Flood insurance costs cause concern; nonprofit discusses underestimated flood risks
NEW ORLEANS (WVUE) — Darrell Cheatham has maintained the greenery outside his home in the Broadmoor neighborhood of New Orleans. The weather was great but sometimes the rain can cause him problems.
“He’ll come out of the ground, you know, but once a year he can get into your house, he can get into my butt, about a foot,” Cheatham said.
Like many people in Louisiana, he worries about rising flood insurance premiums.
“Because, you know, it’s like impacting your mortgage, it’s impacting your monthly income because now you have to put that into the equation,” Cheatham said.
Ricky LeBoeuf of Leithman-LeBoeuf Insurance says he sees the impact of FEMA’s 2.0 risk rating.
“I think a lot of people will get sticker shock,” LeBoeuf said.
FEMA has implemented a new methodology for determining flood insurance rates.
“Policies increase every year, usually with flood insurance, but this year we are seeing higher than normal increases, but they are currently capped at 18%, but it is per year and can continue to increase 18%,” LeBoeuf said. .
FEMA says it has updated the National Flood Insurance Program risk rating to provide flood insurance rates that are actuarially sound and better reflect a property’s flood risk.
The First Street Foundation, a New York-based nonprofit, has analyzed the economic impact of underestimated flood risk on properties and has its own flood risk model.
Jeremy Porter, Ph.D., is with the foundation.
“The flood hazard model that was developed by the First Street Foundation is a traditional hydrodynamic flood model that produces high resolution flood layers over the property.”
Additionally, Porter said, “This risk-based approach that we take at the First Street Foundation reflects the flood patterns that underpin the Risk Rating 2.0 approach.”
He says it provides valuable information to the public.
“By looking at the First Street Foundation’s flood layers, you can begin to understand what the risk-based approach looks like and what type of risk profile each property has.”
The Foundation examined the municipalities with the greatest difference between average expected loss and average premiums last year.
Lacombe, Covington, LaPlace and Houma top the list of 10 areas.
Porter was asked if people in those areas could expect an increase.
“Yeah, especially in those top 10 areas,” Porter said. “In this report, we were able to identify the areas most undervalued at this point by the current NFIP pricing structure.”
The foundation created FloodFactor.com to help homeowners find their property’s flood risk. On the site, owners can enter their addresses to obtain risk information.
“In coastal areas, you see almost across the country, and especially in South Louisiana, you see places where the old NFIP pricing structure was much lower than the actual risk-based pricing structure for insurance, which is likely to reflect what the Risk 2.0 rating looks like. “, Porter said.
Fearing devastating effects on homeowners, members of the Louisiana congressional delegation called on FEMA to end the 2.0 risk rating. But it didn’t happen.
So homeowners like Cheatham are seeing higher flood insurance premiums.
“It will never be what it was the year before,” he said.
LeBoeuf advises policyholders to respond immediately if their insurance agent asks for more information about their property.
Give them the new information, otherwise they’re filled with default answers and that’s going to help their renewal bonus,” LeBoeuf said. “They ask for square footage, how many floors in the building, if the machinery is elevated above the first floor, things like that.”
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