Newspaper article St Louis Post-Dispatch (MO)

Flood Program Debt Raises Questions Recent Disasters Put Pressure on Insurance Funds

Newspaper article St Louis Post-Dispatch (MO)

Flood Program Debt Raises Questions Recent Disasters Put Pressure on Insurance Funds

Article excerpt

THE NATIONAL FLOOD INSURANCE PROGRAM is confronting record floods in the northern plains $818 million in debt.

None of the 3.6 million Americans holding flood insurance policies stands to lose. That's because the program is authorized to borrow up to $1.5 billion from the federal treasury to cover claims.

Yet, the debt raises questions about how much the program is costing taxpayers and the wisdom of providing cut-rate insurance in flood-prone areas. Sen. Christopher S. Bond, R-Mo., is among those asking questions. Bond's Senate Appropriations subcommittee handles the budget of the Federal Emergency Management Agency, which runs the insurance program. Three years ago, he arranged a compromise y to fix the program. Jon Kaymark, a committee aide, said committee members had asked the agency to explain. Bond "is very concerned about this borrowing from the treasury and whether the program can pay for itself or whether it will become an additional burden for taxpayers." Run Of Disasters In the past two years, the number of people who have bought flood insurance has leaped by more than 1 million. In Missouri and Illinois, about 70,000 people and businesses have policies - an increase of more than 50 percent from the time of the Flood of '93. Program officials have sold the insurance aggressively in the belief that it saves payments for disaster relief later. Policies are sold through local agents working with the government. But the past few years have brought a string of disasters. In the spring of 1995, the government paid out $580 million in claims for the floods in Louisiana, more than double the $271 million in claims from Midwesterners in 1993. Hurricane Opal in October 1995 resulted in $352 million in claims. Last year floods in the Northeast cost $169 million, Hurricane Fran cost $136 million and Hurricane Josephine $91 million. Since last fall, the country has experienced floods in California and along the Ohio River and now along the Red River in the Dakotas and Minnesota. "We're in a bad stretch right now," said Edward T. Pasterick, chief financial officer for the Federal Insurance Administration. …

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