Phase two of the Risk Rating 2. 0 rollout begins today which means 70-percent of Louisiana policyholders are expected to see premium increases when they renew their flood insurance policies. Policies could increase by as much as 18-percent per year until they reach their full risk rate. Senator Bill Cassidy says it’s still not too late for action to stave off the worst of the coming rate hikes.
“Because the premiums start to rise at first it’s not so bad, next year it’s not so bad, it’s the third, fourth and fifth year that the bite really occurs,” said Cassidy.
The revamped NFIP “Risk Rating 2.0” system prices flood insurance by property individually; rather than by flood zone.
It also considers proximity to water, the elevation of the lot, square footage, and how often the street has flooded before. Cassidy says the President could stave off the rate hikes with an executive order, but will not. He says there is bipartisan support for legislation to spare consumers the high cost of flood insurance.
“I’m optimistic we’ll eventually get something through, it just may not be this Congress, but again, we have a little bit of time, because the bite comes in the out years, but we need help from colleagues, but let me repeat, President Biden can end this now,” said Cassidy.
Louisiana Insurance Commissioner Jim Donelon says Risk Rating 2.0 could force residents out of their homes because they cannot afford to insure them. He says this poses a risk to communities all over southern Louisiana.
“Indeed it does represent a threat to our state’s economy which is more dependent on the National Flood Insurance Program than any other state,” said Donelon.
Donelon says NFIP’s rate hikes will be implemented over several years, and the federal agency states that most residents will initially see monthly increases of $20 to $30.
“But the remaining 3-percent of our 500,000 policyholders will see draconian rate increases that frankly in many cases will render thousands of property worthless overnight,” said Donelon.
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