National Flood Insurance

With the Houston area still soggy from Hurricane Harvey, and with Hurricane Irma making its destructive path across the Caribbean and expected to hit South Florida this weekend, and with Congress in the middle of budget and debt ceiling negotiations -- it's time to rethink the overall inadequacy of the National Flood Insurance Program.

Based on an excellent article by Christopher Flavelle in Bloomberg Businessweek, I have gleaned the following understanding.

Repetitive flooding in certain areas makes flood insurance either unaffordable for homeowners or unprofitable for insurance companies.   So, in 1968 the federal government set up the National Flood Insurance Program "to make sure that homeowners in flood prone areas could get affordable insurance."

But here's the problem.   By subsidizing, and thus making inexpensive flood insurance available, the NFIP has had unintended consequences, although in retrospect they are predictable.   Rather than putting certain land off limits for building by zoning regulations, NFIP simply required that to obtain a mortgage to build, or buy, in an area designated as a 1-in-100 year flood area, one must carry flood insurance.  The subsidies effectively leveled the playing field between swampy land and solid ground.

The obverse of that good (though now inadequate) requirement is that it has encouraged rebuilding in flood-prone areas where the land is cheaper.   A Pew Charitable Trust study has found that 1% of the 5 million properties insured have produced almost a third of the damage claims and half the debt.  This is the so-called "flood-rebuild-repeat" model.  NFIP records show some individual homes having been flooded, and filed claims, 30 or 40 times.

And there's one other problem:   Congress has woefully underfunded the program, so that it is now reportedly $25 billion in debt -- and that's before the Hurricanes Harvey and Irma claims come in.   Congress did a major overhaul of NFIP five years ago to better reflect what insurance actually costs.  Insurance premiums went up, people complained, and two years later, Congress gutted the reforms to lower premiums -- resulting in the $25 billion federal debt.

The flooding after Harvey has shown the failure of our flood-rating system.  It seems no longer meaningful to limit the flood insurance requirement to 1-in-100 year areas, when Houston has had -- in the last three years, 2015, 2016, and 2017 -- three 1-in-500 year level floods, the last of which, Harvey, was of course actually rated at 1-in-1000 year.

Another problem with this program is that people continue to rebuild in the same place where storms have repeatedly destroyed their homes.  Dauphine Island, off the Alabama Gulf Coast, is a prime example.   It is 14 miles long and home to 1,300 people.   The island gets flooded, year after year, whether there are hurricanes or not;  --- and repairs and rebuilding are paid for, year after year, largely by American taxpayers.

The NFIP program is set to expire on September 30th, unless Congress acts to continue it.   Some sort of fix and continuation is almost certain now in the wake of Harvey and Irma.   But even before, there was growing concern over the multiple examples of repetitive flooding, like Dauphine Island, that don't make the national news but that chronically drain NIFP resources.

While many areas that depend on subsidized flood insurance are poor, "the overwhelming majority of buildings on Dauphine Island's most vulnerable beaches are vacation homes and rentals."   Texas Republican Jeb Hensarling had been effectively arguing against "single mothers being forced to pay for insurance [through taxes] for some millionaire's beachfront vacation home."

The House just approved an $8 billion authorization for assistance to the Texas and Louisiana areas affect by Harvey [and the Senate upped it to $15m].   In the next couple of weeks, they will likely be asked for more to help Puerta Rico and Florida.   And also decide in the next three weeks the fate of NIFP.   Obviously, in the wake of Harvey and Irma, Congress can't refuse to at least reauthorize NFIP -- but it needs to be completely reconceived.

A comprehensive study of the problem and negotiated regulations and allocations of funds on disaster relief demand attention.   And Congress already has too much on its agenda with only 15 more days in session in September.

Rather than concentratimg just on money for rebuilding and more realistic premiums for flood insurance, the problem needs a task force to study zoning regulations for new building or rebuilding in flood plains, better municipal plans for flood water management, and general preparedness.

Other than providing immediate relief, however, does either Congress or the White House have the capacity to add this to the crisis with North Korea, the crisis over debt ceiling, the crisis over DACA, the crisis over health care, the crisis over border security -- and the overall crisis of the Trump presidency?   Including possibly impeachment proceedings in the coming year.

The answer seems obviously No.  Meanwhile, the problem will only get worse, as we also fail to do what is needed about global warming that is making the hurricane and flooding problem worse, year by year.

Ralph