WASHINGTON — While the Louisiana congressional delegation pushed to delay flood insurance changes that would increase rates, a coalition of free-market think tanks and climatologists lobbied Tuesday to keep “true cost” premium increases in place.
The Union of Concerned Scientists teamed up with the free market-supporting, nonprofit R Street Institute to argue that the National Flood Insurance Program rate hikes are necessary beginning Oct. 1 to make the program self-sustainable and because the problems will only worsen in the future from climate change and rising sea levels.
“These (rate hikes) are clearly not popular, but they’re critical,” said Rachel Cleetus, senior climate economist with the Union of Concerned Scientists, a nonprofit, science advocacy group.
The National Flood Insurance Program was changed last year by Congress to make the program more financially self-sustainable.
Many of the changes involve phasing out the “grandfathered status” on many properties that were built decades ago and had never seen dramatic premium increases, as well as increasing rates on newer properties.
The NFIP has been in financial distress since a nearly $25 billion loss, largely due to payments made after hurricanes Katrina and Rita in 2005.
Louisiana has nearly 500,000 NFIP policies and there are more than 5.5 million policyholders nationwide.
Louisiana politicians have cited a worst-case scenario in Plaquemines Parish of a home worth about $250,000 having its annual NFIP premiums increase from $633 to more than $28,000 a year because the property was added to an expanded flood zone and is no longer meeting new elevation standards.
Ray Lehmann, a senior fellow and co-founder of the R Street Institute, said such examples are rare or exaggerated.
Lehmann said there may be a need for Congress and the Federal Emergency Management Agency to approve vouchers to help some lower- or middle-income property owners pay the premiums.
Sea levels are rising and storm surges are growing stronger, said Ben Strauss, vice president for climate impacts and director of the Program on Sea Level Rise at Climate Central.
Hurricanes deemed 100-year storms, such as Katrina, are projected to become as common as once-every-decade storms in many coastal areas by 2050, he said.
Erwann Michel-Kerjan, a professor at the University of Pennsylvania’s Wharton Risk Center, said the NFIP rate hikes will force people to look at reality without getting overly generous federal subsidies.
“If you pay the right cost, maybe you will realize you should not live here or maybe you should do something to (elevate) your house,” Michel-Kerjan said.
FEMA asserts the NFIP reauthorization will implement rate hikes of up to 25 percent a year on non-primary residences, businesses and homes that have flooded multiple times.
Primary residences receiving subsidized “grandfathered” rates are not affected until the home is sold or the policy lapses, but Louisiana officials have said the change makes such homes unsellable and that FEMA is underestimating the impacts.