EDITORIAL: National disaster fund would more fairly spread the risk | Editorial
Sunk, literally, as the ocean encroaches upon our shores in the decades ahead. Besides the emotional upheaval, the financial toll is going to be staggering.
At the moment, the federal government tries to protect many Americans from the financial shock of flood damage through the National Flood Insurance Program (NFIP). But the program is in the crosshairs of a
What they don't say is that
Truth is, Floridians are subsidizing repairs in states that experience river flooding -- states that don't participate in the program, yet regularly get emergency disaster funding.
But that part of the story doesn't get told. Instead, we hear that NFIP is going broke and people need to pay actuarially sound rates. Well, we got a glimpse of what actuarially sound rates look like in 2012 when
The outcry led
"NFIP has dramatic implications for our community," said
There is a solution that makes much more sense for Floridians and all Americans -- a national disaster fund, which would spread the risk and force private insurers to participate in this vital effort to protect all Americans from the huge cost of natural disasters.
The flood insurance program served its purpose, but after 50 years, it hasn't aged well.
But lawmakers didn't anticipate the increase and severity of flooding disasters and the aggressive development along coastlines and in areas that flood repeatedly.
To cover its liabilities, NFIP borrows money from the
Besides the rash of costly storms, NFIP is plagued by what are called "repetitive flood loss properties." According to
Last year, Rep.
"It's got to be fair for everybody," said Rep.
Still, the proposed overhaul passed in the House 237-189. The
Old technology and flawed flood-zone mapping also hamper NFIP. Those
The study says that the
"These maps are intended to inform flood insurance requirements and regulate development standards in high-risk areas," said
Now they tell us.
Ros-Lehtinen is right: The system must be fair. Right now, it's not.
Duffy is right, too: Private insurers must play a bigger role in providing flood-insurance coverage. Right now, they're not.
A national disaster fund would help address both concerns.
First, NFIP would cease to exist. The new fund would require private insurers to participate in the calamity market, making them cover all disasters, including floods. The goal is to remove the federal government as the flood-insurer of first resort.
As envisioned by insurance regulators, the fund would offer "reinsurance," which is insurance for insurance companies because a catastrophic natural disaster could bankrupt an insurer.
At the moment, it has
With a national fund, states would be required to create or maintain a similar layer of coverage for homeowners. The federal government would provide the final layer of coverage if any area were hit with a Katrina-like disaster.
In addition, this fail-safe would allow private insurers to diversify and invest their money elsewhere, boosting their bottom lines and lowering policyholders' premiums.
There are pitfalls. For example, if a national fund is not based on actuarially sound costs of losses, it won't work. The flawed
Although Harvey, Irma, Maria and the
Natural disasters affect most of the nation at one time or another. A national disaster fund is the fairest way to spread the risk among insurers, the government and property owners, who would be required to participate.
Taxpayers already are providing disaster-recovery funds through
Hurricane Irma wasn't just another wake-up call warning that
"
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