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Flood insurance rates are going up and St Tammany Parish is suppose to be hit hard. So FEMA seeks to reassure them. How? By telling how the rates were developed.

Many south Louisiana property owners will see steep increases in their flood insurance premiums due to an overhaul currently taking effect, and a Federal Emergency Management Agency official on Wednesday sought to explain the complex new system to St. Tammany residents concerned over how their homes will be affected. The official spoke at a public meeting in the Parish Council chamber near Mandeville after heavy criticism that the agency has not been sufficiently transparent with the public on the drastic changes to the country’s flood insurance program. The presentation was far more detailed than one provided at a forum in St. Charles Parish in March. The new system has provoked deep concern over whether it will reshape parts of the housing market in Louisiana, which has the country’s highest participation rate in the National Flood Insurance Program. Parish leaders and the state’s congressional delegation have been seeking to limit the increases on the way for Louisiana homeowners, so far without success. Bonnie Peyroux, president of the homeowners association in the Moonraker Island subdivision on the Slidell lakefront, said she worried not only about flood insurance spiraling but also other costs such as homeowners coverage. “We have people who are leaving because they simply can’t afford to live there anymore,” said Peyroux, 76.

Telling me how they were developed will not make me happy as they are still rising fast. I appreciate what they are doing but it is a bit too late.

St. Tammany President Mike Cooper said residents remain concerned over premium increases, but that he appreciated the presentation from FEMA’s Gilbert Giron. “Last year when we were aware of this, there were too many unanswered questions,” Cooper said after the meeting. “And Congress has tried to intervene. Our local officials have met, other parish presidents have met. And we have asked Congress to intervene with FEMA.” The new system for setting rates, known as Risk Rating 2.0, will no longer rely on FEMA’s maps and instead will look at the individual characteristics of each property to determine premiums. It is the biggest change in how rates are set in the NFIP’s history. It will bring the the national program, which FEMA oversees, more in line with private sector practices, and also help address the federal program’s enormous debt: more than $20 billion. Proponents say it will seek to price the flood risk of each property accurately and do away with a system that resulted in less expensive, older homes essentially subsidizing premiums for newer, pricey houses.

Old house versus new house? I thought is was more on how close to water. I don’t want to subsidize a beach front house but the house next to me suffers the same level of flooding although the damage may be different.

But there are worries of unintended consequences in south Louisiana, where everyone lives near water of some kind. One of the factors being used to set the new rates is distance from water; others include construction type, cost of rebuilding and height above ground. Risk Rating 2.0 took effect for new policies in October, while existing policies began seeing the change in April, starting with policy renewals. Increases for existing policyholders will be phased in, limited to 18% per year. Those increases will continue annually until homes reach their full risk rate, compounding over time. New policies are priced at the full rate immediately, and some real estate agents and insurers report seeing certain premiums quadruple or more compared to what they would have been under the old system. Around 20% of Louisiana policyholders are expected to see one-time decreases.

The presentation was an hour long but the only questions taken were those submitted in advance. I usually get my questions from the presentation.

Giron provided an hour-long presentation on the new system, explaining factors used in setting rates, then answered questions submitted in advance as well as from the audience. He defended FEMA’s transparency, saying he has been providing similar presentations in various locations for months, though many have noted that parts of the data in the new algorithm are proprietary and not available to the general public. He also had a warning for Louisiana residents, saying that premiums in the state “have been artificially low for years,” while also pointing to the large amount of claims paid out in the state. “We are addressing that not just in Louisiana,” said Giron. “We’re addressing this in the entire country.” But as many others have pointed out, a large proportion of Louisiana’s claims resulted from the federal levee failures during Hurricane Katrina in 2005, not from foolhardy decisions to live in risky areas.

The last sentence is right, especially for those who have been here for a number of years. The ones who will be hurt the most are the poor and vulnerable as they don’t have the money to pay and kive in the most flood prone areas.

FEMA reassures St Tammany on flood insurance
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