What’s the point of flood insurance if nobody can afford it?

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Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, questioned Roy Wright, the President and Chief Executive Officer of the Insurance Institute for Businesses and Home Safety about the skyrocketing price of flood insurance for Louisiana homeowners.

Wright previously served as the chief executive of the National Flood Insurance Program (NFIP) at the Federal Emergency Management Agency (FEMA) and launched Risk Rating 2.0. FEMA has refused to show Congress the algorithm it has used to implement Risk Rating 2.0.

Key excerpts of the exchange are below:

Kennedy: “Now, what’s the point of flood insurance if nobody can afford it? And, what’s the point of having a federal agency paid for with people’s taxpayer dollars, if they won’t explain to the people what they’re doing? Are you still for Risk Rating 2.0?

Wright: “Senator, I am five years removed from making decisions in FEMA. And yes, I was the person who launched risk rating 2.0., and, so, we’ve had these conversations, and I’m happy to continue to do so.” 

Kennedy: “This isn’t personal to you, but it’s—I don’t know what your involvement was—but the people that implemented this and rolled it out in this manner ought to hide their head in a bag.” 

Wright: “So, I do think that FEMA should be transparent about what they’re doing. I also know that these insurance calculations are more like calculus than they are arithmetic, but the risks are growing. The cost of wind insurance in southern Louisiana is just as high or higher, and so, I think there’s an affordability need for sure, but we’ve got to look at this. Yes, FEMA should be showing the pieces. We need to make sure people understand it. I think people need to know which mitigation actions—”  

Kennedy: They’re not. They’re not. Nor do the people at FEMA seem to care.”

. . .

Kennedy: “If the IRS came to you and said—I don’t know how much money you make, I don’t want to know—if the IRS came to you and said, ‘We’re going to do your taxes for you this year, Mr. Wright. You owe $4 million in income taxes, but we can’t tell you how we came up with the figure,’ you think that’d be fair?” 

Wright: “That would not be a fair action.”

Kennedy recently introduced two bills to ensure fairer flood insurance premiums for Louisianians. The Risk Rating 2.0 Transparency Act would require FEMA to publish an explanation of how the agency is determining flood insurance prices under Risk Rating 2.0. The Flood Insurance Affordability Act would cap annual flood insurance premium increases.

Full video of Kennedy’s remarks is here.

More information on the impact Risk Rating 2.0 has had on Louisianians is here.

Author: Press Release


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