Kennedy raises concerns about flood insurance and FEMA’s cost hikes

Published 12:34 pm Thursday, June 16, 2022

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WASHINGTON – Sen. John Kennedy (R-La.) today questioned witnesses in the Senate Banking Hearing about FEMA’s Risk Rating 2.0 plan and why FEMA refuses to let Congress or other stakeholders see the algorithm that FEMA has implemented for flood insurance policyholders.

Risk Rating 2.0 enacted the biggest change in history to the way the National Flood Insurance Program (NFIP) calculates flood insurance premiums. Risk Rating 2.0 significantly raises flood insurance premiums on Louisianians who depend on NFIP to protect their homes from natural disasters.

Key comments from Kennedy’s questioning include:

Kennedy: “Dr. Van Doren, Mr. Theodorou, have either of your think tanks hired outside expertise to review the algorithm used by FEMA to set these new rates? Have either of you done that? . . . Why not?  . . . How do you know they’re accurate? You don’t know they’re accurate because FEMA won’t show them to you. If I refer to Milliman, I’m talking about a company—last year, had about $1.2 billion revenues, 4000 employees. They’re risk management experts. They represent large institutions, mostly insurance companies. Milliman designed this algorithm, did it not?”

Theodorou: “It’s my understanding of that Milliman did. I have reviewed . . .”

Kennedy: “ . . . Who owns the algorithm? Does Milliman own it? Or does FEMA own it? You’re both experts? Do you know?”

Theodorou: “I would say it’s, it’s the NFIP.”

Kennedy: “Do you know that for a fact?”

Theodorou: “I do not know that for a fact.”

Kennedy: “And you don’t know that for a fact because FEMA won’t share this algorithm with anybody. They tell you, ‘If we show it to you, we’ve got to kill you.’ They won’t even show it to Congress. But, yet, we’re supposed to place blind trust in the federal government. What could possibly go wrong?

. . .

Kennedy: “ . . . they won’t show anybody their algorithm. And, if you trust government, Mr. Theodorou, particularly on this program, you failed history class. Now, this is not right. I want to see this program fixed.”

. . .

Kennedy: “Why does FEMA, Mr. Quinn, repeatedly keep hiring these lawyers and engineers who act like thieves? How much did U.S. Forensic make last year off of FEMA?”

Quinn: “I don’t know, but I know they do very, very well, as does the Nielsen law firm. And they, they get paid quite well for perpetrating or supporting fraud, Sir.”

Kennedy: “And they get paid for not paying claims, not for paying them, right?”

Quinn: “That is correct.”

Kennedy: “Why does FEMA keep doing this?”

Quinn: “We have asked that question over and over. FEMA has told us that they do not have the ability to remove these fraudsters from the program. . . . I can’t imagine the amount of wreckage that these organizations are doing in communities. I have personally lived through it. I’ve seen it in the bayous of Louisiana. I’ve seen it all over America.”

Dr. Peter Van Doren is a Senior Fellow at The Cato Institute.

Jerry Theodorou is the Director of the Finance, Insurance and Trade Policy Program at the R Street Institute.

Douglas Quinn is the Executive Director of the American Policyholder Association.



  • This Feb. 14, Kennedy urged President Joe Biden to stop the implementation of Risk Rating 2.0.

  • On Sept. 22, 2021, Kennedy pressed FEMA Administrator Deanne Criswell to delay the implementation of Risk Rating 2.0.

  • On June 7, 2021, Kennedy introduced the Flood Insurance Fairness Act to stop the Biden administration from unilaterally making changes to NFIP, including Risk Rating 2.0.

  • On April 15, 2021, Kennedy called on Senate Banking Committee Chairman Sherrod Brown (D-Ohio) to hold a hearing to examine Risk Rating 2.0.

Watch Kennedy’s exchange here.