WASHINGTON – Tired of waiting for the Federal Emergency Management Agency to explain its new flood insurance rating system, Louisiana US Sen. John N. Kennedy filed two bills Thursday to address higher premiums.
The Madisonville Republican introduced the Risk Rating 2.0 Transparency Actwhich would require the Federal Emergency Management Agency, FEMA, to publish an explanation of how the agency determines the National Flood Insurance Program, NFIP, prices under Risk Rating 2.0.
While some Louisiana homeowners and businesses paid less for flood insurance under the new pricing system that FEMA called Risk Rating 2.0, a good many policyholders saw increased, sometimes dramatically higher costs.
Louisiana elected officials and the congressional delegation – Democratic and Republican – have repeatedly asked FEMA to explain the factors that went into setting the new rates. Their requests have gone unheeded.
“The Biden administration is refusing to show lawmakers the new algorithm it uses to raise flood insurance premiums,” Kennedy said in a statement. “Since millions of Louisianians depend on the NFIP to protect their homes from natural disasters, FEMA must come clean about why premiums are skyrocketing under a Risk Rating of 2.0. Meanwhile, my bills would ensure fairer rates for the people of Louisiana.”
The Risk Rating 2.0 Transparency Act would make FEMA responsible for creating an online data base for policyholders. The database would provide information on premium rates and how FEMA sets those rates.
Republican US Sen. Cindy Hyde-Smith, of Mississippi, cosponsored the proposed legislation. Many of her constituents, particularly those in the southern part of the state, where geography differs little from what is found in Louisiana, have faced the higher prices for flood insurance.
“At a minimum, policyholders deserve to know exactly why their premiums cost as much as they do, especially when that rate is higher than previous years,” Hyde-Smith said in a statement. “From the start, FEMA has not been forthcoming with the public or Congress on how it developed the new flood insurance rate structure.”
Kennedy’s second measure is called the Flood Insurance Affordability Act and would cap annual flood insurance premium increases.
Mon. Marco Rubio, R-Fla., cosponsored that measure.
“Flood insurance is vitally important to Floridians and Americans living in coastal communities. People shouldn’t have to pay an arm and a leg to make sure they are protected,” Rubio said in a statement.
The Flood Insurance Affordability Act would lower the statutory limit on annual premium, increasing primary resident homeowners under a Risk Rating of 2.0 from the current limit of 18% to 9%.
Private companies began in the 1920s to stop insuring homeowners and businesses from flooding because of the costs. with the enactment of the National Flood Insurance Program in 1968the federal government subsidized property losses through insurance policies.
Over the years it became clear that the cost of the policies did not cover the damage losses, leaving taxpayers to pick up the difference.
Since the 1990s, Congress members, particularly those from the interior of the country that suffered little flooding, demanded changes.
After a decade of study, FEMA changed the system to align premiums closer to the costs of possible losses. That meant higher priced policies for homeowners and businesses in flood prone areas, which includes much of Louisiana.