The ‘flood-build-repeat’ model, so popular among re-election-seeking members of Congress, must come to an end.
Hurricane Harvey, which battered Texas over the past week, offers the clearest lesson why Congress should not perpetuate the federal National Flood Insurance Program (NFIP), which expires at the end of September. The ravages in Houston and elsewhere would be far less if the federal government had not offered massively subsidized flood insurance in high risk, environmentally perilous locales. But this is the same folly that the feds have perpetuated for almost 50 years.
Two years before NFIP was created, the 1966 Presidential Task Force on Federal Flood Control Policy warned that a badly run program “could exacerbate the whole problem of flood losses. For the Federal Government to subsidize low premium disaster insurance … would be to invite economic waste of great magnitude.” That sage advice was ignored.
Instead, NFIP embraced a “flood-rebuild-repeat” model that has spawned an almost $25 billion debt. The National Wildlife Foundation estimated in 1998 that 2% of properties covered by federal flood insurance had multiple damage claims accounting for 40% of total flood insurance outlays, and that more than 5,000 homes had repeat claims exceeding their property value. A recent Pew Charitable Trust study revealed that 1% of the 5 million properties insured have produced almost a third of the damage claims and half the debt.
NFIP paid to rebuild one Houston home 16 times in 18 years, spending almost a million dollars to perpetually restore a house worth less than $120,000. Harris County, Texas (which includes Houston), has almost 10,000 properties which have filed repetitive flood insurance damage claims. The Washington Post recently reported that a house “outside Baton Rouge, valued at $55,921, has flooded 40 times over the years, amassing $428,379 in claims. A $90,000 property near the Mississippi River north of St. Louis has flooded 34 times, racking up claims of more than $608,000.”
When NFIP was created, one of its purported goals was to deter development in…