'Worst April Fools' joke ever': Risk Rating 2.0 expected to cause Louisiana flood insurance premiums to skyrocket
BATON ROUGE - Hundreds of thousands of Louisiana flood insurance policyholders could soon be shelling out more for coverage as FEMA's new Risk Rating 2.0 went into full effect Friday.
"Worst April Fools' joke ever," Rep. Garret Graves said in an interview with WBRZ one day before the new rating structure was enacted.
New flood insurance policies had already been subject to Risk Rating 2.0 beginning October 1, 2021. All other policies made the change Friday.
In Louisiana, some 80% of policyholders could see an increase in flood insurance premiums this year.
"Look, in some cases this may be a few hundred dollars a year," Graves said. "In some extreme cases, right now, it may be a few thousand dollars a year. We've seen rates going from maybe $500 a year to $7,000, $8,000, $9,000 a year."
Under Risk Rating 2.0, rates will be determined not by flood zone, but rather by individual properties, which according to FEMA include flood frequency, multiple flood types—river overflow, storm surge, coastal erosion and heavy rainfall—and distance to a water source along with property characteristics such as elevation and the cost to rebuild.
FEMA contends the new rating system will be fairer, allowing premiums to be more equitable and better reflect the risk for properties in flood-prone areas.
For months, Louisiana's congressional delegation has pushed the feds to cancel or delay the implementation of Risk Rating 2.0, calling for more information on what policyholders will pay beyond the first year and how rates are calculated.
"We continue to ask FEMA to release how it's calculating rates and how mitigation can reduce the rates," Sen. Bill Cassidy told local reporters in February.
Earlier this week, several southeast Louisiana parish presidents raised concerns that Risk Rating 2.0 will make flood insurance unaffordable for some and may lead others to drop coverage entirely, according to WWL-TV in New Orleans.
"We're going to be communities with uninsured homes, and none of us want that as parish presidents," Jefferson Parish President Cynthia Lee Sheng said. "None of us wants that. That is a disaster waiting to happen to us."
Friday afternoon, East Baton Rouge Mayor-President Sharon Weston Broome's office released the following statement to WBRZ about Risk Rating 2.0:
"These changes by the federal government are disappointing. We are concerned about what they mean for homeowners and flood insurance policy holders in our parish. We have been voicing our concerns to the federal government for some time now. We will continue to take steps to strengthen our community’s flood insurance rating and coordinate with our congressional delegation to advocate for our citizens."
On Capitol Hill, Louisiana lawmakers have been trying to legislatively pump the brakes on Risk Rating 2.0 taking effect with a handful of bipartisan bills aimed at more transparency.
"We've offered amendments to try to prevent this from being fully implemented until [FEMA has] better information out there, being able to explain to homeowners and renters the costs of these new rates," Graves said.
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