By: Craig Fugate
In an era of increasingly intense and frequent severe weather, tens of millions of Americans are all too familiar with the impacts and costs of flooding.
Unfortunately, Congress has failed to update flood policy to meet the challenges of this new norm, instead choosing to continually extend its own deadline for reauthorizing the National Flood Insurance Program (NFIP), which provides federally backed coverage for homeowners and small businesses in 22,000 communities nationwide.
The program, which is more than $20 billion in debt, is in dire need of reform. In its current form, the NFIP has failed in two of its goals — decreasing the costs from flood damage and improving the federal government’s management of flood risk — and without major improvements will continue to burn through taxpayer dollars while incentivizing policyholders to live in at-risk areas through subsidized premiums.
And yet, Congress has kicked this can down the road for the seventh time in less than a year.
This continued delay comes despite the fact that some in Congress are proposing fresh ideas for fixing the program. Pending bills would require sellers to disclose flood risk to homebuyers, require repeatedly flooded communities to develop localized plans to reduce risk, enhance mapping of risk areas, boost investments in resilience — for example, through a revolving loan fund — and engage private insurers, all viable strategies to keep people safer while decreasing the costs of disasters.
The failure of Congress to act on these proposals should be particularly concerning to the tens of millions of Americans who live in areas with a 26 percent chance of flooding during the life of a 30-year mortgage.
And there’s a more immediate threat: The National Oceanic and Atmospheric Administration predicts a 75 percent chance that this year’s hurricane season, which began June 1, will be equal to or worse than average (the season has already produced two hurricanes, a benchmark that isn’t reached until Aug. 28 in an average year).
Last year’s destruction from Hurricanes Harvey, Irma and Maria caused more than $270 billion in losses. Even now, 10 months after the last of those storms, many Americans continue to grapple with their losses and unsettled insurance claims, and many communities struggle with how and where to rebuild.
Americans deserve better from the NFIP. Established in 1968 to compensate for a lack of available private insurance and to promote sound floodplain management, the program is where most people turn for flood insurance. And in the five decades since the NFIP’s creation, it has grown to cover roughly 5 million policyholders nationwide. Unfortunately, in that time it also has largely failed to mitigate flood risk while becoming fiscally unsustainable.
Each month, people unwittingly buy homes in areas likely to flood, learning only at closing that they’re required to carry flood insurance on their new property — coverage that isn’t included in a standard homeowner’s policy.
Some, due to a perceived lack of flood risk, feel they should not be required to purchase the insurance, and many who have flood insurance policies — even those who pay federally subsidized premiums — believe the costs are too high. And others who are not required to buy insurance because they live adjacent to — versus in — designated flood-prone areas are often unable to pay for repairs and rebuilding when major storms flood their properties.
Fiscal conservatives who support self-sustaining government policy and programs largely want the NFIP reformed and point to the billions in losses that the program has racked up, including the recent forgiveness of a $16 billion debt to the federal Treasury.
Others who are similarly concerned about wasteful spending note that the program functions as a perverse incentive, encouraging people to live in high-flood-risk areas and to rebuild, sometimes again and again, after their homes are damaged or destroyed — rebuilding that is financed through subsidies and payouts.
Floods don’t choose political sides or respect jurisdictional boundaries, nor are they confined to the coasts. In the past decade, landlocked states accounted for eight of the 10 states that experienced the most flood-related disaster declarations. And allowing the federal government to fund repairs and rebuilding for policyholders that repeatedly flood — in some cases to the tune of exponentially more money than what their property is worth — will drive the NFIP deeper into debt.
With the historic flood costs our nation suffered last year, and the potential for billions of dollars more in damage this year, Congress must act now to authorize a modernized NFIP with effective policies regarding disclosure and repetitive-loss properties. That is one surefire way to help communities prepare for flooding and break the costly cycle of rebuilding the same structures time and time again.
Craig Fugate was administrator of the Federal Emergency Management Agency from 2009 to 2016.