Partisan budget disagreements on Capitol Hill will likely impact the implementation of new flood insurance rates scheduled to take effect Oct. 1, according to U.S. Rep. Garret Graves, R-Baton Rouge.
The National Flood Insurance Program’s new Risk Rating 2.0 is expected to result in rate increases for nearly 80% of policyholders and make flood insurance too expensive for many in Louisiana still struggling to recover from Hurricane Ida and other floods over the past year.
But a stalemate in Congress over raising the federal debt ceiling is threatening passage of the 2022 federal budget, which, if not resolved in the next week, will prevent Risk Rating 2.0 from taking effect, Graves says.
That’s both good news and bad news for Louisiana policyholders.
- On the plus side, it will delay the expected rate hikes for at least a little while, giving the state’s congressional delegation more time to push back against the pending changes.
- On the downside, it will leave a gap in coverage between the expiration of the existing program on Sept. 30 and whenever the new program takes effect.
“Effectively, what Congress is doing is letting the flood insurance program expire on Sept. 30,” Graves says. “So there will not be a program to go into effect on Oct. 1 because there is a fight over how to proceed. By not reauthorizing the program—and I’m not saying this is my preference; it’s just what is going to likely play out—there is a delay, which gives you more time to continue to negotiate.”
But what happens if there is a flood during that gap in coverage? It’s not at all an unlikely scenario, especially given that hurricane season doesn’t end until Nov. 30.
Graves says he is confident, based on history, that Congress would retroactively fund the program.
“It would not be the first time there is a gap in coverage,” he says. “While it is concerning to have a gap, every time it has happened, Congress has gone back and restoratively funded the program. They have never not restarted it.”
The situation underscores the challenges and complexities of the NFIP at a time of global climate change and more frequent, wetter storms, particularly in the Gulf South.
It also begs the larger question of whether elected officials should continue to push back against rate hikes for policyholders in areas at high risk for flooding, like much of Louisiana. While it makes sense politically, is it sustainable?
Graves says he doesn’t oppose raising rates or support incentivizing development in risky areas.
“But you have to be fair about it,” he says. “What 2.0 would do is not only grossly increase flood insurance rates but would raise them much more quickly. If somebody chooses to build in the bottom of a swamp, we can hold them responsible. But if they are victims of things outside of their control, it is concerning that we are going to make them pay for it.”