It has been 1,979 days since all heck broke loose in the flood insurance industry. Apparently, that just wasnít enough time for Washington to react. So with the National Flood Insurance Program set to expire on Friday, itís looking increasingly likely that Congress will seek a two-week extension before finally getting around to fixing this problem. Letís hope members of both political parties take it more seriously this time.
Itís not like Congress hasnít been attuned to the issue. Since the disastrous Biggert-Waters legislation was signed into law by President Barack Obama in 2012, flood insurance has been an ongoing problem, both in terms of premium increases and taxpayer liabilities. The Homeowner Flood Insurance Affordability Act of 2014 alleviated some of the fallout, but it was a temporary fix.
With the NFIP approaching $30 billion in debt this year, along with $16 billion already written off by the federal government, there is ample reason for Congress to come up with a comprehensive plan. The problem is that lawmakers from non-coastal regions want residents in Florida, Texas, Louisiana and other similar states to bear the entire burden.
The House passed legislation last month that would gradually eliminate subsidized rates and cause premiums for Florida homeowners to continue to rise. While increased rates eventually may be necessary, it cannot be the main strategy. Congress needs to devote more money to mitigating future floods instead of hammering middle class homeowners, most of whom do not live in mansions or on the waterfront.
The wiser strategy is updating flood maps that are decades old and not nearly detailed enough. That might mean more homeowners will be required to buy flood insurance, but spreading the risk would save money in the long run and invite more private insurers to participate. There also should be a more comprehensive plan to either raise the elevation of homes or buy those that repeatedly flood, because paying multiple claims on the same property ends up costing the NFIP far more than the actual value of the houses.
There was hope that the Senate would build on the House plan and incorporate some of these strategies to come up with a more reasonable path forward. Unfortunately, Congress has been preoccupied with regressive tax cuts and never had meaningful discussions about NFIP reform.
With the flood insurance program set to expire on Friday, an extension is absolutely the right path to take. While the ill-conceived Biggert-Waters plan caused flood insurance premiums to temporarily skyrocket and disrupted the real estate market in Florida, allowing the NFIP program to expire would be exponentially worse.
There are signs that lawmakers in coastal states might band together to ensure a more positive fix. The congressional delegations from Florida and Texas sent a letter to leadership this week, expressing disappointment with federal relief aid for the 2017 hurricane season and pledging not to support a budget deal unless more money was provided. That kind of cooperation also is needed for flood insurance.
Whether the extension is for two weeks or two months, the issue eventually must be confronted and fixed. Kicking the can down the road is not the optimal strategy, but it is preferable to the Houseís flawed plan. Florida homeowners need someone to be their advocate on this issue. Itís up to the Senate to come through before the next hurricane season arrives.