Relief for rising flood insurance rates could come from Louisiana
Homeowners in Louisiana may find some relief from rising flood insurance rates thanks to new legislation that has been introduced to the state. This legislation seeks to reform flood insurance in Louisiana, putting an end to the increasingly costly problem that this type of coverage has caused homeowners and businesses alike for several years. Rising rates are putting homeowners under inordinate financial strain and stifling the growth of the housing market.
Federal program continues to grapple with financial problems
State lawmakers note that flood insurance has been a problem in Louisiana since the arrival of Hurricane Katrina in 2005. The powerful storm caused significant damage to the state, most of which was felt in the city of New Orleans. In the years following, the federal National Flood Insurance Program, which accounts for the vast majority of flood policies currently active throughout the country, has been struggling to overcome significant financial problems of its own. These problems often threaten the program’s ability to pay claims relating to flood disasters.
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Reforms exact a costly toll
In an effort to resolve the problems that have taken hold of the National Flood Insurance Program, federal lawmakers have worked to introduce reforms that are having a dramatic influence of insurance rates. Premiums for flood coverage are on the rise due to these reforms and there are currently no signs that rates will stop growing for the foreseeable future. Moreover, FEMA is currently making drastic revisions to its flood maps, which is also having an impact on flood insurance rates.
Legislation to delay rate increase by two years
The legislation coming from Louisiana aims to delay any further increase to flood insurance rates by at least two years. This would provide adequate time for a feasible solution to be found concerning the problems of the National Flood Insurance Program. One possible solution could be opening up flood insurance to the private market. While private insurers are weary of offering flood coverage due to the risks it represents, some larger companies could be able to manage these risks effectively with modest support from the federal government.