Don’t put flood insurance out of reach: Editorial

Congress needs to reauthorize the National Flood Insurance Program by Sept. 30 to avoid a gap in new policies. But it is crucial to ensure that legislation to extend the program doesn’t throw policyholders into turmoil.

The House bill being pushed by Texas Rep. Jeb Hensarling, who is chairman of the Financial Services Committee, is seriously flawed. Although the bill has been amended for the better since it passed committee in June, it would punish property owners for a second flood claim, no matter how small and no matter how old.

A homeowner with two insurance claims would automatically lose the rate protection provided by the program’s grandfather clause. That clause assures that homeowners who built to FEMA’s specifications won’t have their rates skyrocket if they are put into a different classification because of new regulations or flood maps.

The change could be financially catastrophic for thousands of homeowners nationwide who suddenly wouldn’t be able to afford flood insurance. Property owners could see a spike in costs even if their claims were for a few hundred dollars, which is like a fender bender, and even if their home flooded long before they bought it.

That isn’t the only problem with the legislation, but it is one of the most worrisome.

Louisiana’s House members, including Majority Whip Steve Scalise, who is recovering from serious gunshot wounds, are working to get changes in the bill to protect our region and property owners across the country at risk of flooding.

This isn’t just a coastal issue. The Coalition for Sustainable Flood Insurance, which is led by GNO Inc., has 300 members from 35 states. Anyone who lives near a river or downhill from a rain-swollen stream can find their property under water.

Three Wisconsin counties in House Speaker Paul Ryan’s district flooded in July. The Journal Sentinel described the damage: “Torrential rains and widespread flooding across southeastern Wisconsin last week caused millions of dollars worth of damage to homes, roads and bridges in Racine, Walworth and Kenosha counties.”

Fortunately, there are alternatives to the House bill. The Senate has three bills that are all superior to the House version. One essentially would continue the program without major changes. The other two would make sensible reforms to help sustain the program long-term, reduce costs and provide security for homeowners and businesses.

Louisiana’s Sen. Bill Cassidy and Sen. Kirsten Gillibrand, a New York Democrat, introduced legislation in June to extend the flood insurance program for 10 years. Their bill preserves grandfathered rates, introduces private coverage options, increases funding for flood mitigation and includes high-tech mapping to better assess risk.

Sen. John Kennedy, Louisiana’s junior senator, is a cosponsor on a reform bill introduced by Sen. Bob Menendez, a New Jersey Democrat. That legislation would reauthorize the flood insurance program for six years. It limits annual rate increases to 10 percent (which is significantly lower than now allowed), increases investment in mitigation, includes high-tech mapping, caps compensation for companies that write flood premiums and reforms the claims process.

Unlike the House, the Senate bills don’t punish homeowners who happen to live on or near water. Senators ought to coalesce around one bill and send it to the House.

There is a myth behind Rep. Hensarling’s attitude toward flood insurance. The claim is that the federal flood insurance program just subsidizes beach homes for wealthy people. That’s not true.

Most of the houses in Louisiana covered by the federal program are family homes, sometimes for generations. Our coast is home to fishers, farmers and rig workers who fuel and feed the nation. According to statistics from the Coalition for Sustainable Flood Insurance, 62 percent of all NFIP policies are in counties with a median household income below the national average of $53,889. And 98.5 percent of all NFIP policies are in counties with a median household income below $100,000.

It’s important for the flood insurance program to be financially sound, but Congress must ensure that charges are made smartly and fairly. The House bill isn’t even close.