Mississippi officials are discussing a lawsuit aimed atdelaying the onset of flood insurance premium rate hikes beforebills start going out Oct. 1.

State insurance commissioner Mike Chaney told a stateLegislature Budget Committee hearing Monday that he and the stateAttorney General's “have been having discussions about filing thelawsuit.” Chaney said the suit, if filed, would be in Federal Courtin a Gulf Coast state.

The lawsuit would seek an injunction based on allegation ofillegal taking. Chaney said at the hearing that under theBiggert-Waters Act, rates for some homeowners will increase over1500 percent for some Mississippi residents.

Mississippi was remapped in 2009 after Katrina, and Base FloodElevations changed. “Many homes were rebuilt after Katrina to thethen-existing flood elevations and are caught in new elevationrequirements and new zones,” Chaney testified.

Chaney told the panel he and the attorney general areconsidering action because he does not think Congress will addressthe issue in a timely manner.

At several meetings, including comments to Gulf Coast insurancecommissioners last Saturday, Chaney said, “This BW-12 act could endup generating another savings and loan crisis, like theeighties.”

A hearing on the issue will be held by the Senate BankingCommittee Wednesday. Industry lobbyists say the House FinancialServices Committee will hold a similar hearing Oct. 9.

Also Monday, Jackson County Mississippi supervisors passed aresolution voicing support for federal legislation that would delaythe rate hikes. However, there appears to be little forlegislation, the legislation that would be considered would onlystop limited rate hikes scheduled to go into effect next year, andnot the major rate hikes for which Write-Your-Own companies willstart sending out bills starting Oct. 1.

At the meeting, the supervisors said that the rate hikes,ranging from hundreds of dollars a year to thousands of dollars ayear on homes in flood-prone areas could cause people in middle- tolow-income brackets to walk away from their homes. Moreover, thereis a strong possibility that Congress will not act on legislationfunding the government for the new fiscal year starting Oct. 1,thereby generating a government shutdown.

Earlier, GNO, Inc., the former Greater New OrleansCommittee, called the rate hikes “harmful” in a new report. Thegroup said a confluence of factors, including the rate hikes,incomplete and inaccurate FEMA maps, and questionable actuarialcalculations will lead to premium increases of up to 3,000percent and more – for policyholders who have built to codeand never flooded.

The report said, “To be clear, GNO, Inc. is committed to afinancially solvent NFIP and premiums that reflect true risk,” butthe committe does “not support policies that create moral hazard byincentivizing building in harm's way, nor do we supportsubsidization of severe repetitive loss properties.

“But there are hundreds of thousands of Americans who have donenothing wrong, have built exactly as the federal government hastold them – and who now could have their lives destroyed,” the GNOsaid.

The report said that, “If unchecked, the negative consequencesare broad: owners will lose everything, values of unsellableproperties will plummet, bank mortgages will go into default, localtax bases will erode, and economies will be eviscerated.”

The report said GNO is “already seeing this negative spiral inSt. Charles parish, where values on some homes have been lowered30% by the assessor – an unprecedented action. Ultimately, this'cascade effect' will undermine NFIP itself, as policyholders willleave an unaffordable program.”

Meanwhile, SmarterSafer.org released a letter asking Congress toresist delaying the rate hikes.

“NFIP remains almost $28 billion in debt to U.S. taxpayers as aresult of years of heavily subsidized premiums regardless of need,”the organization writes, adding detail of what is says aredisproportionate benefits to the wealthy. “Forty-three percent ofsubsidized properties are located in counties that have averagehome values in the top 10 percent of the country.”