The Federal Emergency Management Agency (FEMA) recently issued new flood maps that require people in many parts of New Orleans to elevate their houses, according to Jeff Albright, CEO of the Independent Insurance Agents of Louisiana.
“When you talk of raising a structure up off the ground, it’s very expensive. I’ve heard estimates ranging from $25,000 to $60,000. That is a very difficult situation for policyholders to deal with. If policyholders are not able to have their houses elevated, will flood insurance be available through the NFIP?” Albright asked.
There are many public policy questions related to rebuilding an area that is below sea level and then providing flood insurance to it, Albright said. “A lot of people who are not from [New Orleans] ask the question, ‘Why do people live below sea level? And, why should we rebuild that? And, why should those people get any help?’”
Albright said people in New Orleans bought homes and other property based on existing FEMA flood maps and assurances from the Army Corps of Engineers that the levees could withstand a Cat 3 hurricane. “People made rational decisions based on the information they had at the time.,” he said.
However, “FEMA is revising its maps and saying, ‘Oops, it needs to be 3 feet higher.’ ‘Oops, the levees didn’t hold. By the way, we don’t think its going to hold the next time a Cat 3 storm hits. We’re not sure we’re going to enhance the levees to make them what we told you they were to begin with,’” Albright said.
He asked, “Whose fault is that? Is it the fault of the policyholders that made rational decisions based upon assurances from the federal government, FEMA and the Corps of Engineers? Or is it the fault of the federal government for allowing them to commit to major assets and properties that weren’t as protected as they said they were?”
The question comes down to who will pay for it? “Are we going to make those people in New Orleans suffer enormous financial loss?” Albright asked.
That remains to be seen.