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WASHINGTON – RealEstateRama – U.S. Senator Bill Cassidy, M.D. (R-LA) today delivered a speech on the U.S. Senate floor demanding Congress take action to ensure the National Flood Insurance Program (NFIP) remains affordable, particularly in the wake of flooding across Louisiana last week.
“Last week, we saw terrible flooding in parts of Louisiana,” said Dr. Cassidy. “Now, families in Louisiana are turning to FEMA and the National Flood Insurance Program to help lift them out of the hole that last week’s storms have left them in. Moments like this are why families have flood insurance.”
“NFIP premiums in Louisiana are expected to go up by 234%, with some zip codes increasing as much as 1,100%. In real terms, some zip codes will see an increase from around 600 dollars to more than eight thousand dollars annually,” said Dr. Cassidy. “Insurance—just like everything else in this country—has become unaffordable.”
Background
Last month, Cassidy delivered a speech on the Senate floor highlighting how important flood insurance is across the United States. He urged Congress to take action to protect the 4.7 million American homes that rely on NFIP to rebuild after a flood.
In January, the U.S. Senate Banking Committee held a hearing on NFIP at the request of Cassidy. The hearing highlighted the urgent need for Congress to act and featured a Louisiana witness.
Last year, Cassidy reintroduced his National Flood Insurance Program Reauthorization Act to reauthorize the program for five years, providing greater stability for homeowners, small business owners, and the real estate market as the nation continues to struggle with inflationary pressures. The bill would also implement a series of sweeping reforms to reduce costs, make generational investments in communities to reduce flood risk, and establish a fairer claims process for policyholders. He participated in a roundtable hosted by GNO, Inc. and the Coalition for Sustainable Flood Insurance before introducing the bill to hear from community leaders and advocates on the issue.
Cassidy also traveled St. Bernard Parish last August to talk with residents about their flood insurance premiums, resulting in the second episode of his series Bill on the Hill.
Last February, Cassidy delivered a speech on the U.S. Senate floor demanding the Biden administration halt massive hikes to National Flood Insurance Program premiums caused by Risk Rating 2.0. He continues to call out President Biden—who can stop the implementation of Risk Rating 2.0 with the stroke of his pen.
The NFIP-RE Act of 2023 has been met with an outpouring of support including New Orleans Chamber of Commerce President and CEO Sandra Lindquist, Baton Rouge Area Chamber President and CEO Adam Knapp, Home Builders Association of Greater Baton Rouge President and CEO Karen Zito, Greater New Orleans, Inc. President and CEO Michael Hecht, Restore and Retreat Executive Director and State Representative Joseph Orgeron, Lafourche Parish President Hon. Archie Chaisson, III, St. Tammany Corporation CEO Chris Masingill, Terrebonne Levee and Conservation District President Tony Alford, Northshore Home Builders Association Executive Officer Amy Ybarzabal, and National Association of Counties Executive Director Matthew Chase. Here’s what people are saying.
In February 2022, FEMA publicly acknowledged an internal study finding that the implementation of Risk Rating 2.0 to the National Flood Insurance Program (NFIP) could cause 20% of policyholders to drop out of the program due to skyrocketing premiums. Learn more here.
Cassidy’s full speech as prepared for delivery can be found below:
Mr./Madame President,
Last week, we saw terrible flooding in parts of Louisiana.
People’s lives were disrupted, just like after any serious flooding.
Now, families in Louisiana are turning to FEMA and the National Flood Insurance Program to help lift them out of the hole that last week’s storms have left them in.
Moments like this are why families have flood insurance.
But what about after we’ve recovered and the sun is shining again?
There is an increasing concern amongst Louisianans and Americans that they will not be able to afford to keep their flood insurance for when the next storm hits.
A house is the biggest purchase most people make in their lifetime.
Unless you are among the wealthiest Americans, you are taking out a mortgage to make that purchase.
After you’ve bought your home, imagine if FEMA changes the rules, and your flood insurance now costs more than that mortgage.
No American should have to pay more in flood insurance than their mortgage.
But that is the story I am hearing more frequently from people in Louisiana.
There is a cost-of-living crisis in Louisiana that is being fueled by inflation created by the Biden administration.
Inflation is costing Louisiana families 884 dollars more a month compared to 2021.
Everywhere they turn, they are frustrated with the fact they’re paying more and getting less.
When I speak to families back in my state, they are not only worried about how they are going to put food on their table or pay for gas.
They are worried about how they are going to afford to stay in their homes. How can they afford a good education for their children?
Congress has the power to do something about it, and I want to focus on making flood insurance affordable.
The National Flood Insurance Program was created as a safety net for the most vulnerable Americans.
It covers 4.7 million American homes.
But those millions of homes are at risk of losing their protection because of skyrocketing premiums caused by FEMA’s new risk assessment system, Risk Rating 2.0.
Let’s talk briefly about the history of NFIP, Risk Rating 2.0, and how we got here.
FEMA introduced Risk Rating 2.0 in October of 2021, and it was slated to take effect in 2022 for new policies and in 2023 for existing policyholders.
Since then, Americans who rely on flood insurance have been held in a state of uncertainty.
Before they were hit with that first bill, many families didn’t know if their premiums would jump up, how much they would increase, and when the rate hikes would end.
FEMA told us that 77 percent of policyholders would see a premium hike, but they refused to tell us how the agency calculates individual policy rates.
FEMA is hitting Americans with a bill and won’t tell Congress—the people elected to represent them—how they came up with the price?
If I sound frustrated, that’s because I am.
You wouldn’t accept if your mechanic stuck you with a crazy bill but wouldn’t tell you what was wrong with your car.
Why would we just accept it from a government agency that exists to serve the people?
Louisiana is one of the states getting hit the hardest.
NFIP premiums in Louisiana are expected to go up by 234 percent, with some zip codes increasing as much as 11 hundred percent (1,100%).
In real terms, some zip codes will see an increase from around 600 dollars to more than eight thousand dollars annually.
Couple that with the homeowner’s insurance crisis in my state, couple that with inflation across the country, couple that with the cost to heat your home and the cost to go to the grocery store, it’s clear to see why Americans feel like they can’t keep their head above water.
Insurance—just like everything else in this country—has become unaffordable.
And when people can’t afford flood insurance, they begin to drop their coverage, and the pool of policyholders shrinks.
It enters what’s called an actuarial death spiral.
FEMA itself forecasted that over 20 percent of policyholders would leave the program within 10 years.
We are setting the program up for collapse and leaving Americans who need insurance out in the cold.
And some groups are being hit even harder than others.
While FEMA won’t tell us how they come up with the numbers they expect Americans to pay, we do know that they do not factor in income—or ability to pay.
There is no discount or consideration for working-class families who live paycheck to paycheck.
Or the elderly couple who are retired and live on a fixed income.
Congress has the power to reverse this trend. We need to step up now.
If my colleagues and my friends in the other chamber want to honor the people we serve, let’s start with the 4.7 million policyholders being mistreated by the National Flood Insurance program.
I urge my colleagues to read our NFIP Reauthorization and Reform Act—come talk to me about it.
We can only move forward by working together.
With that, I yield back.
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