U.S. Senator Bill Cassidy has released a critical report on the National Flood Insurance Program (NFIP), highlighting the significant challenges faced by homeowners due to skyrocketing premiums. According to Cassidy, the report reveals that premiums in Louisiana have surged by an average of 234% since the implementation of FEMA’s new risk assessment program, Risk Rating 2.0, in October 2021. This alarming rise has forced approximately 52,000 residents to drop their flood insurance policies, leaving many vulnerable to natural disasters.
“This report confirms what Louisiana homeowners already know—the National Flood Insurance Program is broken,” Cassidy stated. “We must understand the problem to properly diagnose it and address it. This report clearly lays out why flood insurance premiums are out of control, but also why there is reason to hope.”
The NFIP, which has provided affordable flood insurance for over 50 years, is often the only option available for many communities. However, the recent drastic increases in insurance costs have put financial strain on homeowners. The report warns that FEMA’s approach, particularly the Risk Rating 2.0 methodology, has made flood insurance unaffordable for many, potentially leading to a loss of coverage for up to one million policyholders in the next decade.
Senator Cassidy criticized FEMA’s focus on cost recovery over affordability, saying, “They are so focused on covering costs, including debt from the levee collapses during Katrina, that they are neglecting affordability.” He further warned of an “actuarial death spiral,” where rising costs lead to fewer policyholders, ultimately driving rates even higher.
Homeowners in Louisiana are already feeling the impact. Donna Nunnery, a resident without insurance coverage, lamented, “We don’t have any insurance; we don’t have anything.” Another resident, Katherine Drezek, noted, “I think all the insurance has gone up, not only flood insurance.”
Cassidy’s report recommends several reforms, including capping premium increases, offering discounts for those facing rising costs, enhancing mitigation efforts, and simplifying the claims process. He urged Congress to act swiftly, stating, “We’re trying to make the program more affordable, sustainable, and accountable. My goal is to have this done before the end of the next Congress.”
The report also emphasizes the need for increased transparency in how premiums are calculated. Cassidy's findings indicate that minimal communication and lack of clarity during the implementation of Risk Rating 2.0 have contributed to policyholders’ frustration.
Louisiana is among ten states currently suing FEMA for failing to consider the skyrocketing flood insurance costs associated with Risk Rating 2.0. Cassidy concluded, “We must hold FEMA accountable and push for changes that prioritize affordability for Louisiana homeowners.”