Flood Insurance premiums in Louisiana

Flood insurance premiums could rise 20 percent in Louisiana – $1.1 billion shortfall in state’s 2013 Medicaid budget

By Bruce Alpert, Times-Picayune

Desdemona Despair,

30 June, 2012

Washington – New federal flood insurance legislation could force some homeowners and commercial property owners to pay higher premiums, up to 20 percent a year for the next five years. Currently rate increases are limited to 10 percent annually. The legislation, added to a transportation funding bill expected to win congressional approval by the weekend, would apply to second homes, properties with repetitive flood claims and commercial properties.

The bill finances Louisiana highway and mass transit projects and includes the Restore Act, which would funnel billions of dollars in anticipated Clean Water Act fines from the 2010 BP oil spill to Louisiana and the four other Gulf states.

About 25 percent of the 5.6 million federal flood insurance policies have been in the program since 1972, and were exempted from congressional mandates to adjust rates closer to market prices, according to insurance industry estimates.

That protection will continue for owners of primary residences covered by the federal flood insurance program since 1972, as long as they haven't made repeat claims and don't make future renovations or rebuild in a way that increases a property's value by 50 percent or more.

Most Louisiana lawmakers said the bill, which extends the program for five years after dozens of short-term extensions, will bring some important stability.

The program has been extended for short intervals 16 times since 2008. The program temporarily lost authorization four times, resulting in postponement of house sale closings in communities where flood insurance is mandatory. […]

After Hurricane Katrina, some homeowners, including prominent members of Congress, said FEMA relied too heavily on insurance company determinations that the damage was caused by floodwaters, which enabled the private companies to avoid paying out on wind policies and put the financial burden on the federal program.

The bill also calls on FEMA to streamline and improve its migration grant program to help lift or move homes out of harm's way to prevent repetitive claims.

As details of the transportation bill emerged Thursday, there was praise from Louisiana lawmakers and environmental groups for the inclusion of the Restore Act, to funnel Clean Water Act fines to the Gulf coast for ecosystem restoration and economic recovery efforts.

But House Republican leaders were criticized for insisting the costs of the bill be partially offset by reclaiming $650 million in Medicaid funding for Louisiana. During negotiations, the GOP leaders said the money was part of a larger sum paid the state in error and should be recouped.

The decision creates a $1.1 billion shortfall in the state's fiscal 2013 Medicaid budget, forcing cuts in care for the poor and uninsured. […]