Look­ing for high ground Florence and her sis­ters re­veal the need for smart storm-in­sur­ance re­form

The Washington Times Weekly - - Editorials -

Hur­ri­cane Florence hurled fu­ri­ous wind and drench­ing rain on the Caroli­nas, but it was the wa­ter that fell on sat­u­rated ground that caused epic de­struc­tion. As the over­flow­ing rivers, streams and es­tu­ar­ies re­cede home­own­ers are del­ug­ing in­sur­ance agents with pleas for a check large enough to cover clean-up and re­pairs.

As a re­sult of an un­wieldy fed­eral flood in­sur­ance pro­gram, U.S. tax­pay­ers could be on the hook for bil­lions for the restora­tion. As Congress ham­mers out flood in­sur­ance up­grades, law­mak­ers must im­pose in­cen­tives to re­build lives and houses on higher ground. Ev­ery­one will pay if they don’t.

Strik­ing the At­lantic coast­line as a Cat­e­gory 2 storm, Florence dumped record rain, more than 30 inches in some places, in­un­dat­ing com­mu­ni­ties in North and South Carolina be­fore veer­ing north­ward through the mid-At­lantic states be­fore blow­ing out to sea. The death toll has climbed to three dozen, and tens of thou­sands of houses, shops and stores, schools and churches suf­fered flood dam­age. The fi­nal toll won’t be known un­til flood wa­ters sub­side, but es­ti­mates range from $3 bil­lion to $20 bil­lion.

Florence’s path of de­struc­tion re­flects on Congress’ glar­ing fail­ure to adopt leg­isla­tive up­grades to the Na­tional Flood In­sur­ance Pro­gram (NFIB). The flood fund un­der­writes in­sur­ance poli­cies in flood-prone re­gions, guar­an­teed by the full faith and credit of the fed­eral govern­ment, which is it­self $21 tril­lion un­der­wa­ter. That’s a lot of money, even as Wash­ing­ton mea­sures money. As a re­sult of in­ac­tion, the pro­gram, ad­min­is­tered by the Fed­eral Emer­gency Man­age­ment Agency (FEMA), has un­der­charged pol­i­cy­hold­ers and gone broke pay­ing out claims.

Last year, the flood pro­gram was $25 bil­lion in the red af­ter pay­ing pol­i­cy­hold­ers for prop­erty dam­ages caused by Hur­ri­canes Maria, Irma and Har­vey. As a stop­gap mea­sure, Congress for­gave $16 bil­lion of debt. And in Au­gust, Congress granted a three-month ex­ten­sion just as the pro­gram was about to ex­pire.

The House has now passed the 21st Cen­tury Flood Re­form Act, a five-year reau­tho­riza­tion of the flood fund that in­cludes sev­eral mea­sures putting fed­eral flood in­sur­ance on a sta­ble foot­ing. These in­clude re­quir­ing FEMA to con­duct an an­nual in­de­pen­dent study of the pro­grams to de­ter­mine whether pre­mi­ums are suf­fi­cient to pay for longterm ex­penses. Re­ly­ing on govern­ment bailouts is no way to run a busi­ness that in­sures 5 mil­lion prop­er­ties.

The leg­is­la­tion would en­able com­mu­ni­ties to de­velop their own flood maps that ac­cu­rately de­pict re­gions vul­ner­a­ble to ris­ing wa­ters. Towns fre­quently re­sist in­clu­sion on flood maps be­cause it makes the pur­chase of flood in­sur­ance manda­tory and thus dis­cour­ages de­vel­op­ment. But when storms like Florence take prop­erty own­ers by sur­prise, dam­age to unin­sured build­ings can mean fi­nan­cial devastation and greater set­backs to long-term eco­nomic growth.

The leg­is­la­tion would im­prove meth­ods of iden­ti­fy­ing prop­er­ties prone to re­peated flood­ing, which hit in­sur­ance re­serves hard with mul­ti­ple claims. Ad­di­tion­ally, the mea­sure would al­low pri­vate in­sur­ers to of­fer their own flood poli­cies, pro­vided they meet govern­ment-ap­proved min­i­mum cov­er­age. En­abling in­sur­ance com­pa­nies to com­pete for busi­ness could re­sult in lower pre­mi­ums, says the House Fi­nan­cial Ser­vices Com­mit­tee.

The Se­nate is stalled over its own flood in­sur­ance bill, and Hur­ri­cane Florence was a jar­ring re­minder that time is a-wast­ing. Nat­u­ral dis­as­ters are un­pre­dictable, hence they’re fre­quently called “an act of God.” As the na­tion’s pop­u­la­tion, now at 325 mil­lion, con­tin­ues to grow, smart in­sur­ance pol­icy is a proper way to achieve a clear bal­ance be­tween cost and risk.

While Eastern states, and At­lantic Coast states in par­tic­u­lar, are fre­quently vul­ner­a­ble to storm-sea­son flood­ing, the Western states face other rav­ages of na­ture. Sum­mer­time wild­fires blacken thou­sands of square miles of dry wilder­ness, burn­ing houses and killing many caught in the fire. Flood in­sur­ance, both fed­eral and pri­vate, must not be an in­cen­tive to build where flood­ing is likely.

Vic­tims of nat­u­ral dis­as­ter de­serve sym­pa­thy and as­sis­tance. Still, Amer­i­cans who set­tle where they can gaze at scenic coast­lines and rugged moun­tains can’t ex­pect oth­ers to pay for it. Fed­eral dis­as­ter pro­grams must not en­cour­age risk-tak­ers to gam­ble with their lives and prop­erty, but rather nudge them to­ward safer places to live.

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