When Nor’Ida slammed into New Jersey nine years ago, federal disaster response faltered. Many who relied on the National Flood Insurance Program (NFIP) were left with empty pockets and damaged homes. The indebted program offers one policy template that is insufficient for most homeowners, partly because it lacks competition from a private market. In two weeks, Congress will vote on whether to reform or just extend the NFIP. With climate forecasters predicting more devastating storms on the way, the time for reform, and for a real flood-insurance market, is now.
Major storms that cause widespread flooding routinely spark a deluge of flood-insurance claims that drain NFIP funds. Taxpayers are called on to bail the program out again and again. The program is broken. The NFIP has borrowed over $40 billion from taxpayers and continues to subsidize harmful development, mask risk, and provide only one-size-fits-all policies across the country.
Private flood insurance
Fortunately, some of the fixes are not as complicated as the problems. For instance, Congress should clarify that homeowners can purchase more affordable private flood-insurance policies that can be better tailored to homeowners’ different needs. That would also help transfer some of the burden of post-disaster costs to private insurers and away from taxpayers.
Current flood maps are another problem that must be fixed by requiring that the Federal Emergency Management Agency use updated technology. A report by the Department of Homeland Security found FEMA’s flood-map planning plagued by mismanagement and that less than half of maps “adequately identified the level of flood risk,” often by not accounting for rain accumulation. Bad flood maps can mask risk and distort appropriate policy rates, making the NFIP less effective.
Congress should also prioritize pre-disaster mitigation instead of focusing on responding to storms after they hit. Actions like moving buildings and infrastructure out of floodplain, elevating and effectively protecting what remains, and restoring wetlands can be good investments. A study found that every $1 invested in mitigation efforts saves taxpayers $6 in disaster recovery.
A matter of urgency
The urgency for these reforms cannot be understated. Climate reports predict more extreme weather events will threaten more and more homes. Storms during the past few years prove it is not only homes near coastal areas and rivers that have to worry about flooding. Floods can strike anywhere, and since standard homeowner’s insurance does not cover flood damage, FEMA now urges everyone to acquire flood insurance.
As evidenced by superstorm Sandy, it is clear Nor’Ida will not be the last major storm to hit New Jersey in our lifetime. Solutions to the problems plaguing government flood insurance are clear but require congressional action. The swift escalation of climate change is making severe weather a growing threat to all Americans. Opening the flood-insurance market to private competition and updating NFIP and the nation’s approach to disasters should be a bipartisan opportunity for policymakers to deliver protection to Americans.