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Your Flood Insurance Rate Is Probably Going Up: FEMA Announces New Rates Effective In October

Home elevations, like this one at Old River Landing in Point Coupee Parish, are a common way to escape rising waters and reduce flood insurance premiums in Louisiana.
Phoebe Jones
Home elevations, like this one at Old River Landing in Point Coupee Parish, are a common way to escape rising waters and reduce flood insurance premiums in Louisiana.

Flood insurance rates across the country are about to change in a big way, and it starts on Oct. 1.

Here in Louisiana that mostly means increases. Eighty percent of flood insurance policyholders are expected to see their premiums either increase or stay the same, FEMA announced Thursday. Premiums will decrease for the remaining 20 percent in the state.

Flood insurance rates are set by the National Flood Insurance Program (NFIP), which is run by FEMA, and the new rates are part of a major overhaul to that program billed as “Risk Rating 2.0.”

The changes are meant to do a couple of things:

  • to more accurately reflect the actual flood risk of individual properties,
  • to make the NFIP financially stable,
  • and to provide more transparency to flood insurance customers about how their rates are determined.

That means some people could see their rates decrease, others could see their rates increase, and still others could find out that they need flood insurance when they hadn’t before. David Maurstad, senior executive of the National Flood Insurance Program, said during a press call Thursday that the new approach addresses an “inequity in the program that has built up over time and must be corrected.”
“Policyholders with lower-value homes are paying more than they should, and policyholders with higher-value homes are paying less than they should,” he said.

Here’s how FEMA says the rate changes break down among existing policy holders in Louisiana versus the national average:

  • 20 percent will see an immediate decrease (nationally: 23 percent)
  • 70 percent will see an increase of $0 - $10 per month (nationally: 66 percent)
  • 7 percent will see an increase of $10 - $20 per month (nationally: 7 percent)
  • 3 percent will see an increase of $20 per month or more (nationally: 4 percent)

It’s not yet clear where the increases and decreases will take place. FEMA recommends people contact their flood insurance agent to determine how their premium is expected to change.
When will this go into effect?

Oct. 1 for new policies. For people renewing an existing policy: April 1, 2022.

Will my rate increase all at once?

No. If your rate is expected to increase, it won’t happen all at once. FEMA can only increase premiums by 18 percent every year, so the highest-risk properties (those with the highest premiums) will see rates increase over time. It could take up to 15 years for some people to reach the ceiling of their premium.

How is FEMA coming up with these numbers?

FEMA is using a blend of datasets and models from both the private and public sector, including USGS, NOAA and the Army Corps of Engineers.

What’s the most my premium could increase?

Right now, FEMA does not have a cap on how much an individual premium can be. Under Risk Rating 2.0, premiums will be capped around $12,000 per year. Andy Neal, chief actuary for FEMA, said that number would be for the highest-value homes, and that the cap “is not something we’re chiseling into stone.”

“Just like when I was a kid, you could buy a pair of designer jeans for $10 or $20. You can’t do that anymore. Inflation changes things.”

Starting in October, no one will pay more than $12,000 per year for flood insurance. But the cap could increase as climate change increases flood risk for some communities, and as the models used to determine flood risk are updated.

How often will the rates continue to change?

Premiums could change yearly. FEMA will review the models it uses to determine risk once a year.

Support for the Coastal Desk comes from the Greater New Orleans Foundation, the Walton Family Foundation, and local listeners.

As Coastal Reporter, Travis Lux covers flood protection, coastal restoration, infrastructure, the energy and seafood industries, and the environment. In this role he's reported on everything from pipeline protests in the Atchafalaya swamp, to how shrimpers cope with low prices. He had a big hand in producing the series, New Orleans: Ready Or Not?, which examined how prepared New Orleans is for a future with more extreme weather. In 2017, Travis co-produced two episodes of TriPod: New Orleans at 300 examining New Orleans' historic efforts at flood protection. One episode, NOLA vs Nature: The Other Biggest Flood in New Orleans History, was recognized with awards from the Public Radio News Directors and the New Orleans Press Club. His stories often find a wider audience on national programs, too, like NPR's Morning Edition, WBUR's Here and Now, and WHYY's The Pulse.

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