The new flood insurance risk rating methodology that the Federal Emergency Management Agency recently implemented will result in many people across the country receiving shocking premium increases. This new methodology, known as Risk Rating 2.0, will result in about 80% of policyholders having an increase in premiums. Further, FEMA will continue to increase premiums by 18% annually until a “true risk-based premium” is reached.

These good intentions are already hitting homeowners and I believe, over time, the negative consequences will become more apparent. If you are a homeowner with a mortgage and are required to have flood insurance, then premiums that become unaffordable will not only significantly impact you as the homeowner, but also your lender and your community. Unaffordable premiums will directly result in the devaluation of homes. To make matter worse, I understand that insurance agents and Realtors do not have the information they need to serve their clients. We also are told that homebuilders need more guidance on how elevation impacts premiums. This lack of transparency is inexcusable.

Flood insurance should be available and affordable so people can live and work in their communities. FEMA arbitrarily changed the rules for existing policyholders who, in many instances, have no practical alternative to these flood policies. Bankers in Louisiana are already reporting the impact of these changes. Examples for primary residence premium increases in Louisiana cities include: Waggaman — a jump from $574 to $2,490; Terrytown, $537 to $1,936; Metairie, $572 to $1,921; Gibson, $600 to $5,100.

FEMA needs to pause Risk Rating 2.0 until a study is completed with proper changes that assure the National Flood Insurance Program is more equitable, affordable and available to citizens across the nation.


Louisiana Bankers Association

Baton Rouge