BATON ROUGE, LA (WAFB) - Thousand of homeowners in Louisiana are in danger of paying flood insurance so high, they could end up losing their homes. Some have found their insurance rates increasing by 4,000 to 6,000 percent. Opponents of the changes say the effects could be devastating here and around the United States.
Homeowners and insurance agents have crunched the numbers and it seems the calculations are sky high, especially for property that's never flooded before.
"A $70,000 home, $3,400 for flood insurance," said Rep. Ronnie Johns, from Lake Charles, during a special meeting at the state Capitol, Wednesday morning, between the Senate and House Insurance Committees.
Another speaker commented that another property owner is going from $600 to almost $17,000 a year in flood insurance.
That's what some south Louisiana homeowners will be expected to pay, under the Biggert-Waters Flood Insurance Reform Act.
"I had a lady ... A retired piano teacher, 81, said 'Mr. St. Pierre, if I have to pay this kind of raise I'm going to commit suicide," V. J. St. Pierre, parish president in St. Charles Parish, told the committee.
The Biggert-Waters Act is tied to the National Flood Insurance Program, which is billions of dollars in debt.
To put the program back on track, Congress approved plans to raise flood insurance premiums and remove exemptions that protected homeowners from rate spikes, if they had already rebuilt their homes to FEMA's earlier specifications.
Senator Johns, is also an insurance agent. Under the proposed changes, he says one of his clients will go from paying $400 a year for flood insurance, to $2,400. But it's what Johns says he was told by and employee from the insurance program that really upset him.
"The lady I had on the phone yesterday told me, 'Maybe your client doesn't need to live so close to the water.'"
It's not just property owners in Louisiana who will be affected. Recent events in New York and Colorado, to name a few, have leaders in other states noticing the act could be problematic for them as well.
Some opponents say if people can't afford to make the flood insurance payments, their homes could become uninsurable and the Louisiana economy could be crippled.
"If they (houses) become uninsurable, you can't sell them. The value goes to zero. Value goes to zero, the owner loses everything because for middle class America equity is tied up in our homes. If owners lose everything, then banks lose their portfolio, real estate markets freeze up, companies lose workers because they have nowhere to live, government loses its tax base," said Michael Hecht, CEO of Greater New Orleans Regional Economic Development.
The act requires an affordability study to be done before it takes effect. Lawmakers in Washington, including Louisiana's delegation, are asking things be delayed for four years, in order for that to happen.
"This is not just a Louisiana problem ... It's a national issue that's affecting all of us. We've got to fix it," said another speaker.
One parish president at the meeting suggested asking President Barack Obama to sign an executive order to stop the act from taking effect.