Editorial: Taxpayers shouldn't foot this crazy bill
The madness has to stop. It’s time to scrap the National Flood Insurance Program and end the taxpayer subsidies that allow the owners of property repeatedly damaged or destroyed by floods to rebuild in the same precarious location. Property owners who insist on rebuilding in the face of rising seas and the near certainty of more floods should look to the private sector for coverage.
The Federal Emergency Management Administration could face 300,000 claims for damage caused by superstorm Sandy. The bill could add $5 billion to $10 billion to the $17.8 billion the insurance fund still owes taxpayers for money borrowed to cover damages from Hurricane Katrina. Taxpayers can kiss that goodbye. The below-market premiums FEMA charges for coverage mean even if no more violent storms strike, the debt will never be paid.
Federally subsidized insurance forces taxpayers to pay for the rebuilding of beach homes they couldn’t possibly afford and to repeatedly replenish the sand on beaches that wash away. The program is the gift that keeps on giving, often to the same people. This week The New York Times reported that a Biloxi, Miss., home valued at $183,000 has been rebuilt 15 times in the last decade alone at a cost to taxpayers of $1.47 million. Taxpayers spent a total of $2 million to rebuild an oft-flooded $116,000 home in Humble, Texas. And a USA Today study discovered that a Mississippi home worth $69,000 has been rebuilt 34 times since 1978. That’s insane.
It’s time to make people who gamble by building or buying homes on barrier islands, seashores and in flood plains do so with their own money. It will also be better for the environment. The flood insurance program created in 1968 was a well-meaning attempt to help people private insurers wouldn’t touch because the risk was too high. It did so, but with the perverse result of encouraging development in flood-prone areas. That increased the risk for taxpayers and guaranteed the additional losses of lives and property.
The federal subsidy has been a disaster for wildlife. It’s encouraged the destruction of coastal environments and deprived the public of waterfront that, if left unsubsidized and thus undeveloped, would be theirs to enjoy.
The unpaid debts from Katrina and the realization that rising sea levels will increase the damage toll convinced Congress to reform the program before reauthorizing it for another five years. Premiums increased, though to nowhere near what the market price would charge. Coverage, which for homes is limited to $350,000 per claim, will be phased out for second homes and properties with repeated damage claims beginning in July. That will help, but with sea levels predicted to rise by 2 to 6 feet by the end of the century, it’s no solution.
FEMA is in the process of updating its flood zone maps and, presumably, they will expand significantly. That means mortgage lenders may require that more property owners purchase flood insurance. In much of the nation, including the Northeast, only a small percentage of property owners do, and an even smaller percentage continue coverage. FEMA’s records show that the program insures just 9,406 properties in New Hampshire though many more, as the widespread flooding in recent years proves, are at risk.
What’s needed in the flood insurance program’s place is a federal insurance fund that comes to the rescue of everyone whose property is destroyed, not just by floods, but tornadoes, wildfires, earthquakes and other natural disasters. And unlike the flood insurance program, that fund should have strict rules to determine when a property should be rebuilt or relocated.