GNO, Inc fighting to fix flood insurance ratesSep 16th, 2013 | By Candace Griffin | Category: news
Since May, Greater New Orleans, Inc. (GNO, Inc.), the 10 parish regional economic development organization that includes Plaquemines Parish, has led the charge to address changes to the National Flood Insurance Program (NFIP), which will cause policy holders to sustain huge rate increases. Due to inaccurate FEMA maps and the Biggert-Waters Act of 2012, policyholders are sure to see astronomical rate increases on if the NFIP plan is not changed or delayed.
Though this could lead to major insurance issues across the U.S., it will have a profoundly negative effect on Plaquemines Parish. According to FEMA’s current flood maps, many of the Parish’s levees and storm protection systems are unaccredited—like berms and barrier islands—which means that any property owner residing within one of these “unaccredited” areas will be deemed as living in a high flood risk zone.
“The Parish has billions of dollars worth of federal improvements [levee systems] that we aren’t getting credit for,” said Dale Benoit, Past-Chairman of GNO,Inc. and co-publisher of The Plaquemines Gazette, who presented GNO Inc’s findings at a meeting of the Plaquemines Association of Business and Industry (PABI), held last week.
This means that homes that were originally built to FEMA elevation standards will no longer be in compliance with the law due to the phas-ing-out of “grandfathering”— meaning that either property owners will have to raise their houses or businesses to meet the new elevation requirements, or face paying absurd flood insurance rates. Neither option sounds good; that is why GNO, Inc. along with officials from the Parish and across the state are fighting to stop these flood insurance reforms.
If left unchecked, these changes could essentially bankrupt entire communities.Homeowners will not be able to pay their insurance rates if the 3,000 percent increase comes to fruition; properties will become worthless, bank mortgages will default, and local tax bases will slowly but surely disintegrate over time.
As a residential example of how homeowners will be affected, GNO, Inc. assessed the possible insurance rates for a house in Jesuit Bend. This home, built in 1998 and valued at $350,000, was built two feet above the elevation requirements at the time, but under the new set of rules this homeowner’s premium would go from $633 per year to $28,554 per year—unacceptable— especially in areas that have never flooded.
Benoit also pointed out that FEMA has not completed an affordability study that would quantify policyholders that may or may not see drastic increases in their policies. The study should have been completed by April of 2013, but it was not—this means that the Biggert-Waters Act would be implemented before rate increases are properly assessed.
“How can they fully implement this program without the study being finished,” said Benoit. “One million or more homes and businesses could be affected by this.”
Currently, FEMA is re-working it’s flood maps to reassess the Parish’s levees, and GNO,Inc. along with others are continuing to try and halt the implementation of the Biggert-Waters Act.
Benoit pointed out that changing the policies or delaying implementation has become a political issue.
“While the Louisiana delegation is fully on board, there are legislators around the nation who believe the program is a hand out to people who repeatedly
build in harms way. They believe this mainly affects vacation homes,” he said.
To counter the misinformation, GNO Inc has led a national group—the Coalition for Sustainable Flood Insurance (CSFI)—that allows representation from all around the country to make the case that this program benefits working families whose jobs in the energy, fishing and maritime industries require that they live close to the coastline.
The group is also showing that flooding is a nationwide problem with numerous flood declarations being made in the interior parts of the nation along rivers.
Documentation provided by FEMA shows that since the NFIP program’s inception in 1969 it has collected $6 billion more in premiums than have been paid out in claims. But from 1969 to 2012, total income of $46,484,128,000 has been surpassed by expenses of $64,231,199,000 when claims, commissions, and interest are added. This lead to a $17,747,071,000 deficit.
FEMA asserts that up to 30 percent of a premium goes towards paying commissions and servicing costs.
GNO, Inc. questions why is the cost so high considering that insurance companies
carry zero risk with the federal government guaranteeing the program.
If flood insurance premiums raise to the proposed higher rates, insurance companies will be pocketing a significant amount of money— GNO, Inc. and many others find this to be unfair to property owners and aim to push for a change.