The Mississippi Insurance Department has asked a federalcourt in Gulfport, Miss. for an injunction to delay floodinsurance rate hikes scheduled to go into effect Oct. 1.

Insurance Commissioner Mike Chaney says he filed the suitagainst the Federal Emergency Management Agency as administrator ofthe National Flood Insurance Program and Craig Fugate, FEMAadministrator because the hikes “will affect millions ofhomeowners, not only in Mississippi, but across the country and areintended to repay the debt from catastrophes being carried by theNFIP and to make rates in the future actuarially sound.”

“We've known for a long time that the flood program neededreform,” he says. “We know the program is deeply in debt, but itseems grossly unfair to place that burden directly on homeownerswho simply followed the rules and did what was asked of them.”

If the court grants the injunction, it could wreak havoc for the83 insurance companies that administer the National Flood InsuranceProgram through the Write-Your-Own system, and for the contractorthat runs NFIP-direct, a Federal Emergency ManagementAgency-administered program for the approximately 833,000ratepayers who deal with FEMA directly.

It could also impact mortgage services of homes that either arerequired to have flood insurance on their homes or businesses, ordo so voluntarily.

The flood insurance program serves approximately 5.6 millionratepayers nationwide.

The suit says rate hikes scheduled to go into effect are“perceived as an oncoming economic disaster to Mississippi citizensand other persons having homes or businesses located in a floodzone.”

The suit also says that there are bills proposed in Congressthat would roll back the premiums or lengthen the timepolicyholders would have to move to full risk premium rates, butthat, “it is unlikely that Congress will act in time to avoidsubstantial rate increases scheduled by the Federal EmergencyManagement Agency for implementation.”

MID claims that under the federal AdministrativeProcedure Act, a federal court “possesses the authority to compelagency action unlawfully withheld or unreasonably delayed.”

The department alleges FEMA's failure to obtain the variousstudies and other assistance mandated by law amounts to“an agency action unlawfully withheld or unreasonablydelayed,” and therefore subject “to review and remedialaction.”

At the same time, the Massachusetts congressional delegationasked in letters to the House and Senate congressional leadershipthat the rate hikes be delayed for all but second homes until astudy mandated by the 2012 law on affordability of flood insurancepremiums is completed. The letter also asked that funds needed tocomplete the study be promptly appropriated. Currently, FEMAmust pay for all the studies mandated by the 2012 law, theBiggert-Waters Act, through NFIP premiums.

And, a group based in New Jersey announced rallies protestingthe rate hikes will be held Oct. 1 in nine states. These includeLouisiana, New Jersey, New York, Massachusetts, Vermont, Hawaii,Florida, Iowa, Georgia and Alabama.The founder of the groupcoordinating the protest, George Kasimos, a Realtor based inNewark, N.J., said, “We want to make this a national issue.”

In a statement issued after the lawsuit was filed, Chaney alaundry list of issues should be studied before the rate increasesgo into effect.

“FEMA says they have no discretion in the implementation of theBW-12 act,” Chaney said. “Common sense needs to prevail.”

“The following things should be considered, “accurate elevationmaps; a reasonable way for consumers to challenge maps; areasonable phase in of actuarially sound rates after the studiesare completed; voucher programs; enforcement of building codes fornew construction; proper land use; the use of reinsurance; choicesin deductibles and separate escrow accounts for premiums thatCongress cannot raid.”

Joseph Ammerman, chief of staff to Chaney at the MississippiInsurance Department, said it is unlikely that the Gulfport courtwill hold the necessary hearing on the injunction request for twoor three weeks. That means that individual homeowners and mortgageservicers, who will start getting bills reflecting the new ratesstarting Tuesday, will have to be charged the increased rates.

At the same time, Senate Democratic leadership officials aretelling people clamoring for immediate relief that Congress isunlikely to take up the issue until November. George Kasimos, anorganizer of Stop FEMANow, a multi-state organization formed to block large floodinsurance increases, said New York and New Jersey senators havetold him they have ruled out attaching a delay provision to theContinuing Resolution the Senate is voting on today, or including adelay in legislation increasing the debt ceiling.