Protecting People, Property and Our Way of Life

Good signs on flood insurance

February 1, 2014


Coastal residents here — along with people in flood-prone areas across the U.S. — have been watching with great interest as the U.S. Senate has toyed with the idea of delaying some major changes to the National Flood Insurance Program.

We are still watching Congress to see whether the nation will undo the potential damage it has put in motion. But there were two huge, encouraging signs this week that progress could be coming.

First, the Senate passed a bill that would delay some of the “reforms” implemented by a 2012 law aimed at making the flood insurance program more self-sufficient.

Then, the White House announced that President Obama, who had been critical of the bill, would not veto it if it makes it to his desk.

Of course, that still leaves the House of Representatives, where the bill is expected to encounter significant opposition.

Many in Congress argue that the people who face the risk of flooding should be the ones to shoulder the financial burden. They argue that the taxpayers should not subsidize the insurance program.

What the critics ignore, though, is the financial chaos that would result from sudden changes such as those required by the 2012 law.

The law would do away with subsidies, but it would also force many home and business owners to pay dramatically increase premiums for coverage.

The sudden shift would do two things.

First, it would force many homeowners to drop the insurance coverage by simply pricing them out of the market.

So people who have long had coverage, who played by the rules and did everything the government and their banks required, would no longer be able to afford coverage, leaving them vulnerable to ruin in the event of a future storm.

Second, the changes could cripple the real estate markets here and in other low-lying areas, where potential buyers would face ballooning insurance payments, which are required by mortgage companies as a conditions on many loans.

It is only fair that the federal government explore other options for giving the insurance program more solid financial footing.

Forcing the people who are required by banks to carry flood insurance but who fail to do so to enter the market would greatly expand the revenue stream going into the program.

And cutting the generous 30 percent fee paid by the government to the insurance companies that sign up flood insurance policies would be a way to decrease some of the expenses the program faces.

There are better, wiser ways to go about flood insurance reform than the plan that is now in place. It is up to Congress to come up with a plan that will stabilize the program without pricing so many people out of it.

The Senate has made the first move, and the White House seems to be cooperating. Now it is up to the House.

Perhaps a long-term fix is on its way. At least the momentum seems to be building in that direction.

Editorials represent the opinions of the newspaper, not of any individual.