Leaders see relief from huge insurance rate increases

St. Mary Parish President Paul Naquin

By ZACHARY FITZGERALD zfitzgerald@daily-review.com

The Homeowner Flood Insurance Affordability Act includes several provisions that area leaders wanted included to ease the impact of flood insurance premium increases, but an area real estate agent says the possibility of premium increases is already affecting the area’s real estate market.
St. Mary Parish President Paul Naquin was pleased that the act passed the House Tuesday and hopes the Senate does not make changes to the act, he said. “It depends what the Senate does now,” Naquin said. Naquin was pleased with the about 75 percent of the House who voted for the act, he said.
The bill includes 60 to 70 percent of what area leaders had asked legislators to include, Naquin said.
Naquin expects the bill to be easier to pass in the Senate, assuming the Senate does not make major changes to the House bill, therefore sending it back to the House, he said. The bill made some key changes to the Biggert-Waters Act of 2012 that was passed to reform the National Flood Insurance Program. The Senate already passed its own version of a flood insurance bill in January that proposed changes to the Biggert-Waters Act.
The affordability study and grandfathering provision were two of the key changes area leaders wanted, Naquin said. For the affordability study in the House bill, FEMA would examine the potential effects insurance premium increases would have on residents. Naquin said area leaders also pushed to get the grandfathering provision in the House bill. The provision states that if a property is sold and the property has met all the building codes and base flood elevation standards, the flood insurance premiums for the existing property would not increase upon sale of the property, Naquin said.
“That’s what we wanted, the grandfather clause to stay with the property not the owner,” Naquin said.
The bill also includes the stipulation that flood insurance premiums cannot increase more than 18 percent per year. The Senate bill passed in January included a 25 percent maximum annual increase on flood insurance premiums.
Real estate agent Daniel Sons of Bayouland Realty in Morgan City said the possibility of flood insurance premium increases cost him a sale in December and probably will cost him several more sales in Stephensville and in Morgan City. Properties that have the potential for premium increases have possible buyers concerned, Sons said.
“People are scared to buy in certain areas already. And people who are living in certain areas are afraid of how much it’s going to cost them and whether they’ll be able to afford their mortgages,” Sons said. Even by lowering the cap on annual flood insurance premium increases, the real estate market will still see property values drop to compensate for the rising cost of insurance, Sons said.
If the affordability study examining the impact of flood insurance premiums is completed, properties that meet all the building codes and base flood elevation requirements, insurance premiums should come in at a “decent” rate instead of the 600 percent to 700 percent increases that were a possibility, Naquin said.
The House bill would also keep flood insurance premiums static for four years to allow time for the affordability study to take place, Naquin said.
The House bill will now go back to the Senate, and Naquin expects a decision from the Senate within the next couple days. If the Senate does not make any major changes to the bill, residents should not see their flood insurance premiums increase until the affordability study is complete, Naquin said.
U.S. Rep. Charles Boustany, R-Lafayette, said in an email that the passage of the bill in the House “protected the lives of families across America, including those in South Louisiana. The unaffordable and unrealistic flood insurance rate hikes put many across our community in a state of peril with overnight sticker shock. However, the House took measures to ensure relief was provided to many families.”
U.S. Sen. David Vitter, R-Metairie, said in an email, “The most important strength of the House bill is that it reinstates grandfathering permanently, which means if you played by the rules and built or rebuilt your homes to code, you’ll be protected from unaffordable rate increases.”
U.S. Sen. Mary Landrieu, D-New Orleans, said in a news release, “The compromise legislation the House passed … represents nearly two years of arduous work by a broad coalition of business groups, community leaders and individuals that has fought to stop draconian rate increases on homeowners.”

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