Michael Hecht, President & CEO of Greater New Orleans, Inc. (GNO, Inc.), was invited to testify at an August 2, 2024 oversight hearing of the House Committee on Natural Resources.  The hearing, “Rigs to Restoration: Examining Gulf Coast Restoration through Energy Production and Permitting,” was examined Louisiana’s experience in coastal restoration, including the barriers encountered through the permitting process and the shared relationship between energy production and environmental protection.

Hecht, discussed the importance of revenue-sharing to protect working coastal communities, particularly those that ensure energy security for the the nation.  Hecht, also representing CSFI, also highlighted the NFIP’s role – in the passage below – in reducing risk exposure for these communities, including Southeast Louisiana and fellow working coasts across the country.  Hecht’s full written testimony is available online.  This testimony builds upon Hecht’s January 2024 testimony on NFIP reauthorization in front of the Senate Committee on Banking, Housing, and Urban Affairs.

“Despite being safer on paper, Louisianians are struggling with cost burdens – inflation and all types of insurance. Within Congress’s control is the National Flood Insurance Program (NFIP). NFIP was created by Congress in 1968 as “reasonable method of sharing the risk of flood losses is through a program of flood insurance which can complement and encourage preventive and protective measures.” NFIP was also intended to make “flood insurance coverage available on reasonable terms and conditions to persons who have need for such protection.” However, in October 2021, FEMA used their administrative authority to implement Risk Rating 2.0, the largest change in premium calculations in the program’s history. Risk Rating 2.0 contains dozens of rating factors, including “distance to coast” and “coastal erosion.” Thus, communities of economic necessity due to their location, like Coastal Louisiana, are being unduly punished for their role in the American economy.

GNO, Inc., since 2013, has organized the national Coalition for Sustainable Flood Insurance (CSFI), a national alliance of approximately 800 contacts across 35 states. CSFI sees NFIP as an essential federal program that allows critical communities across our country to keep working. CSFI advocates for a reauthorized NFIP that is affordable, transparent, and accurate, and ultimately incentivizes mitigation to lessen communal risk exposure. However, the NFIP of today is largely unaffordable, inaccurate, and contradictory to the environmental and economic wellbeing of our country. Under Risk Rating 2.0, an NFIP policy will be $1,808, which represents a 103.6% increase over legacy rates. In Lafourche Parish, where we stand today, the average premium will rise by 320.6%, from $929 to $3,909. In 41 states, rates have risen by over 50%. Since Risk Rating 2.0’s implementation, NFIP participation has predictably plummeted nationwide by nearly 5%, from 4.9M to 4.66M now. Texas has lost over 130,000 policyholders, and Louisiana has lost over 60,000 policyholders. Clearly, Risk Rating 2.0 is driving out the workforce from working coasts. This means that costs will be passed on to all Americans.

CSFI believes that property-level mitigation measures, like elevating a home, or community-wide measures like building wetlands, should predictably, reliably, and immediately influence flood insurance premiums. Currently, Louisiana’s coastal investments are not clearly benefitting our policyholders. According to the Office of the Flood Insurance Advocate (OFIA), “Certain mitigation actions do not result in the same level of decreased premium rates as they did in the past because flood insurance premiums now consider more sources of flood risk.” OFIA elaborates: “Policyholders, insurance agents and community officials expressed to OFIA that premiums rates do not seem to adequately reflect mitigation activities. For instance, they have indicated that they believe insufficient credit is given for certain mitigation techniques, such as elevation and adding openings to equalize the pressure of floodwater on the wall of an unfinished enclosure below an elevated building. This makes it harder for homeowners to take action to reduce their flood premiums, and harder for OFIA to advise customers of their mitigation options; a duty assigned to OFIA in its legislation. This also makes it challenging for local officials to determine the cost-benefit of mitigation funding opportunities FEMA makes available to the States and participating NFIP communities.”