Federal Flood Insurance Changes Could Dramatically Increase Homeowner Premiums

An article from the September 9 edition of the National Association of Counties (NACo) County News discusses the potentially significant premium increase facing homeowners that rely on federally provided flood insurance.

The Federal Emergency Management Agency (FEMA) manages the National Flood Insurance Program (NFIP), which covers 98 percent of flood insurance policies nationwide.  NFIP was recently reauthorized by the Biggert-Waters Flood Insurance Reform Act in 2012.  However, the Act also amended NFIP and several of the changes, including new flood plain maps, could lead to significant premium increases for affected homeowners.  Louisiana is the first state to undergo new flood mapping since the amendments were passed, but eventually all states will be subject to remapping.  From the article:

Louisiana was the first state to have new flood mapping completed after the reforms were passed, and consequently is serving as a test site when those reforms are enacted. New York and New Jersey are also being remapped, following 2012’s Superstorm Sandy.

St. James Parish President Timmy Roussel said that up to 100 homes in his parish and 1,000-plus homes in nearby St. John the Baptist Parish could see drastic increases in their flood insurance premiums.

“Houses that were paying $600 a year for their premium could end up owing $20,000,” he said. “We have some questions about new policies that if they aren’t addressed could put people out of their homes.”

The article cites the following amendments made under Biggert-Waters as the primary causes of the premium increases:

Under the current plans to implement flood insurance reform:

  • grandfathering will be phased out — houses that had previously been built to code are now in violation, according to new flood maps
  • mapping will only recognize remediation work performed by the Army Corps of Engineers — unaccredited levees and pumps not placed by the Corps might as well not exist. “It’s not reflective of true risk,” Hecht said; and
  • actuarial information will be used that create dramatic and sometimes prohibitive changes in premium cost — some as high as 3,000 percent.