Opinion: What Happened to Affordable Flood Insurance?

(TNS) – Ten years ago, the flood made strange friends in America.

In 2012, a surprising coalition of free market conservatives, conscientious government groups, environmentalists and insurance industry lobbyists came together to press Congress to reform the national flood insurance program. The conclusion of the bipartisan bill was simple. Ending much of the federal subsidy for flood insurance premiums, he ultimately decided to stop the NFIP from borrowing from the Treasury Department to pay its bills.

Then reality set in. Homeowners across the country, especially in flood-prone areas along the Atlantic and Gulf coasts, complained they were facing up to a 500% price increase because of NFIP reform. Flood insurance programs have had to pay for themselves completely by charging policyholders more. Just two years later, essentially the same coalition pressed Congress to roll back reforms, leaving the NFIP in a more financially precarious position by hard capping how much flood insurance rates could be raised each year. I went back to


Governments must manage taxes properly while keeping flood insurance affordable.

Last year, the Federal Emergency Management Agency, which administers the NFIP, took a big step towards a new fee structure that more accurately reflects a property’s actual flood risk, taking into account factors such as flood frequency and the cost of reconstruction. I tried

This change, though well-intentioned, had the same effect as the well-intentioned reforms of a decade ago. Annual flood insurance premiums are skyrocketing by hundreds of dollars, and nationally, 77% of policyholders expect their prices to go up, and Houston-area homeowners have had enough. Rebecca Schuetz of The Chronicle reported last week that her 45,000 buildings in the area have scrapped her NFIP policy. One of her 12 Houston buildings, which she once had FEMA insurance for, will lose its protection if another major storm hits southeast Texas. .

While some of the premium increases will be gradual (federal law limits annual price increases to 18%), even a modest increase will be out of reach for Houstonians living on the margins. It’s nothing. In a time of economic uncertainty, with inflation already weighing on household budgets, protecting a home from flooding has become an unaffordable luxury for some.

It’s been five years since Hurricane Harvey devastated Houston and three years since Tropical Storm Imelda. Despite several hurricanes that hit our Gulf Coast neighbors in Louisiana, Mississippi, Alabama and Florida, we’ve since been lucky to fend off another major storm this year. With a relatively mild hurricane season coming to an end, Houston and Harris County continue to work on flood control projects. That is, remembering that of the more than 204,000 homes and apartments Harvey damaged in Harris County, three-quarters of them were outside his federally designated 100-year floodplain. until you get it.

But in trying to sustain the NFIP solution (currently a $20.5 billion deficit), the federal government has lost sight of NFIP’s original mission: affordability. As long as taxpayers are subsidizing her NFIP, the program has a duty to make it as accessible as possible to the entire community. I applaud local nonprofits such as West Street Recovery for trying to remedy this problem at a detailed level. This covers flood insurance premiums for her 22 homeowners who can no longer afford to pay. such a massive problem.

Fortunately, there is an opportunity for Congress to take bold steps to make NFIP more affordable and more solvable. Congress has until December 16th to reauthorize the NFIP. Otherwise, FEMA would have to stop selling and renewing insurance nationwide. Since 2017, there have been 21 short-term reauthorizations, each essentially requiring structural changes to the program to ensure financial stability. What if this time they actually decide to fix it?

A 2021 report from the Congressional Research Service, a nonpartisan public policy research agency, outlines various policy prescriptions that Congress can consider to reduce the amount NFIP policyholders must pay. The most interesting options are means-tested and affordable programs that target premium discounts or subsidies to eligible households. An income-based approach that relies on median income or federal poverty guidelines requires low-income households to pay a portion of the premium and FEMA to cover the rest. If you’re a millionaire with a beach house, unfortunately there are no more subsidies to spend an afternoon on a boogie board.President Biden has already endorsed such an idea. In his initial national agenda, Build Back Better, Biden included $358 million in programs to help low-income people get flood insurance and protect their property from flood damage. .

The CRS report also includes several options for Congress to reduce NFIP’s debt. This would include completely wiping out, or at least eliminating, the $400 million annual interest payments FEMA pays to the Treasury Department. There is precedent for such measures. Congress has already written off his $16 billion debt on his NFIP in 2017. Congress could also change how catastrophic storm losses are financed by setting a threshold for the maximum amount of loss the NFIP is expected to fund. Anything above that threshold is the responsibility of the federal government.

Of course, we must not lose sight of the best long-term solution. It’s about keeping people’s homes from flooding in the first place. Houston and Harris County are working on a wide range of flood control projects, including building taller structural requirements, purchasing floodplain real estate, preserving and restoring wetlands, and building large-scale storm surge protection systems such as the Ike Levee. . The benefits of significantly reducing flood risk through these measures far exceed short-term insurance premium savings.

The reality of living in a low-lying coastal city like Houston is that paying for flood insurance is a must. It’s time for Congress to do so.

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