Chamber urges US Senate to undo changes in flood insurance

A pending home sale in Erath was abandoned after the buyers learned the flood insurance rate would jump from $858 to $19,000 a year while another homeowner in the area saw premiums jump from $1,200 to $4,200 a year, according to figures from Troy Hebert, Van Eaton & Romero general manager.

“We’ve had to take listed homes off the market due to rate increases,” Hebert said, explaining no buyer wants to purchase a home where the annual flood insurance payment might be higher than the mortgage.

Hebert, who also is president of the Realtor Association of Acadiana, joined a roomful of business leaders and economic development officials Wednesday at the Greater Lafayette Chamber of Commerce to urge the U.S. Senate to undo changes in the nation’s flood insurance program that threaten to push insurance rates for some Louisiana homeowners through the roof.

The new rates come courtesy of changes Congress approved in 2012 to shore up the government-run National Flood Insurance Program, which is running an estimated deficit of more than $25 billion.

But those changes, meant to curb what some view as government subsidies for people who build in flood-prone areas, have led to unintended consequences that take too big a toll on south Louisiana, said Jason El Koubi, Greater Lafayette Chamber of Commerce president and CEO.

On Tuesday, the U.S. House of Representatives passed the Homeowners Flood Insurance Affordability Act, a measure that would reverse some of the rate hikes.

The bill goes to the Senate. The Lafayette chamber and 17 other chambers of commerce, real estate organizations and economic development groups in the Acadiana region sent a letter this week urging speedy passage.

“We are standing unified on this until it gets done,” El Koubi said.

The proposed legislation would allow homeowners who followed elevation and building standards at the time they built their homes to be shielded from sharp rate increases should their property be classified as more flood prone if the Federal Emergency Management Agency revises flood maps.

That protection would remain with the property, even if the original owners sell it.

Another provision would cap annual increases in flood insurance premiums at 18 percent.

The legislation also calls for efforts to keep flood insurance rates at no more than one percent of the value of the policy — $1,000 in the case of a policy with $100,000 in coverage.

Lafayette City-Parish President Joey Durel said that rising flood insurance premiums could make it impossible for a family to keep up with the annual expenses of owning a home in some areas and the family can’t sell their home because no one wants to take on the high insurance payment.

“To think everything they had worked for their entire life might be devastated,” he said.

Hebert said the changes in the flood insurance program have been most problematic locally in Iberia and Vermilion parishes, two coastal areas that have seen widespread flooding in recent hurricanes.

The impacts have yet to be felt that much in Lafayette Parish, Hebert said, but that’s mainly because new FEMA flood maps for the parish that classify new areas in the parish as flood prone have yet to be applied.