Insurance Commissioner Jim Donelon said "draconian rate increases" for flood insurance provided by the federal government will be devastating to homeowners and businesses, and urged Congress to postpone changes passed in 2012 for at least another year. "The Biggert-Waters (Flood Insurance Reform) Act threatens to devastate our economy and make thousands of properties valueless," Donelon told the Press Club...
Insurance Commissioner Jim Donelon said "draconian rate increases" for flood insurance provided by the federal government will be devastating to homeowners and businesses, and urged Congress to postpone changes passed in 2012 for at least another year.
"The Biggert-Waters (Flood Insurance Reform) Act threatens to devastate our economy and make thousands of properties valueless," Donelon told the Press Club of Baton Rouge on Monday. "Politicians just don't do insurance well."
The 2012 law reauthorizes the National Flood Insurance Program, or NFIP, first passed in 1968, and will mandate substantial increases in premiums for certain policyholders in high-risk areas who, until now, have received subsidized rates.
Proponents say the increases will help bring the program out of debt and toward actuarial soundness. Opponents argue that the changes will disproportionately affect policyholders in high-risk areas, like the Gulf Coast, and could go so far as to render certain properties valueless.
Donelon is in the second camp. While he said some other states have coasts dominated by high-rise apartments, hotels and vacation homes, Louisiana's is a "working coast" that provides indispensable energy and exports to the entire region and the world.
"That working coast is important to the entire country and, as such, if this is a program that we benefit from more than others, there are other programs out there that benefit other states much more so than the state of Louisiana. And I think we're deserving of that trade-off, that consideration in that very important part of our economy."
About 80 percent of policyholders nationwide won't be affected by the changes, according to FEMA. This is true St. Bernard Parish residents, 95 percent of whom should see no change in their premiums, Donelon said. However, he said whole subdivisions in St. Charles Parish would be facing increases that are unaffordable and untenable.
Louisiana has the third highest number of flood insurance policies under the NFIP and accounts for the majority of the program's debt, after $16 billion in payouts to policyholders in the state in the wake of Hurricane Katrina.
Donelon said Monday that he would like to see the 2012 changes delayed for one more year so Congress could include levee upgrades performed by local governments. He also said he'd like to see premiums increase over 10 years and not five, as is currently set forth in the law.
He also touted the work of Louisiana's congressional delegation for seeking to delay rate increases set to go into effect Oct. 1. U.S. Sen. Mary Landrieu, D-La., sent a letter to House and Senate leaders two weeks ago urging a delay in the rate increases. Every member of Louisiana's delegation signed the letter except U.S. Rep. John Fleming, R-Minden.
Lauren McGaughy is a state politics reporter based in Baton Rouge. She can be reached at lmcgaughy@nola.com or on Twitter at @lmcgaughy.