FEMA to allow monthly flood insurance payments amid rising costs

NEW ORLEANS (WVUE) - Amid soaring flood insurance premiums, FEMA has introduced a policy change that could ease the financial burden on policyholders.

Late last year, FEMA, which administers the National Flood Insurance Program, announced that policyholders will soon have the option to pay their premiums in monthly installments rather than a lump sum.

“It’s all about affordability, I guess. And if you can afford it monthly, it’s going to come out to the same bottom line, which is all overrated to begin with,” said Thaddeus Biagas, a New Orleans resident. ”Personally, I think people are going to start leaning toward self-insurance some kind of way—within a group or the neighborhood.”

Dan Burghardt, owner of Dan Burghardt Insurance Agency, said the rising cost of flood insurance has put many property owners in a tough position.

“People are having to make a decision—what to keep, what not to keep—and putting food on their table is the number one thing. So, FEMA’s trying to put the brakes on the number of non-renewals,” Burghardt said.

John Beyer of New Orleans is among those affected by rising flood insurance rates.

“I rent because flood insurance doesn’t make it practical to own property at this point,” Beyer said.

His home near the 17th Street Canal was among those devastated when Hurricane Katrina flooded New Orleans.

“I actually lived on Bellaire Drive, so we lost pretty much everything. And that was an act of Congress—no pun intended—to get our insurance on that,” he said.

In 2021, FEMA implemented Risk Rating 2.0, a new methodology for determining flood insurance premiums. While FEMA said the change would lower rates for some policyholders, many have seen their costs skyrocket.

“Since 2.0 took effect, we’ve seen average premiums in Louisiana go up at least 200%,” Burghardt said.

Biagas pointed to additional financial pressures.

“And then you couple that with the property taxes—so between the insurance, your property taxes—they’re exceeding the mortgage rates,” he said.

“Everything is going up, everything is going up,” added Larry Taplin.

Despite the rising costs, Burghardt stressed the importance of maintaining flood insurance.

“As far as I’m concerned—this is an insurance agent—who needs flood insurance? Everyone,” he said.

He believes Congress should establish a national insurance program covering all natural disasters, including wildfires.

“Right, in general—cover all of them. That way, you don’t have any particular people pointing fingers at the Gulf Coast, costing FEMA more money than anything,” he said.

U.S. Sen. Bill Cassidy of Louisiana and Sen. Cory Booker of New Jersey recently introduced legislation that would provide low- and middle-income households with flood coverage a 33% refundable tax credit. Burghardt supports the measure.

“If you can get a tax credit up to 20%–30% on the flood rates, that would make it even more affordable. Throw in the payment plan, and now you’ve got a lot more activity there to increase the flood insurance program and possibly even lower the rates further, with more people keeping it and more people buying it,” he said.

FEMA says it is working with insurers who write flood policies to begin offering the installment payment option as soon as possible.

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