WASHINGTON – U.S. Senator Bill Cassidy, M.D. (R-LA) today delivered a speech on the Senate floor calling on Congress to take action to address the National Flood Insurance Program (NFIP).
“Risk Rating 2.0 affects Louisiana, the Gulf Coast, and frankly all coasts, or any place where there is a river or a stream that can overflow. It particularly affects people who are lower income. Sixty-two percent of all NFIP policies are in parishes and counties where the median household income is below the national average of about $54,000,” said Dr. Cassidy.
“Forty-four of 50 states have had over $50 million of NFIP claims from 1978 to 2021. There are only six states that have had less than $50 million in claims. 13 states have had over $1 billion in damage—and they’re all over the map! Virginia, Missouri—hardly a coastal state—North Carolina, South Carolina, New York, New Jersey, Florida, Alabama, Mississippi, Pennsylvania, Texas, California, and Louisiana. Those are the states that have been hit the hardest but not the only ones getting hit. Every single state has had an NFIP claim because every state is affected by flooding. This is a national issue, not just a coastal issue—not just a Louisiana issue,” added Dr. Cassidy.
“There’s a consensus that no family in America should be forced to move because of unaffordable flood insurance premiums. And that flood insurance should remain affordable, accessible, and accountable to the taxpayer, and sustainable for the future,” concluded Dr. Cassidy. “My challenge to my colleagues is to designate someone on your staff to understand this issue and help move forward legislation that will reform this program. As we were committed to many other issues, there should be a commitment to this issue. Because there are Americans in every single state who are affected by this.”
Background
In January, the U.S. Senate Banking Committee held a hearing on NFIP at the request of Cassidy. The hearing highlighted the urgent need for Congress to act and featured a Louisiana witness.
Last year, Cassidy reintroduced his National Flood Insurance Program Reauthorization Act to reauthorize the program for five years, providing greater stability for homeowners, small business owners, and the real estate market as the nation continues to struggle with inflationary pressures. The bill would also implement a series of sweeping reforms to reduce costs, make generational investments in communities to reduce flood risk, and establish a fairer claims process for policyholders. He participated in a roundtable hosted by GNO, Inc. and the Coalition for Sustainable Flood Insurance before introducing the bill to hear from community leaders and advocates on the issue.
Cassidy also traveled St. Bernard Parish last August to talk with residents about their flood insurance premiums, resulting in the second episode of his series Bill on the Hill.
Last February, Cassidy delivered a speech on the U.S. Senate floor demanding the Biden administration halt massive hikes to National Flood Insurance Program premiums caused by Risk Rating 2.0. He continues to call out President Biden – who can stop the implementation of Risk Rating 2.0 with the stroke of his pen.
The NFIP-RE Act of 2023 has been met with an outpouring of support including New Orleans Chamber of Commerce President and CEO Sandra Lindquist, Baton Rouge Area Chamber President and CEO Adam Knapp, Home Builders Association of Greater Baton Rouge President and CEO Karen Zito, Greater New Orleans, Inc. President and CEO Michael Hecht, Restore and Retreat Executive Director and State Representative Joseph Orgeron, Lafourche Parish President Hon. Archie Chaisson, III, St. Tammany Corporation CEO Chris Masingill, Terrebonne Levee and Conservation District President Tony Alford, Northshore Home Builders Association Executive Officer Amy Ybarzabal, and National Association of Counties Executive Director Matthew Chase. Here’s what people are saying.
In February 2022, FEMA publicly acknowledged an internal study finding that the implementation of Risk Rating 2.0 to the National Flood Insurance Program (NFIP) could cause 20% of policyholders to drop out of the program due to skyrocketing premiums. Learn more here.
Cassidy’s full speech as prepared for delivery can be found below:
Mr./Madame President,
I’d like to talk about flood insurance—a difficult issue facing Louisiana families and families elsewhere.
When most think about hurricanes, they think of wind, rain, and lightning.
But perhaps the greatest threat a hurricane brings is the threat of flooding.
Floods destroy homes and businesses, leaving them moist and rotting them from the inside.
Floods can make a home that a family has lived in for over 50 years and has never flooded before completely unlivable.
Go down to Louisiana—or for that matter, California after their recent flooding—and ask anyone whether they think a flood could upend their life, and you’ll hear an emphatic yes, and you’ll know it’s honest.
So, if we know the answer is an emphatic yes, then the question is: why can’t Congress do anything about it?
It’s not because we lack the mechanism—the National Flood Insurance Program, which insures 4.7 million American families, is a federal program. We are the ones who can change it.
It’s because Congress in general does not understand the issue, and beyond that, there needs to be a political will.
All this is becoming more urgent since FEMA implemented its new risk assessment system—Risk Rating 2.0.
Risk Rating 2.0 affects Louisiana, the Gulf Coast, and frankly all coasts, or any place where there is a river or a stream that can overflow.
It particularly affects people who are lower income.
62% of all NFIP policies are in parishes and counties where the median household income is below the national average of about $54,000.
And truth be told, as we just saw in California, devastating flooding can occur in every state.
44 of 50 states have had over 50 million dollars of NFIP claims from 1978 to 2021.
There are only six states that have had less than $50 million in claims.
13 states have had over $1 billion in damage—and they’re all over the map!
Virginia, Missouri—hardly a coastal state—North Carolina, South Carolina, New York, New Jersey, Florida, Alabama, Mississippi, Pennsylvania, Texas, California, and Louisiana.
Those are the states that have been hit the hardest but not the only ones getting hit.
Every single state has had an NFIP claim because every state is affected by flooding.
This is a national issue, not just a coastal issue—not just a Louisiana issue.
The way the program is being conducted now, however, is what’s called an actuarial death spiral. The rising premiums mean fewer can afford insurance, so they drop.
So the remaining risk is concentrated on a smaller pool. But that rising the rate means the next rate hikes will cause even more to drop off, and the remaining risk gets concentrated on even fewer.
This is true of every insurance program. The problem is it’s now happening to the National Flood Insurance Program.
If this occurs, next time there is a flood and someone doesn’t have insurance, they won’t be able to rebuild their home or the federal taxpayer will have to come in and bail them out.
If that occurs, then my gosh, maintaining the National Flood Insurance Program will be understood as the bargain it actually is.
Now this is a real problem.
When I have town halls and meetings with constituents, they tell me that their property, casualty, plus flood insurance will be more than their mortgage.
They are making the tough decision to either drop their coverage or move from their family homes because they can no longer afford to have both.
So, it begs the question, what’s going on with Risk Rating 2.0?
Congress never passed a bill requiring that FEMA implement this.
President Biden could have stopped it with a stroke of a pen.
He should have told FEMA to delay or cancel the implementation altogether.
He failed, and now Americans are literally paying the price.
Now, by the way, he can do something.
In 2019, my office worked with the Trump administration to successfully delay implementation because of concerns over the methodology of how FEMA was calculating rates.
This time, even though the concerns remain, the Biden administration refused to listen, ignoring the concerns of people in Louisiana and elsewhere.
Indeed, ignoring millions of participants in the National Flood Insurance Program.
Without any help from the people who are supposed to serve them, many Americans are in an impossible situation.
That results in an estimated 900,000 people dropping their insurance because they can’t afford it.
There is some promising news.
The Banking Committee had a hearing on the National Flood Insurance Program reform package I put forward.
We received excellent input.
I think there’s a consensus that no family in America should be forced to move because of unaffordable flood insurance premiums.
And that flood insurance should remain affordable, accessible, and accountable to the taxpayer, and sustainable for the future.
My challenge to my colleagues is to designate someone on your staff to understand this issue and help move forward legislation that will reform this program.
As we were committed to many other issues, there should be a commitment to this issue. Because there are Americans in every single state who are affected by this.
With that, I yield back.
###