Sen. Cassidy again urges congressional action on soaring flood insurance rates

NEW ORLEANS (WVUE) - As Beryl’s heavy rain and storm surge caused severe flooding Monday (July 8) in Texas, the cost of flood insurance likely will rise once more.

“People in Texas right now are getting bombed with Beryl. And there’s flooding all over,” said Dan Burghardt, owner of Dan Burghardt Insurance. “Every time you turn the news on, someplace has got floodwater rushing through the city, damaging everything in sight.”

FEMA is changing how it rates flood risks for homes. But something meant to serve as a safety net for homeowners is instead leaving many vulnerable.

“A program that is supposed to give security instead is creating anxiety,” Sen. Bill Cassidy (R-Louisiana) said Monday on the Senate floor. “We owe it to them to find a solution to a system that isn’t working for Americans who were promised a safety net in case of a flood. Let’s get to work.”

The National Flood Insurance Program, which covers 4.7 million policies across the country, now follows FEMA’S new risk assessment system called Risk Rating 2.0.

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Before this year, Burghardt said, insurance agents had all kinds of tools to determine rates, such as flood maps, zones broken down into different areas, community numbers and a flood elevation survey.

“All of that’s out the window now,” Burghardt said. “Put in an address and they give us a rate.”

Actuarial rates are now being used, so a home’s new buyer will inherit effects of claims from the previous homeowner. As a result, people who’ve never experienced flooding could see their rates go up anyway.

“This poses a major problem for a lot of people who have bought houses, and we were all brought into this area based on the ability to buy affordable flood rates,” Burghardt said.

He said this was misleading and needs to be addressed.

Burghardt said he was paying roughly $800 for flood insurance grandfathered in from four years ago. Now, his policy is doubling, and is expected to gradually increase another 18% over the next five years.

“My suggestion is, if you have flood insurance, do not let it lapse,” Burghardt said.

Cassidy said every member of Congress has constituents who rely on the NFIP, and told his fellow senators that Congress needs to do something before it’s too late. He focused on the uncertainty ahead.

Cassidy said his team is working on a bipartisan solution that will roll back Risk Rating 2.0, and make flood insurance transparent, affordable and accountable again. This is the fourth installment of a series of Senate floor speeches Cassidy has delivered that focused on flood insurance costs.

“Now we are seeing the consequences of that decision, with an estimated 900,000 people -- or one-fifth of all policies -- dropping their coverage because it’s unaffordable,” Cassidy said. “When that happens, the pool of policyholders shrinks and the program enters what’s called an actuarial ‘death spiral.’ We are setting the program up for collapse.”

According to Cassidy, 62% of all NFIP policies are in parishes and counties where the median household income dips below the national average of about $54,000.

“This is not a rich man’s program,” he said. “These are not millionaires’ beach homes. These are hard-working people, uncertain whether they’ll be able to stay in their home, because of a decision made by a bureaucracy with zero input from Congress.”

He said the NFIP is supposed to protect people from being financially wiped out by a flooding event.

“Risk Rating 2.0 affects all coasts and anyplace where there is a river or a stream,” Cassidy said. “Anywhere there is water, there is a risk of flooding.”

Cassidy told the Senate that 44 states have had more than $50 million in total NFIP claims, and every state has had at least $5 million in claims.

“Virginia, Missouri, North Carolina, South Carolina, New York, New Jersey, Florida, Alabama, Mississippi, Pennsylvania, Texas, California, and Louisiana are all states that have had more than $1 billion in NFIP claims since 1978. Let me say that again: $1 billion dollars in NFIP claims,” he said.

According to Cassidy, the US has seen seven major flooding events over the past three years that have cost more than $1 billion each.

Flood insurance coverage offers a 30-day wait on a one-year policy as a potential money-saving option. Independent agents who offer a private flood insurance program could quote lower rates to people in lower risk-rated areas.

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