Bill allows flood premium increase

• By GERARD SHIELDS
• Advocate Washington bureau
• Published: May 9, 2008 - Page: 15A - UPDATED: 12:05 a.m.

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WASHINGTON — The U.S. Senate is poised to pass a bill changing the National Flood Insurance Program over the objections of Louisiana’s two senators.

U.S. Sen. Mary Landrieu and U.S. Sen. David Vitter contend that the new rates, which would allow insurers to raise premiums from 10 percent per year to up to 15 percent per year, would financially hurt Louisiana residents living in flood zones.

The senators supported a proposal that would have added wind coverage to the flood insurance plan. Many Gulf Coast lawmakers have complained that insurance companies that handle wind claims pushed off their responsibilities on the national insurance program by saying the wind damage during Hurricane Katrina in 2005  was caused by flooding.

The Government Accountability Office issued a report this week that stated adding wind coverage to the national insurance program would be complicated and costly. The investigative arm of Congress, however, did conclude that insurance companies have an inherent conflict of interest in wind cases.

The Senate late Wednesday rejected a Vitter amendment that would have increased coverage limits that have been unchanged since 1994.

“It doesn’t update the program the way it needs to be updated,” said Vitter, R-La.

Another Vitter amendment that failed would have extended phase-ins of higher premiums from two years to five years. The move was necessary due to new flood maps issued since Katrina, he said.

“A lot of folks are in the flood zone for the first time or they are moving from a less dangerous part of the flood zone to a more dangerous part, which will transfer to higher rates,” Vitter said.

Landrieu, D-La., proposed an unsuccessful amendment that would have eliminated the requirement that homeowners behind levees and dams purchase flood insurance.

Since the U.S. House of Representatives passed a bill with the wind provision included, Gulf Coast senators hope they will be able to insert it during the conference committee meeting between the two chambers that will craft a compromise bill.

Insurance companies oppose the change, saying that it would undermine the private market.

Landrieu and Vitter had placed holds on the flood insurance measure, but withdrew those holds after receiving promises that their amendments would be voted on. “I have tried my hardest to oppose this bill,” Landrieu said.

The Senate is expected to cast a final vote on the measure next week.