WASHINGTON — A bipartisan group of the Louisiana congressional delegation and lawmakers from other states touted the growing momentum Tuesday to prevent skyrocketing flood insurance rate increases that began being phased in Tuesday for some policyholders.
Louisiana’s two senators, Mary Landrieu, a Democrat, and David Vitter, a Republican, and Rep. Bill Cassidy, R-Baton Rouge, and senators from Florida, New Jersey and North Dakota all discussed the increasing support to fight premium hikes in the National Flood Insurance Program that are beginning to impact much of the nation.
The problem is that there is no clear legislative path for enacting the changes at this point, but the members of Congress emphasized that there are multiple potential options and that their coalition is growing every day, even while a sharply partisan government shutdown is in effect.
The lawmakers acknowledged that a flood insurance fix is unlikely to come during the shutdown, but that major progress could come soon afterwards.
“Even with the government shutdown, if we keep working together, we might be able to find a way for relief,” Landrieu said.
The NFIP, was changed last year by Congress to make the program more financially self-sustainable.
Many of the changes amount to phasing out the status that allowed properties built decades ago to be grandfathered into the flood insurance system at much lower rates.
The NFIP has been in financial distress with a loss of nearly $25 billion, 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.
The lawmakers specifically want to change some rates impacting “grandfathered” properties and a trigger that allows rates to jump suddenly to unaffordable levels when homes are sold in some areas.
Vitter called some of the rate hikes “un-American” and argued that they would destroy the flood insurance program by making many of the policyholders homeless.
Landrieu and Vitter said the chairman of the Senate Banking Subcommittee on Economic Policy, Sen. Jeff Merkley, D-Ore., has agreed to work with them on finding a long-term legislative fix and getting the ball rolling.
A one-year delay to some rate hikes sponsored by Cassidy passed the House and a similar provision is in a funding bill on the Senate floor.
A House committee hearing also is scheduled for next week to discuss flood insurance concerns.
“This is not about politics. This is about doing something right by American families,” Cassidy said, noting that many House members are pushing to include the NFIP delay in all upcoming budget negotiations.
Prior to the U.S. House committee hearing, the Greater New Orleans, Inc. business group on Tuesday sent a letter to the House committee leaders asking to keep flood insurance affordable that was signed by 109 business and civic associations nationwide, including the U.S. Chamber of Commerce, the American Bankers Association and the National Association of Home Builders.
The rate hikes being phased in starting this week apply to some homes and businesses built prior to the first 1973 federal flood maps.
The Oct. 1 trigger applies to properties — businesses, secondary vacation homes and homes that have been repeatedly flooded — that were grandfathered into artificially lower premiums for flood insurance before flood maps were created. Such impacted policyholders will see 25 percent annual premium increases over a few years.
But such subsidized properties sold after July 6 last year when changes in the law first began being implemented will not have their new rates phased in.
That is because the rates for such subsidized residences are triggered all at once when a home is sold or the flood insurance policy lapses.
Only about 18,000 Louisiana policies will see immediate impacts as non-primary residences, businesses and repetitive-loss properties built before the flood maps. Another 50,000 or so primary residences from before the 1973 flood maps are not impacted until they are sold or the policy lapses, according to FEMA.