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The Uncertain Future Of Flood Insurance

Since last August, the popularity of flood insurance has again surged in Louisiana, but the future of the debt-laden National Flood Insurance Program is uncertain. Since 2005, the program has racked up $24.6 billion in liability to the U.S. Treasury, mostly due to claims after Hurricane Katrina, Superstorm Sandy, and the Great Louisiana Flood of 2016. That’s just one way that Louisiana’s past is influencing the federal program’s future.

‘Hopefully, our friends at FEMA…’

In the spring of 2013, an auditorium at Hahnville High was packed. Federal Emergency Management Officials were on stage to explain the recently-passed Biggert-Waters Flood Insurance Reform Act, which aimed to shift some of the cost of flood risk to policyholders. Behind a microphone, a parish official introduced the federal dignitaries: “So, ladies and gentlemen, hopefully, our friends at FEMA, give them a round of applause…”

The applause transformed quickly into boos.

The reforms Congress had wanted would have brought exponentially higher rates to St. Charles. Angry property owners threw the keys to their houses at federal officials, and left them on a railing in the auditorium. The keys became a symbol of rebellion in the parish, and they helped catalyze a rollback of Biggert-Waters in Washington.

Then last year, a no-name storm dumped three times as much water as Hurricane Katrina on Louisiana. Across 20 parishes so far, the federal government has paid out $2.4 billion just in flood claims.

Once again, federal lawmakers are questioning whether low-lying areas are too risky to insure. Quoting his own constituents, Texas Congressman Jeb Hensarling has argued that people who don’t have flood risk subsidize those who do. “In talking about the program, Steven of Larue in my district said, 'This is just another instance of the federal government wasting the taxpayer dollars over and over and over again on the same problems.'"

Not ‘a bunch of stupid Cajuns’

“There’s always going to be somebody who says, why should we have to bite the bullet for somebody who decided to build on a floodplain? Well, that’s where we have to tell the rest of the country, we do have value,” says Julia Fisher-Perrier, a St. Charles Parish councilwoman who lobbies Congress on flood insurance. “Just because we built on a flood plain does not just mean we’re a bunch of stupid Cajuns.”

She says her community needs two things from insurance: affordability and sustainability. And she’d know: an independent insurance agent by day, she sells plenty of flood policies. Historically, federal flood claims in Louisiana add up to about as much as the next three states combined.

But Fisher-Perrier argues communities like hers are stepping up now to cut their risk down. A two-year-old millage tax in St Charles Parish funds over $5 million annually in levee protection. “We go to D.C. and we explain that we’ve passed that tax; they want to help more,” she says. “We’ve got our act together here.”

‘A stitch in time saves nine’

For lawmakers seeking to reauthorize the federal program, its survival depends on balancing the books. Sustainability comes from better planning, says Louisiana Senator Bill Cassidy. His reauthorization bill would move existing policy fees toward reducing flood risk.

“Is there something that a community can do that can decrease their risk of flooding so that you don’t have to pay out flood insurance premiums, right?” he says. “A stitch in time saves nine.”

Even so, FEMA funding for risk reduction is shaky at a time when many Republicans want to cut budgets. Another idea for shoring it up is to forgive the interest on the debt the flood insurance program owes to the U.S. Treasury.

Greater New Orleans, Inc.’s Vice President for Policy and Communications Caitlin Berni says that would free up hundreds of millions of dollars a year. “We feel like that is going to provide the taxpayer and the federal government with much longer greater benefit over the long term than moving money from one federal government pocket to another which is what we are doing right now paying interest on debt to the US treasury," says Berni. 

Berni says it’s also important for Congress to keep insurance affordable. Sixty thousand more people have flood policies in Louisiana compared to a year ago. Berni wants that number to keep growing. “Flood insurance is only sustainable if more people buy it.”

Some lawmakers want to raise premiums sooner rather than later, get rid of policy subsidies entirely, or even kick some properties out of the program. Sixth District Congressman Garrett Graves, who represents parts of Baton Rouge, says that’s not fair.

“If we establish standards, and people comply with it, you really can’t keep coming back and moving the goal line on people which unfortunately is what has happened," says Graves. 

Lawmakers on both sides of the aisle including Graves also say cutting red tape makes the program more appealing to policy buyers.

Most Louisianans who flooded last year didn’t have flood insurance. But Shirley Wilkinson did. “If that’s what you want to call it,” she laughs, without humor. Wilkinson is scraping down her savings and digging into her retirement to rebuild her Denham Springs home. “I had $117,000 in damage to my home, my home is worth $120,000, and they wanted to give me like $40,000 to fix my house,” she says.

She’s not so sure the federal program is worth it anymore. Like a lot of homeowners – after last year’s flood, after Sandy in New York, and after Katrina – Wilkinson feels lowballed. “If I could I would never buy insurance ever again,” she says.

“A lot of different fingers of blame”

Natural Resources Defense Council senior policy analyst Rob Moore agrees that flood insurance has to be accessible in order to be successful. He also points out that local communities can already lower their rates themselves. An existing FEMA program knocks up to twenty percent off policies where cities and parishes improve drainage and tighten up building codes.

After last year, Denham Springs and other communities are considering more regional fixes against future floods. But just eight percent of cities and a quarter of parishes in Louisiana do that.

“There are a lot of different fingers of blame you can point for that situation,” Moore says. “You know, Louisiana as a state and its communities could be doing more to help its residents with the risks it’s facing. But a lot of this starts with Congress too.”

Moore argues that FEMA and the flood program shouldn’t be so focused on getting people back to the exact same spot. “Our primary response to flood disasters is to rebuild. What we need to be paying more attention to is, how do we help people live somewhere that’s safer.”

Who will pay the cost of risk?

Rebalancing the message that the federal flood insurance program sends could also rebalance the costs of managing risk among parishes, towns, and policyholders themselves.

Which is why Westbank resident Mike Cacibuda is paying attention to what happens in Washington. As far as he’s concerned, he and his family are safe: they’ve never flooded. But his Jefferson Parish home is also in a special high risk flood zone. So, “you've got to be insured.”

He’s more prepared than some. Cacibuda points to storm shutters, paid for by the Road Home program after Katrina. But his house sits on a concrete slab foundation. Lifting it up above the flood zone would cost a pile.

His risk might be changing, but Cacibuda doesn’t think his insurance should. “To have to absorb that whole cost yourself? I mean, we didn’t do it. It’s not like - we didn’t ask for a hurricane to come here.”

Cacibuda says he can’t raise his house. Jefferson Parish has already raised levees and floodwalls. The only thing left to raise is insurance: new FEMA maps are lifting his premium to $2,200 a year.

The Louisiana Public Radio Partnership is made possible by the Corporation for Public Broadcasting.

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