Americans depend on our coasts, so we need national flood insurance
By: Michael Hecht | The Hill | 12/7/2017
The 2017 storm season has been one of the most active in United States history, with 17 named storms and 10 hurricanes, six of which were major category 3 or stronger hurricanes. Earlier this month, the House took a step in the right direction to protect Americans living in vulnerable regions, voting in favor of a five-year reauthorization bill for the National Flood Insurance Program (NFIP). However, there is much work to be done on the Senate side, both to address concerns remaining in the House package and to make proactive improvements for policyholders to NFIP, so that we ensure the it is available, affordable and sustainable.
The fact is that living near water is an economic necessity. The commerce, recreation and national defense that by their nature happen at waters edge are activities that benefit the entire nation. More than 50 percent of the country’s population and jobs are along the coast. What’s more, coastal jobs pay more, with earnings in coastal regions averaging nearly $6,000 more annually compared to other areas. The National Flood Insurance Program is critical to ensuring these communities can continue to provide their vital contributions to our national economy.
Questioning whether flood-prone communities should exist where they do misses the real issue, which is how can we be smart about how we live and work in an age of increasing weather volatility. There are valid criticisms of NFIP, from its inaccurate mapping, to the lack of mitigation resources for homeowners, to flaws with the claims process, to a need to bring in greater revenue to pay claims. As we approach the reauthorization of the program, we should consider reforms with the fundamental understanding that a healthy NFIP supports a healthy American economy.
Accurately assessing risk is critical in flood management, as a few inches can make all the difference. Numerous communities across the country can point to erroneous mapping that results in a lengthy and expensive appeals process. No one benefits when this process is drawn out and frustrating. Communities can’t plan appropriately and residents do no have the necessary information to understand their true flood risk.
To solve these challenges, Congress should require the Federal Emergency Management Agency (FEMA) to use more sophisticated laser-based mapping that is both more accurate and granular. Local communities also need more leverage in the appeals process, so the appeals process can be streamlined and local governments can be reimbursed for successful map challenges. Congress should also increase authorization to the National Flood Mapping Program, so that FEMA has adequate resources to complete flood mapping across the country.
As a country, we need a stronger focus on mitigation, which is the true long-term way to prevent flood losses and reduce taxpayer exposure. FEMA’s flood mitigation assistance fund and pre-disaster hazard mitigation funds are designed to help and reward communities for reducing flood risk, but those programs need to be adequately resourced. Congress should appropriately fund these programs to provide greater tools to property owners and communities.
Homeowners should also be incentivized with credits towards their premiums for undertaking mitigation activities that reduce National Flood Insurance Program exposure. While buyouts are a politically sensitive topic, a voluntary program that purchases extreme repetitive loss properties would reduce NFIP’s exposure and greatly assist those homeowners who now have properties they cannot sell because the value is so diminished.
Flood insurance also needs to remain affordable. One of the great myths of flood insurance is that it is widely abused by rich people for their beach homes. The reality is quite different, as 98.5 percent of all NFIP policies are in counties with a median household income below $100,000, and 62 percent of all NFIP policies are in counties with a median household income below the national average of $53,889. Preserving affordability is critically important so that homes, often the largest investment in someone’s life, retain their value.
We agree that NFIP needs to bring in more revenue to pay claims. Instead of raising premiums on those already participating in NFIP, a more responsible way to bring revenue in line with costs is to increase program participation. NFIP, like any insurance program, needs a large and diverse risk pool to be healthy. More participation makes particular sense for NFIP, as recent history has shown us that everyone can be at risk of flood, as there has been a flooding disaster declaration in each of the 50 states over the past 31 years. There are multiple ways to increase participation, like requiring an opt-out when you purchase your home, where you have to actively decline purchasing flood insurance, or expanding the geographic areas required to buy flood insurance.
The next deadline is fast approaching, as NFIP is set to expire Friday. Fortunately, there are two pieces of legislation introduced in the Senate that would serve as a strong foundation for reauthorization, the Sustainable, Affordable, Fair and Efficient NFIP Act by Sens. John Kennedy (D-La.) and Bob Menendez (D-N.J.), and the Flood Insurance Affordability and Sustainability Act, which would serve as a strong vehicle for reauthorization. The ball is now in the Senate’s court, and we urge swift action so that we can secure a five-year reauthorization with stabilizing reforms. Our working coast, and therefore all of America, depend on it.
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