Editorial: Flood insurance remains a vexing problem

Louisiana is buried so deep under the current property insurance crisis that it's possible to forget that flood insurance remains a daunting challenge as well.

U.S. Sen. Bill Cassidy took to the Senate floor recently to remind his colleagues of this. We're glad he's keeping a spotlight on the issue and working to wrangle a multi-state coalition to make the federal program not only sustainable but affordable.

Those two goals intertwine, Cassidy explained. Washington has long sought a way to make the National Flood Insurance Program — created because private industry didn't see a way to make money insuring for the widespread damage of catastrophic floods — self-sustaining. But imposing actuarially sound premiums risks pricing out customers who need the coverage.

That, Cassidy said, is what's happening under Risk Rating 2.0, an opaque system that FEMA created to gradually move toward self-sufficiency.

The senator argued it's had the opposite effect. He said that a fifth of all policyholders around the country have dropped coverage because it's "unaffordable."

"When that happens, the pool of policyholders shrinks and the program enters what is called an actuarial death spiral, where the risk is put on fewer people, which raises the premiums even more, which makes those who are relatively speaking least at risk drop, which concentrates (risk) more…setting up the program for collapse. Congress needs to do something before it's too late," Cassidy said.

He's not wrong. The average Louisiana premium for a single-family home is projected to rise by 134% over time — price bumps are capped at 18% per year — according to data FEMA released last year, with even steeper increases in the most flood-prone areas.

But it's not just Louisiana that's affected. Cassidy noted that each of the Gulf Coast states has seen $1 billion in payouts since 1978 — but so have California, Missouri and several northeastern states.

And the beneficiaries of the program are not just wealthy people who build vacation homes on the beach, Cassidy noted; Just as Louisiana has a working coast, floods elsewhere tend to happen in river valleys where people live in older homes on low ground.

"This is for middle-income families, working families and poor families, to allow them to have the security that they can rebuild after a tragic event," he said.

We recognize that there are no easy solutions here — and that pressure for additional federal insurance to cover hurricane winds, wildfires and earthquakes is also mounting. Federal programs are few people's preference, but if they're the only way to keep Americans in their homes, the idea must be on the table.

In fact, finally solving the long-running flood insurance conundrum could create a model for addressing other growing hazards.

So we thank Cassidy for the reminder, even though many Louisianans don't need it.

Until disaster strikes close to their homes, too many of his congressional colleagues, it seems, always do.