Friday of the Oct. 1 starting date for refunds.

"As so many families are struggling in today's economy, ensuring that families receive these refunds as quickly as possible must be a priority," Cassidy said.

FEMA didn't disclose how much the average refund will be or how much the agency will pay out in total. Part of the cost of eliminating some of the premium increases under Biggert-Waters is recouped from a $25 fee on all flood insurance policies for primary residences and a $250 surcharge for all other polices.

A FEMA official said the refunds will be made in a single payment from the Write Your Own companies that sell and help administer the program.

People who purchased homes after Biggert-Waters took effect in 2012, or whose coverage lapsed after the law took effect, were immediately denied subsidies, leading, in some cases, to dramatic increases in premiums -- double, triple, even 10 times the cost of previous policies." That provision of Biggert-Waters was repealed by the new legislation. It is the increases these policyholders paid that will be refunded, starting Oct. 1.

Sen. Mary Landrieu, D-La, who led efforts to modify Biggert-Waters in the Senate, said it's important that Congress work to make more changes in the flood insurance program to keep it affordable and structurally sound as the program  comes for a reauthorization in 2017. Landrieu and Cassidy are competing in the fall Louisiana Senate race.

Under the 2014 legislation, increases for most subsidized properties can be no less than 5 percent per year and no more than 18 percent annually for an individual policyholder. Rates cannot be increased by more than 15 percent on average for policyholders in a single risk designation.