Flood insurance could become unaffordable for thousands, lawmakers worried
Since October, homeowners looking for flood insurance have been met with higher rates due to FEMA's Risk Rating 2.0. Updates the agency says are designed to keep prices fair.
Seventy percent of policyholders could see an increase up to $120 per year. Another 10% could see increases of more than $240 a year. Others could be in for major sticker shock.
"For a lot of those that I'm used to seeing $400-$560 a year number, we are seeing things going up into the thousands," Co-Owner of SafeSource Insurance Group, Aundrea Allen said.
FEMA, however, notes that 20% of people will see their premiums decrease. Allen says she's seen mixed results.
"There are many folks we are sending awesome emails to, 'Hey guys, guess what, your rate is going from $2500 to $500,' or were even able to say, 'Let's add some content coverage, or lower your deductible,'" Allen said.
Senator Bill Cassidy isn't sold on the changes to the National Flood Insurance Program. He asked FEMA in September to stop or delay them until he and other lawmakers could get more clarity. On Wednesday, he announced he still has concerns.
"They finally responded to the letter we sent in September confirming that as much as 20 percent of policyholders will drop," Cassidy said. "Now, this is a problem. If they drop you have to spread the risk over a small number of people, which is going to increase the rates for them all, and that's how you begin an actual-orderly death spiral."
"FEMA has some type of algorithm behind the scenes that we do not have access to," Allen said.
"We continue to ask FEMA to release how it's calculating rates and how mitigation can reduce the rates that happen after the first year of Risk Rating 2.0 when the temporary discounts end," Cassidy said.
New rates for existing policyholders will go into effect after April 1, 2022.
Allen says the best thing to do is speak with your insurance agent 60 days before renewal.
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