Katrina shakes up flood insurance

Many still do not purchase coverage

Graphic by: Kevin Oregeron

The few areas in yellow are Zone X in the parish, which the Fed says are outside the 500-year Flood Plain.

Even in the aftermath of two major hurricanes -- one, Katrina, that barely missed St. Charles Parish -- many local residents are still not heading the warnings of purchasing flood insurance, especially those living in Zone X, areas that are determined by the federal government to be out of the 500-year plain. Most importantly, those living in Zone X are not required to buy flood insurance.

But with two major storms and billions of dollars in claim, the insurance industry will change dramatically in Southern Louisiana, like St. Charles Parish, where many live in close proximity to water and at or below sea level.

Local insurance agent Reenee Remkes, who has been in business for over twenty years in the region and lived through and lost everything in Hurricane Betsy, said that he sends out letters to residents each year imploring them to buy flood insurance. Considering the devastation caused by Katrina, he said he was surprised he saw only about a 5 percent response in flood insurance in Zone X following the storm.

Shaking his head, Remkes said, "If the storm would have been another 30 miles more to the west we could have had another St. Bernard Parish out here." The blow from Katrina would have been devastating to the parish, considering there is not a completed hurricane protection levee on the west bank.

Ultimately, he would like to see the Army Corps of Engineers do away with the Zone X designation, as he feels that the designation is particularly misleading and gives Louisiana residents a false sense of security. "Not including Hurricane Katrina Rita, over a 24-year period, 31 percent of Louisiana homes in Zone X have flooded, paying out over a billion dollars in claims," said Remkes.

As to the future of the industry, "I would say without a doubt, because of the problems in New Orleans, Jefferson Parish and St. Charles Parish, the Corp will come in and rezone the area or make the whole area an emergency program," said Remkes.

In 1981, when he got started in the insurance business in St. Charles Parish, Remkes said that whole area was an emergency program. This meant that the federal government would only sell a homeowner $35,000 on a house and $10,000 on contents; it was a package policy, where everyone paid the same premium.

In St. Charles Parish, very few acres are Zone X. Most of the Zone X regions abut the Mississippi River. Remkes described an example of the dramatic drop-off in heights: "It is 14 ft. above sea level right by River Rd. by Ormond; it goes down to 0 ft. above sea level by the time you hit Airline Hwy." This creates a bowl much like New Orleans.

The federal government sets the prices for flood insurance, and, for a $250,000 house with $100,000 in contents in Zone X, the cost is $317 per year. It is important to note that this is the maximum that the National Flood Insurance Policy will cover.

For those homes costing more and requiring more coverage, Remkes said that a homeowner has to look to outside agents, ones not insured by the federal government. Only several agencies supply addition coverage. In addition to being expensive, if the independent agent or agency goes bankrupt from a run on claims, the homeowner could lose out.

If a homeowner lives outside Zone X, they are required to buy flood insurance, unless they have paid off their home. Remkes said that often older residents living outside of Zone X who have paid off their home drop flood insurance.

As to why they would take such a risk, Remkes guessed, "Some think that because they have gone through Hurricane Betsy, Hurricane Camille and have never flooded. So they think, why should I carry it?"