Economic and housing data continue to describe a modest recovery for housing that will lead to higher levels of construction activity in the years ahead. While some recent information illustrates that there will be ups and downs along the way, current fundamentals indicate rising demand and insufficient housing inventory.

Mortgage interest rates have risen, but thus far there is no evidence to suggest that these increases have changed the overall improving trend for housing. Qualifying for a mortgage, including accumulating the necessary downpayment, remains a larger challenge for most home buyers as opposed to recent rate increases.

 

 

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Currently, we have two critical insurance issues on the national level that will negatively impact Louisiana citizens. The National Flood Insurance Program crisis and the possible elimination of reinsurance tax deductions.

In Louisiana, we are all knowledgeable of the NFIP problems with the threat of rapidly increasing premiums. However, this is not only a coastal issue but a national one, as all 50 states participate in the program. Properties that have never flooded will see an increase. These same insurance holders do not realize that their premiums could increase by 4,000 percent.

 

I applaud Congress for taking another look at the NFIP increases but we need to take a long term approach instead of a Band-Aid one. One of the main program myths is the continual red bottom line.

According to the Federal Emergency Management Agency's published data for the past 35 years, NFIP premium income exceeded its cost by $6.2 billion. Our national leaders need to look further into the data that states the NFIP is a not a financially sound program. The surpluses need to stay in the NFIP and operate as an insurance program.

 

The second threat to Louisiana citizens are bills filed by U.S. Rep. Richard Neal, D-Maine, and U.S. Sen. Bob Menendez, D-N.J., that would deny a tax deduction for certain reinsurance premiums. Reinsurance is essential to and used by almost all insurance companies as it reduces loss by spreading risk. Removal of these tax deductions will result in more expensive insurance coverage for all consumers.

 

A tax raise on reinsurance mainly affects companies that insure against catastrophes. This will particularly impact states such as Louisiana, which, as we are all well aware, is highly susceptible to hurricanes. While many Louisiana homeowners and business owners already are having trouble affording insurance, this proposed legislation would further exacerbate the problem.

Due to the unique challenges Louisiana businesses and homeowners already face with securing property insurance policies, I urge our national leaders to seriously consider the devastating effects of unfair increased flood insurance rates as well as disrupting the reinsurance market.

 

Billy Ward, president

Louisiana Home Builders Association

Baton Rouge

The Louisiana Home Builders Association is comprised of Builders & Associate members which:

• Represents the homebuilding industry before state & regulatory bodies

• Serves as the chief advocate of private property rights




• Educates the general public as to the advantages of utilizing licensed builders




• Promotes professionalism in the homebuilding industry




• Promotes economic development & quality of life in Louisiana

Home Builders SIF Workman's Compensation is offering free membership to your local HBA (up to a $500.00 value).  If you are not a member with us or you have subcontractors that maybe interested, contact Home Builders SIF for more details. 1.877.LHBASIF (1.877.542.2743)