U.S. Sen. Bill Cassidy (R-LA) led seven of his Republican colleagues in calling on the U.S. Federal Emergency Management Agency (FEMA) to terminate a Biden-era risk rating policy that they say has caused rampantly rising flood insurance premiums.
“In Louisiana and other flood-prone states, premium increases of well over 100 percent have forced tens of thousands of homeowners to drop coverage altogether,” wrote Sen. Cassidy and his colleagues in a Feb. 3 letter sent to FEMA Acting Administrator Karen Evans.
“These trends are not isolated — they reflect a nationwide contraction in NFIP [National Flood Insurance Program] participation driven by affordability pressures,” wrote the lawmakers, who include U.S. Sens. Roger Wicker (R-MS) and Shelley Moore Capito (R-WV).
Each year Risk Rating 2.0 remains in place, they noted, participation continues to erode, the insurance pool weakens, and taxpayer exposure grows, according to their letter. “Immediate action must be taken to stop the actuarial death spiral,” the senators wrote.
The loss of participation is a structural problem for the NFIP because flood insurance depends on a broad risk pool to function effectively, they said.
“As policyholders exit the program, risk becomes more concentrated, premiums face additional upward pressure, and volatility increases,” wrote the senators. “At the same time, uninsured homeowners are more likely to rely on post-disaster federal assistance, shifting costs away from a pre-disaster insurance model and onto taxpayers.”
Sen. Cassidy and his colleagues also have concerns about FEMA’s “continued lack of transparency” surrounding Risk Rating 2.0 because the agency hasn’t yet released the underlying data, assumptions, or modeling used to generate premium increases, nor provided a mechanism for meaningful external review.
“Without transparency, homeowners cannot understand rate changes, communities cannot plan mitigation investments with confidence, and Congress cannot assess whether the pricing system is operating as intended,” they wrote.
The lawmakers requested that FEMA terminate the Risk Rating 2.0 pricing methodology, halt premium increases exceeding the statutory minimum, and work with Congress to restore a rating structure that supports broad participation and program stability. They also asked FEMA to provide full transparency into NFIP rate-setting.
“Time is of the essence,” wrote the lawmakers. “Each year Risk Rating 2.0 remains in place, participation continues to erode, the insurance pool weakens, and taxpayer exposure grows.”