Louisiana will become the second state to join a lawsuit filed in federal court in Mississippi challenging the flood insurance premium rate hikes that went into effect Oct. 1.
A spokesman for the Louisiana Insurance Department confirmed comments made last week by Commissioner Jim Donelon that the Bayou State plans to be more active in nationwide efforts to get the rate hikes delayed until an affordability study on the impact of the new rates is completed.
Late last week Donelon said, "We are going to file suit." He added that the state has retained lawyers who worked for GNO (Greater New Orleans), a regional development organization, to determine the best path toward contesting the rates, which represent exponential increases in rates in some cases.
"The question now being decided by the lawyers we have hired is whether we file in the pending Mississippi action or a separate action in Louisiana," Donelon said.
Other sources familiar with the debate indicate Donelon and the Louisiana attorney general, Buddy Caldwell, are leaning to filing an amicus brief in support of the lawsuit filed by Mississippi Commissioner Mike Chaney in federal court in Gulfport. A hearing is scheduled for Oct. 28.
An amended complaint, filed Oct. 7, says the purpose of the bill, the Biggert-Waters Act, was to make the National Flood Insurance Program solvent, but, "What the legislation significantly did not address is the effects of the changes on policyholders and the affordability of flood insurance policies for those that truly cannot afford the increases," the complaint says.
The rate hikes were implemented even though the Federal Emergency Management Agency, NFIP administrator, "plainly lacked and continues to lack the necessary information to avoid arbitrary and capricious decision-making."