Increases to flood insurance premiums likely in Louisiana
ALEXANDRIA, La. (KALB) - The National Flood Insurance Program is making a change on October 1, called Risk Rating 2.0.
In Louisiana, there are concerns about rising insurance prices due to the changes to the NFIP, especially as Louisiana still deals with damage brought by Hurricane Ida. Senator Bill Cassidy is pushing for a delay on this change, which he said could raise policy prices for a majority of policyholders in Louisiana.
“We know Risk Rating 2.0 will increase costs. In Louisiana, 80% of policyholders will see an increase in the first year. For some, premiums may become unaffordable and collapse the value of their home,” said Cassidy.
The FEMA-controlled program will now have flood insurance rates that are dictated based on multiple factors relative to the home, instead of the flood zone in which the home is located. Kevin Williams, an insurance agent in Pineville, explained some of the new factors the premiums will be based on.
“A few of those dynamics would be the cost to replace the home, the elevation of the home and the height of the home, the distance to water, and of course they also factor in claims history in that specific area that you’re in. So it’s not going to be based on a specific area primarily but upon a specific structure that you’re insuring,” said Williams.
Existing policyholders who renew their insurance between this October and April 2022 will have their existing rates grandfathered in. Those who buy new homes and are looking to get flood insurance could see an increase of as much as 18% in their premium.
Williams said, although most new policyholders will see an increase, some could see a decrease in price.
“Of those 495,000 flood policies in Louisiana, they’re expecting about 80% of them to get an increase, about 20% of them will go down, and so it’s not going to go up for everyone, but at this point, a majority of policies will see an increase,” he said.
This is the largest change to the National Flood Insurance Program since its inception in 1968.
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