Coastal News Roundup: National Flood Insurance Program Extended, Again
It’s Friday and time for the Coastal News Roundup - this week, a look at how changes to the National Flood Insurance Program could impact Louisianians.
WWNO’s Tegan Wendland talked with Caitlin Berni, a policy expert and consultant on GNO Inc.’s Coalition for Sustainable Flood Insurance. She gave a presentation on the issue to the Coastal Protection and Restoration Authority this week.
Q: The National Flood Insurance program lets people buy home insurance through the federal government. It's run by FEMA but the program is billions of dollars in debt. Congress is looking to extend it again through September - it was set to expire at the end of this month. Lawmakers continue grappling with how to reform it. Why can't they agree on what to do?
We are about to do another short-term extension to take us through the end of September. But there is a great reform package that's been introduced by Congresswoman Maxine Waters, who's chair of the Financial Services Committee. There are also some great proposals that have been authored by Senator Cassidy and Senator Kennedy that are going to be introduced and there is a lot of alignment between members of both parties and promote wide geography, we need to be focusing on ensuring affordability, improving how we assess and communicate risk, increasing opportunities for mitigation, and also getting more folks covered for the peril of flood.
Q: Let's talk about that a little bit. One of the big problems is that the same homes keep being flooded and rebuilt over and over and over again. In fact FEMA has paid out more than $1 billion to rebuild homes like that, “repetitive loss” properties. Twenty-five percent of them are actually here in Louisiana. So this basically incentivizes people to rebuild in vulnerable areas. How could the program be reformed to address this problem?
So I think we need to be putting a greater focus on mitigation and providing greater assistance for both homeowners who have flooded properties to have direct resources to mitigate their own properties, and also really helping communities have technical expertise so that they could be doing community-wide mitigation projects to reduce flood risk, and also helping those homeowners who need help mitigating their properties.
Q: So finding ways to incentivize people installing rain gardens and things on their personal property but also for municipalities to increase flood protection like levees.
Yes - or drainage or greater resources for home elevations. And that is a proposed reform that is on the table.
Q: You talk about keeping flood insurance affordable but what about seeing relocation in some of the most vulnerable areas as a solution?
In the House bills there are greater resources that allow for buyouts to occur. So that is something that has been proposed in the legislation that has come out in Congresswoman Waters bills.
Q: One of the proposals is to make the maps more granular so to really hone in on areas of risk and then have the flood insurance rate reflect whatever that actual level of risk is. So what could that mean for the average flood insurance holder. Could rates be more or less expensive as a result.
Sure so that's actually going to be coming down through something called “risk rating 2.0” that FEMA is implementing separately from the reform legislation that's being proposed in Congress. And I think we have a lot of questions about how that is going to be implemented. As you mentioned it's going to be very granular. Right now risk is assessed through mapping that's very broadly based and you're either in a flood zone or out of a flood zone. And this is going to be property-specific. It could lower some folks’ rates and it could increase some folks’ rates.
Q: But what does it mean for a person who bought a house in what they thought was a pretty safe area because it wasn't in a flood zone and now by the new measures it's risky?
That is to be determined - because right now, Congress has determined that you're either in a mandatory purchase zone or you're out of a mandatory purchase zone. And I think there are a whole lot of questions about how the new risk rating system is going to interact with the mandatory purchase zone and there's not a whole lot of answers on that.
Q: It seems like one of the real problems is the lack of competition in terms of flood insurance providers - don't you think one of the solutions could be to encourage private companies to compete with the federal program?
Sure. I think, you know, that's beginning to happen in Florida. They have been very proactive about wanting to bring in private flood carriers, and have been very proactive in trying to get them covering - particularly in the optional zones - where it's easier from a federal regulatory perspective to enter the marketplace. And so, that definitely is something that we can pursue. That's only 2-3 percent of the net market penetration in Florida altogether. So I think we need a healthy NFIP alongside the growth of the private market because that'll probably take 20 years to get stood up in a way that's meaningful for folks, and actually be competitive in a place like Louisiana.
GNO Inc. is a WWNO underwriter.
Support for the Coastal Desk comes from the Walton Family Foundation, the Greater New Orleans Foundation and the Foundation for Louisiana.