National Flood Insurance Program Set to Expire November 30th, 2018 If Congress Does Not Extend It

This hurricane season highlighted the high cost of living on the beach.

Rebuilding after Hurricane Michael could cost upwards of $4.5 billion. That’s nothing: Hurricane Florence is estimated to cost $50 billion. Hurricane Harvey cost $125 billion. In 2017, 16 separate weather events in the U.S., three of which were the costliest storms on record, cost a cumulative $306.2 billion. Who pays? We all do, in the form of tax dollars and higher insurance premiums. As climate change accelerates and sea levels rise, those costs will only continue to break records and weigh upon society.

Some people are questioning the sense of pouring billions into rebuilding efforts in zones that will be targeted again, or that are predicted to be underwater entirely as climate change advances. The Union of Concerned Scientists calculates that 300,000 coastal homes are located in areas that will experience chronic flooding or be underwater in the next 25 years.

By the end of the century, around $912 billion worth of residential property, or 2.4 million homes will be impacted by climate change. Coastal communities will ultimately be displaced, as flooding that doesn’t recede after storms forces huge coastal populations to move inland. In the meantime, however, people keep building and rebuilding in floodplains and on fragile coastlines. A year after Hurricane Harvey, one in five new homes in Houston is being built in a floodplain. Even when the future is clear, developers continue to push costly and unsustainable growth in high-risk areas.

The National Flood Insurance Program (NFIP) guarantees government payouts in special flood-hazard areas, leading property owners to rebuild a new home on the same vulnerable site multiple times, knowing they’ll always get bailed out. Some are calling for change, as the program is currently more than $25 billion in debt (in figures that predate the 2018 hurricane season). More than 30,000 properties that are insured under the program are considered “severe repetitive loss properties,” which means taxpayers have paid numerous times to rebuild the same house.

“Any time you see a major flood or devastating event, a lot of times you may see politicians come in and say, ‘We’re going to rebuild,'” says Chris Hackett, the senior director of personal lines policy at the Property Casualty Insurers Association of America. “That may be very popular at the time, but I think it’s important to maybe take a moment and think about, is it really the best use of resources to rebuild in this exact location after this disaster struck?” 

Now that may change.

The program, which serves more than five million policyholders across the country, is set to expire at the end of November 2018 if lawmakers don’t reauthorize it. Critics of the program say it doesn’t do enough to discourage building in flood zones or to mitigate risk by requiring building standards that would make buildings more able to withstand severe weather and floods. Others say that privatization is the solution. Private insurance companies would be able to do what the government does not: Discourage building in high-risk areas by charging rates that are in proportion to the risks.

However, eliminating the program is politically risky and thus unlikely, with key recipients living in the Carolinas, Florida, Texas, and Alabama. FEMA officials have said that its ongoing mission is to expand this program.

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