Insurance Commissioner Jim Donelon participated in a meeting on Dec. 13 organized by GNO Inc. to advocate for greater transparency on the new flood insurance rates in the National Flood Insurance Program that will take effect for renewing policies on April 1, 2022.

GNO Inc. organized the meeting of the Coalition for Sustainable Flood Insurance, a national coalition of business associations, economic development organizations, government entities and consumer groups lobbying for long-term reauthorization of the flood insurance program and stronger limits on how much premiums can rise each year as Risk Rating 2.0 is implemented. CSFI would like to see greater transparency in how different factors are weighted in the new NFIP rates, how those rates were developed, and what the rates will ultimately be when all risk has been factored in, including projected rates into the future subject to unforeseen changes that might alter such projections, the Louisiana Department of Insurance said in a news release.

The GNO Inc. meeting took place at the Home Builders Association of Greater New Orleans, and included stakeholders who participated remotely from Galveston, Texas, and Key West, Florida, as well as other areas affected by the new rate plan.

The NFIP’s Risk Rating 2.0 program took effect beginning on Oct. 1 for new policies. The new rates for existing policyholders begins as policies come up for renewal starting April 1. Risk Rating 2.0 aims to make the NFIP more actuarially sound by looking at the construction style and location of individual homes and their proximity to water rather than by relying on flood zone maps. Many people in flood-prone states like Louisiana have expressed concern that there is not enough information about the potential financial impact of the new rating scheme.

“Ideally, this would go through Congress, go through Congressional rulemaking, and then be launched in tandem with a long-term sustainable five-year renewal of national flood insurance,” Michael Hecht, president of GNO Inc., which leads CSFI, was quoted by news sources as saying.

“Louisiana property owners are already facing major expenses while rebuilding from four hurricanes that hit our state in the span of one year and two days,” Donelon said in a news release. “We need to know how much NFIP premiums will rise under Risk Rating 2.0.”

FEMA has said that there are 495,900 NFIP flood policies in Louisiana. Under Risk Rating 2.0, the rates for 101,174 of those policies would decrease; the rates for 343,246 would increase between $0 and $120 per year; the rates for 34,352 would increase between $120 and $240 a year and could no longer exceed $12,125 a year.

The Coalition for Sustainable Flood Insurance was formed in 2013 during implementation of the Biggert-Waters Act and is a coalition of approximately 250 organizations across 35 states. The CSFI was the driving force behind the passage of the Homeowner Flood Insurance Affordability Act, compromise legislation that was cosponsored by 235 members of the House of Representatives and passed the Senate with the support of 72 Senators, according to CSFI’s website.

The CSFI is working to get Congress to reform the NFIP in a way to keep flood insurance affordable and sustainable for the long-term, as well as attract more policyholders.

Currently, the NFIP is authorized to operate through Feb. 18, 2022.

On Nov. 2 Sen. Bob Menendez, D-New Jersey) introduced legislation that would reauthorize the NFIP for five years. Louisiana Senators Bill Cassidy and John Kennedy, both Republicans, are sponsors of the bill.

In addition to reauthorizing the NFIP, the National Flood Insurance Program Reauthorization and Reform Act of 2021 would cap annual rate increases at nine percent; cap Write Your Own companies’ compensation at 22.46 percent, while maintaining agents’ 15 percent commission; provide an optional monthly payment plan, freeze the interest rate on the NFIP debt; provide $500 million for new flood maps; increase the cost of compliance cover from $30,000 to $60,000 to better reflect the cost of rebuilding and implementing mitigation projects; cover earth movement and establish an independent office of appeal, according to the proposed legislation.