There is a house in Spring, Texas, just outside of Houston, that has achieved a certain distinction for being flooded again and again. Over the years, reports The New York Times, it has been repaired no fewer than 19 times, costing the federal flood insurance program $912,732. Its actual value? Just $42,000.
But that’s not such a rare distinction. A house near Baton Rouge, La., worth $56,000 has flooded 40 times, according to The Washington Post, racking up $428,000 in claims. A property near St. Louis assessed at $90,000 has sopped up $608,000 in payouts.
There is a clear if maddening logic to this pattern. Jimmy Williams, a former lobbyist for the National Association of Realtors, explained that when a hurricane hits and your house is flooded, your flood insurance reimburses you for the damage. Then the federal government says, in his words, “We know that you live in a place where hurricanes hit all the time, so why don’t you just keep rebuilding there?”
The National Flood Insurance Program is under enormous strain right now because of the devastation wrought by hurricanes in Texas, Florida and Puerto Rico. But it was in trouble already — nearly $25 billion in debt and obligated to provide coverage in places and on terms that guarantee more heavy losses.
The federal program was established in 1968 to provide coverage that private insurers had abandoned. It serves the important purpose of saving property owners hit by unforeseen disasters from financial ruin. But it has failed to protect taxpayers from endless unnecessary claims in areas prone to flooding, notably along the Gulf Coast and the Mississippi River.
Unreasonably low rates mandated by Congress are one problem. Another is the eligibility of policy holders for repeated payouts. “Repetitive loss” properties account for 1 percent of those covered but nearly a third of reimbursements.
Steve Ellis of Taxpayers for Common Sense told The Atlantic, “Here you have a program that is subsidizing people to live and develop in harm’s way.” Much of the acreage under water after Harvey, for example, was in marshy low-lying areas that should have been left as habitat for frogs, not humans.
Absent reform, things will only get worse, as rising temperatures and sea levels put more land at risk of episodes of high water — even as the demand for housing creates pressure to develop those lands. The good news is that there are plenty of people who recognize the need for change.
A coalition of advocacy groups from across the political spectrum, from the Sierra Club to the National Taxpayers Union, is pushing to overhaul the flood insurance program. The Trump administration has suggested denying coverage to properties prone to repeated flooding if the owners insist on staying in the same place.
On Nov. 14, the U.S. House approved the 21st Century Flood Reform Act, which makes a start on putting the program on a more solid footing. It would end payouts going forward for properties once they accrue claims adding up to more than triple their value. It would open the market to private insurers. It would allow aid for owners to take measures, such as elevating their homes, that reduce the risk of future damage. One of the chief advocates of change is House Financial Services Committee Chairman Jeb Hensarling. “We’ll pay for your house twice,” he said recently, “but after that it’s either time to mitigate or you might want to consider relocating somewhere else.”
Whether the Senate will go along is far from certain. Past efforts to make the program sustainable have foundered on the unwillingness of politicians to raise premiums and limit coverage. Taxpayers, however, may finally be figuring out that they are getting soaked by a shortsighted and indulgent policy whose consequences are unaffordable.
We can’t prevent nature from doing its worst. But sound programs can minimize the damage it does. If anything good comes out of the terrible hurricanes this year, it may be a new resolve to keep the cost of such disasters from rising still higher.
