NEW ORLEANS (WVUE) – With property insurance premiums rising flood insurance rates are increasing the financial pain for many Louisiana homeowners and Congressman Steve Scalise who is GOP House Minority Whip says he is still fighting to reform the National Flood Insurance Program amid resistance from some on Capitol Hill.
On top of the tens of thousands of policy cancellations, Louisianans face a perfect storm of rising insurance costs.
David Clements is co-owner of Clements Insurance Services in St. Bernard Parish.
“We have seen a substantial increase, in many cases as much as 40%, 50%, 60%, or even 70%. It’s really been troublesome for homeowners, if you see your home bill go up $300, $400 your mortgage, that’s very difficult for a lot of people to keep up,” Clements said of homeowners’ insurance rates.
Clements said reinsurance is a big factor.
“The insurance companies buy insurance from global markets generally located in London or other places around the world and the reinsurance market has really taken a beating over the last few years from everything from the high number of hurricanes that have hit the gulf coast, the freeze in Texas, the riots, the fires,” said Clements.
Then there is flood insurance. FEMA’s new Risk Rating 2.0 pricing methodology is causing many property owners to pay more.
“If you’ve had the policy prior to the implementation of 2.0 then you’re only experiencing an 18% or so increase per year until you get up to the mandated levels of policy premiums but anyone who is building a house, buying a house if they let their coverage lapse then they’re bearing the brunt of the full premium,” said Clements.
Scalise says the higher flood insurance premiums are forcing people to drop their coverage.
“It’s making flood insurance unaffordable, I mean we’ve seen thousands of people just drop their policies which is horrible, but it puts people more at risk, it puts the country more at risk,” said Scalise.
FOX 8 asked Scalise what Congress is doing to address the flood insurance problem. He conceded that there are “detractors” on both sides of the political aisle.
“Republican and Democrat and so any time you’re trying to work on a reform it’s uphill. I was able to help pass a bill a few years ago where we had a very broad coalition, Republicans and Democrats from all around the country, we passed a five-year reform bill of the flood insurance program and it didn’t go anywhere in the Senate, so we’ve at least laid out a road map for how to get this program back on track, we need to keep at it because obviously, we’re not there,” said Scalise.
FEMA says its pricing methodology that took effect in October is designed to deliver rates that are fairer, easier to understand, and better reflect an individual property’s flood risk, but some people disagree.
As for this hurricane season, there is hope that storms will spare Louisiana this year and that insurance rates may eventually go down.
“Hopefully, we can get through the rest of this storm season unscathed and that may help turnaround, you know, if they don’t have to shell out the billions and billions of dollars this year.”
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