It seems to happen every summer — soaring temperatures, worries over hurricanes … and continued fumbling of the National Flood Insurance Program by Congress. Coastal residents can’t change the first two, but their representatives in Washington should be able to develop a flood insurance program that encourages more people to get this vital coverage.
The program is set to expire on July 31 — strangely timed for the very middle of hurricane season — and Congress is again scrambling to extend it for a seventh time. As usual, the outlook is cloudy with a chance of turbulence.
Two bills have been introduced in the Senate but neither has gained much momentum. It’s so shaky that Congress may resort to one of its favorite tricks — a stop-gap three-month extension that will get members through the November mid-term elections.
A better option would be a House bill with several key reforms that passed in November. But the Senate hasn’t even taken up that version, in part because of the very reforms the programs need and that could be unpopular with some voters.
The main problem with the national program is that it’s $20 billion in debt and not generating enough revenues to cover annual costs. Some of that will happen after major events like Tropical Storm Harvey. But even in years when the country doesn’t have a spate of major disasters, the program still operates in the red. Only about a fourth of homeowners have flood insurance, even in places that often take on water.
First-time victims of flooding should always receive the greatest help from this program, but some residents have used it several times for the same property. The program is supposed to ensure that any new construction in major flood zones is elevated, but that’s not always followed.
Ironically, flood insurance is not that costly now, up to about $500 a year. The federal government and local authorities must work harder to get more homes covered to bring more revenues into the program. One option could be making in mandatory for first-time buyers in some flood-prone areas, with the hope that the property owners will get used to paying for it and remain covered.
Private insurance companies should also be incentivized to get more involved in what has previously been a government-dominated market. Currently, they handle only about 15 percent of the policies.
Frankly, Congress might never get the program to be self-sustaining. But it can be better and maybe even build up some surpluses in years without major disasters. That won’t happen without some basic changes, however, and those reforms have been delayed long enough.