EDITORIAL: Federal flood insurance program needs fixing

Nov. 13--The National Flood Insurance Program enacted in 1968 to shield the federal government from disaster payments has become a disaster.

Even before hurricanes Harvey, Irma and Maria, the NFIP was in deep trouble, its $30 billion borrowing exhausted. The program needs to be renewed by Dec. 8.

Congress is working on that legislation. It needs to change the rules to end repetitive losses, make policies actuarially sound and involve private insurers as more than processers.

The NFIB is administered by the Federal Emergency Management Agency. It had been awash in red ink after Hurricane Katrina ravaged New Orleans and the Mississippi delta in 2005 ($108 billion in total damage), followed by Rita and Wilma along the Texas coast, prompting FEMA to borrow $17.3 billion. Hurricane Sandy battered the Northeast in 2012 ($75 billion in total damage), with FEMA borrowing another $6.25 billion.

Historic flooding has occurred elsewhere -- in Iowa in 1993 and 2008. In Waterloo, FEMA provided the city with $5.7 million after the latter flood to help buy and demolish more than 40 flood-plagued homes, including 20 on Sans Souci island.

That avoided some of the crazy repetitive losses:

A frequently flooded Houston home valued at $72,000 has claims totaling more than $1 million.

A Spring, Texas, home valued at $42,024 flooded 19 times with claims of $912,732.

A Baton Rouge, La., residence valued at $55,921 flooded 40 times with $428,379 in claims.

A home north of St. Louis on the Mississippi River valued at $90,000 flooded 34 times with claims of $608,000.

Of NFIP's 5.6 million policies (valued at $1.25 trillion), 150,000 are classified as repetitive losses, accounting for 30 percent of the claims.

Yet building along a rising coast and development in flood plains continues unabated in some areas. That repetitive loss lunacy needs to stop.

In 1998, the National Wildlife Federation issued a "Higher Ground" report on flooding, and Houston was a huge problem. With its runaway growth and lack of zoning, it had more than half of the nation's repetitive losses from flooding, surpassing New Orleans as the nation's leader.

As Politico recently reported, the problem has worsened, even before 50 inches of rain from Hurricane Harvey.

"In 2001, Tropical Storm Allison dumped more than two feet of rain on the city," it reported, "causing about $5 billion in damages. Two relatively modest storms that hit Houston in 2015 and 2016 -- so small they didn't get names -- did so much property damage they made the list of the 15 highest-priced floods in U.S. history. But Houston's low-lying flatlands keep booming, as sprawling subdivisions and parking lots pave over the wetlands and pastures that used to soak up the area's excess rainfall, which is how Houston managed to host three '500-year floods' in the past three years."

U.S. taxpayers continue to pick up the bill for that irresponsibility, while Texans enjoy having no income tax.

Meanwhile, some cities, notably along the Georgia and South Florida coasts, have been proactive regarding flood protection. Norfolk, Va., now requires homes to be built three feet above current base flood elevation, but needs a prohibitive $1 billion in flood protection to make it safe from ocean waters 18 inches higher than a century ago and expected to rise several feet higher within this century.

The NFIB currently provides a subsidy of 31.9 percent on flood insurance policies, while receiving $3.15 billion annually in premiums -- a pittance compared to its growing outlays.

Policies need to be more actuarially sound. Congress tried that in 2012, but backed off two years later following a backlash from property owners. This time it needs to hear from taxpayers subsidizing those policies.

Mortgages in flood plains should be contingent on flood insurance -- a requirement when dealing with a federally insured financial institution. But 40 percent of those mortgages are with unregulated lenders, including a high proportion of manufactured homes. Some initial policies are not renewed.

The Trump administration wants to remove barriers insurance companies face entering the market, including making more information available and ending a provision that the 70 insurance companies acting as NFIP contractors not compete against the government program.

That's a good move.

Yet when flood plain maps should be updated, the administration wants to cut $190million annually from mapping work.

Trump previously rescinded an Obama executive order requiring federally funded infrastructure projects -- including schools, housing and highways -- to factor in climate change.

The situation is getting worse, not better. As the Wall Street Journal reported, 20 storms since 2010 -- preceding this year's destructive hurricanes -- each caused at least $1 billion in damage. Only nine did during the 1990s (inflation adjusted).

Congress shouldn't kick this can farther down the waterway.

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