The U.S. Senate Banking Committee Heard testimony in Washington this morning about the unaffordability of flood insurance. Louisiana Senator John Kennedy voiced his frustration with the Risk Rating 2.0 formula that decides premiums and FEMA’s lack of transparency.
“They made all kinds of wild allegations. Any day now I expect FEMA to say this algorithm is so great it will grow hair, or it will cure ED and I say man I need to see this algorithm; can I see it? No, if we show it to you, we have to kill you. And I’m in charge of their budget,” said Kennedy.
Louisiana Senator Bill Cassidy is pushing legislation to cap premium increases at 9%.
When asked what should be prioritized in the legislation, President of Greater New Orleans Inc., Michael Hecht said the first is by making it affordable.
“Because we want to make sure people stay in the program and that it doesn’t go into a death spiral. The second would be comprehensibility so people understand what they can do to make improvements and what they’re paying for,” said Hecht.
And the third priority Hecht told lawmakers was funding for mitigation to reduce flood risks.
Kennedy said he was told one-fifth of policyholders would see their premiums go down as a result of the new algorithm with Risk Rating 2.0. The Republican then quoted increases of more than 300% in Terrebonne Parish and over 500% in Plaquemines Parish.
“They lied to the American people and my people, and they ought to hide their heads in a bag along with all the politicians that have allowed the sewage and water board to steal money for all these years,” said Kennedy.
The Congressional Budget Office estimates that more than 900,000 policyholders will drop out of the program over the next decade due to premium hikes.
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