Louisiana’s Department of Insurance has joined a lawsuit filed by Mississippi against the federal government to try to block rates from increasing Oct. 1 in the National Flood Insurance Program.
Commissioner Jim Donelon said that the department had filed an “amicus curiae, or friend of the court” brief in Mississippi’s lawsuit.
Donelon said the proposed increases under the Biggert-Waters Flood Insurance Reform Act could be devastating for south Louisiana homeowners.
“The changes to the federal flood program will disproportionately affect policyholders along Louisiana’s working coast. Placing the bulk of the flood insurance burden on these hardworking homeowners is not only financially burdensome but unjust,” he said.
In September, Mississippi sued and asked a federal judge to find that the Federal Emergency Management Agency was obligated to deliver an affordability study to Congress by this past April but had failed to do so. About 17.4 million households in the U.S. live in areas where flood insurance is mandatory, and 41 percent of those have low to median income levels, the lawsuit says. The suit asks the judge to block rate increases until FEMA has done everything the law requires.
The Biggert-Waters Act removes federal subsidies from properties in flood zones. FEMA says the phase-out of subsidies will affect fewer than 20 percent of flood policyholders nationwide.
In Mississippi, 14 percent of flood insurance policies are subsidized, according to the NFIP. Louisiana flood policyholders currently pay more than $360 million in premium to the NFIP, which is the third most premium in the nation, after Florida and Texas. As of Sept. 30, there were about 483,000 NFIP policies in force in Louisiana.
The 2012 law was intended to keep the flood insurance program solvent after a large number of claims following Hurricanes Katrina and Rita, which struck in 2005. It reauthorized the flood insurance program for five years and set a strategy for updating flood zone maps across the U.S. The Mississippi lawsuit says that according to FEMA, Mississippi and Louisiana are the first states to include post-Katrina statistics in their rating methodology.
“This means that Mississippi’s citizens will be among the first in the nation to have these drastic rate increases imposed, and that Mississippi’s citizens will pay for them many years before citizens of other states are required to do likewise,” the lawsuit says.
Louisiana joins Florida, Alabama, South Carolina and Massachusetts in filing amicus briefs in the Mississippi lawsuit.
Louisiana’s brief also states that many residents received FEMA grants and other benefits following Katrina, conditioned in part upon their continued participation in the NFIP.
At the time they did so, the NFIP rates were reasonable and were anticipated to remain so. Moreover, those that rebuilt did so in compliance with then-applicable Base Flood Elevations, the document states.
“If flood insurance premiums escalate beyond affordability because of the Biggert-Waters Act, the recipients of such grants and other grants may be subjected to adverse action by FEMA or their lenders over which they have no practical control,” the brief said.
The suit also states that in some circumstances, the new flood insurance rates will result in an unconstitutional taking of property.
After Katrina and Rita, many rebuilt properties to the Base Flood Elevations then in effect. “Remapping pursuant to the Biggert-Waters Act has resulted in significant increases to the BFEs and, as a result, many homes and businesses built at or over the BFEs that were then in effect are now several feet below the new BFE levels,” the brief said.
“This results in properties being subject to drastic increases in flood insurance premiums even though they were built in compliance with the Base Flood Elevations in effect at the time,” Donelon said. “Many properties have already begun to lose value and will become challenging, if not impossible, to sell. We feel that the devaluation of homes due to these changes is a de facto taking of people’s property value without due process.”