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Many Louisiana Residents Struggle To Recover Without Flood Insurance


We're going to take a closer look now at flood insurance in Louisiana. Only about 12 percent of households in Baton Rouge have flood insurance, and that leaves most people with few options to rebuild. Jim Donelon is the insurance commissioner for the state of Louisiana and joins us now. Thanks for being on the program.

JIM DONELON: Pleased to be with you.

SHAPIRO: Why do you think so few people in this area have flood insurance?

DONELON: Well, though we're not at the bottom of the list of states with per capita income, we're in the 40s, with a lot of what are commonly referred to as the working poor - to the point where 60 bucks a month, $750 a year - the average cost of insuring a home in Louisiana - is, for many, a budget-buster. And that's exacerbated by the federal regulators of the banking industry who require as a condition of a loan, if you're in a flood-prone area, that you get flood insurance. And if you're not, then they tell you you're not required to have it. Well, to the consumer, that sends a very negative message about the need for flood insurance.

SHAPIRO: Are you suggesting that everybody in this part of the state should be required to have flood insurance or recommended to have flood insurance, whether or not they're in a flood zone?

DONELON: Absolutely. I say that every year in a statewide tour I make at the beginning of every hurricane season. And I have three bits of advice for every consumer, beginning with access the significantly still subsidized federal flood insurance program, the best insurance buy any property owner anywhere in Louisiana can make.

SHAPIRO: Tell me about the options for people who are not insured, given that so many people in the area are now flooded and just don't have insurance.

DONELON: Well, the governor has urged everyone who has been impacted to register their application for assistance. It is very nuanced, depending on your situation, and offers up to $33,000 in assistance, but very few will get to that max.

The - generally available for almost everyone victimized by this event is a SBA loan. That, frankly, will allow people to rebuild their homes in most cases, but will suck out of their home the equity that was built up therein. It's unfortunate. It's the biggest investment most people in our state make - their home - and with uninsured losses to total $40,000, $50,000, that will leave them, in the parlance of the finance world, yet again underwater.

SHAPIRO: You know, I'm just imagining how frustrating it must be for you that you spend months and months and months before a disaster hits warning people to get flood insurance, and in many cases, they say, it's not going to be a problem for me. And then after a flood hits, it's too late for people to do anything.

DONELON: And when Katrina hit 11 years ago, we had 360,000 flood policies in our state. It spiked, by 2008, to 490,000. Unfortunately, in the quiet hurricane seasons since 2008, it's back down to 450,000. You quoted accurately - Baton Rouge with only 12 percent penetration - Lafayette, the other hard-hit city, 14.

But in New Orleans, the penetration is 39 percent. That's not just the experience with Katrina. I live in metropolitan New Orleans, and we have had so-called hundred-year floods every five years since 1979. And those experiences have taught property owners in the metro New Orleans area that it is worthwhile having that coverage. On the other end of our state, an area hard hit in the early spring, 5 percent have flood insurance in Shreveport.

SHAPIRO: That's Louisiana's insurance commissioner Jim Donelon. Thanks very much for your time.

DONELON: Glad to be with you. Transcript provided by NPR, Copyright NPR.