Newspaper article The Florida Times Union

America's Flood Insurance Is Bankrupt

Newspaper article The Florida Times Union

America's Flood Insurance Is Bankrupt

Article excerpt

Flooding is high on the minds of Jacksonville residents following the historically bad impact of Hurricane Irma.

So it is worth noting that the nation's flood insurance program was described in The New York Times as "broke and broken."

And that Congress is working to overhaul it. In fact, the House voted to revamp the flood insurance program, which expires in December.

Keys to the revamp are to spur more private flood insurance coverage and to deter repeated federal payouts for flood damage.

The program is basically bankrupt, meaning that Congress had to write off $16 billion of its debt. The program has been in the red since Hurricane Katrina in 2005. In October, the program exhausted its borrowing capacity.

The House bill would bar the program from offering insurance to homes with future claims in excess of three times the replacement value of the structure. There may well be a better way to achieve that goal, however.

One home in Spring, Texas, has been repaired from flood damage 19 times at a cost of $912,732 though the house is worth only $42,024.

And Florida alone has more than 1,600 properties that are considered "severe repetitive loss properties" - structures that flood every two to three years and have been repeatedly rebuilt with taxpayer money, according to Vox. While properties like these represent just 1 percent of the government's flood insurance policies, they account for 10 percent of the claims.

Harris County, Texas, has purchased 3,000 floodplain homes since 1985, an investment that saves $4 for every purchase dollar. Another more economical idea would be to provide federal funding to mitigate flood damages, such as elevating a flood-prone home.

Reformers include many conservatives who see the government bailouts - and lots of environmentalists who think the flood insurance program is an enabler for construction in flood-prone areas.

If the government is going to interfere in the flood insurance market, then that means taxpayers are subsidizing a few homeowners in flood-prone locations.

The government can't force homeowners in flood-prone areas to buy flood insurance, though it would seem that mortgage companies could, just as car owners are required to have insurance.

There also is evidence that the government's flood insurance is badly designed.

Rather than using detailed flooding maps to assess the risks of individual homes, the program uses communitywide averages that overcharge half the risks and undercharge half the risks. In addition, the flood insurance program was not designed for these catastrophic events that are breaking historic patterns.

In short, past history has become a poor predictor of the damages of natural disasters.

TURBOCHARGED STORMS

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