The St Tammany Chamber says their partners at GNO, Inc. have been leaders of the Coalition for Sustainable Flood Insurance since 2013.
With the closures of several insurance providers as well as the exit from Louisiana of others, homeowners are facing rampant increases in their policies. Compounding financial burdens on Louisianans, flood insurance is changing as well.
The National Flood Insurance Program (NFIP) is administered by FEMA, which has recently adopted “Risk Rating 2.0,” a new methodology of calculating flood insurance rates. Risk Rating 2.0 is causing flood insurance policies to rise statewide as well. 80% of Louisianans will see increased coverage, and new premiums, on average, will be 122% higher than the legacy rates. These changes are already causing homeowners to drop their flood insurance coverage, thus increasing their risk exposure.
GNO, Inc. sponsored a presentation and release of a White Paper last Friday explaining the impact of Risk Rating 2.0 and suggesting reforms to make the program more affordable.
Their 5 recommendations are as follows: 1. FEMA should disclose the factor by which premiums are changing for NFIP policies by ZIP code, county, and state and disclose the estimated RR2.0 full-risk premium and total policy costs; 2. FEMA should clearly disclose planned premium rate increase velocities in RR2.0 to remove uncertainty for insureds and allow households and housing markets to prepare for higher NFIP policy costs; 3. FEMA should counter the known negative relationship between price and participation by adopting a low-rate annual premium increase plan until Congress authorizes an affordability framework; 4. Legislators should carefully consider the limitations of affordability frameworks relying solely on income ratios to determine program eligibility. Housing burden should be an additional tool to target and equitably distribute assistance to areas with greater housing burdens; 5. Legislators and stakeholders should continue to evaluate affordability program design, pursue legislative enactment of an affordability program, and clearly communicate desired NFIP affordability public policy implementation outcomes to FEMA.
