Louisiana’s congressional members of both parties were throwing cheers and high fives. They had done it.  They had put an end to the proposed outrageous flood insurance rates.

 “I’m very proud,” beamed democratic Senator Mary Landrieu.  Her challenger in the coming fall election, Congressman Bill Cassidy, papered the state with press releases exclaiming, “This is a great day for Louisiana.”

None of back slapping statements alluded to the fact that these same members of congress had been responsible for the huge premium increases in the first place. Every member of the current Louisiana congressional delegation, as well as state insurance officials had been asleep at the switch when federal legislation proposed the massive increase in the cost of flood insurance for Louisiana property owners, and they had failed to oppose it. No one wanted to talk about that.

Even the press was gushing over the purported legislative victory.  A Times Picayune editorial bellowed, “Hallelujah. Homeowners can stop worrying about whether they will still be able to afford their homes or whether excessive flood insurance premiums will force them out.”  The Morning Advocate chimed in calling the legislation a “remarkable achievement” and “a victory made for Louisiana.”

So property owners in flood prone areas can rest in peace knowing congress has stopped the huge rise in the cost of flood insurance.  Right?  Well, not quite.  The Times Picayune editorial stated that $200,000.00 in flood coverage would cost $2,000.00 a year.  But remember, this is just for the current year.  Under the new legislation, insurance rates can then rise up to 18% a year every year thereafter.  In addition, a yearly fee or surcharge of up to $250.00 can and will be levied on each policy.  Every year.

Just how much will these increases cause the cost of a flood policy to rise?  The first year will see a jump from $2000.00 to $2360.00. After three years this same $2000.00 policy will jump up to $3286.00.  After five years, the increase will total $4575.00.  And ten years from now?  That same $2000.00 policy will cost the property owner $10,223.00.  And this does not include that surcharge of up to $250.00 per year.  According to congress, these rates are supposed to be affordable for the average homeowner?  Come on, man!

A cynic might conclude that congress merely bought some time to get through the next election before property owners find out what a sham this new solution is.  Remember, these figures only apply to flood insurance rates.  Property owners in Louisiana still are paying the highest property insurance rates in the nation -- far above the national average of $2,700.00.

When you add flood insurance costs to the regular property insurance premium of a home in the $200,000.00 range and add the surcharge, many Louisiana homeowners will pay more than $5000.00 for the first year, then a continuing and dramatic rise in rates that will be required to own a home.  And this is something to high five about?  It’s obvious that congress, particularly its Louisiana members, needs to go back to the drawing board and find reasonable solutions to this immense and growing problem.

 

There are workable options, and that’s a discussion for another column.  But all the cheering over this quick fix by congress is little more than smoke and mirrors. Louisianans need real long-term solutions for a problem of homeowner affordability that will not go away and cannot wait.  Not even till the next election.