Flood Insurance

Here is a good story from the Press-Register in Mobile, Alabama about how Louisiana’s senators have stalled efforts to reform federal flood insurance.  Here are the key paragraphs:

Apart from raising the NFIP’s [National Flood Insurance Program] borrowing limits, lawmakers have done nothing to address a host of underlying ills that, in experts’ view, leave the program on a shaky financial footing, encourage development in flood-prone areas and give price breaks to people who could afford to pay full freight.

Congress’ inaction "means that the national flood insurance program can be expected to run into the same problems in the future that it ran into in 2005," said Robert Hartwig, chief economist for the Insurance Information Institute, an industry research organization in New York. "That means in the not-too-distant future, it will go broke."

Already, some observers view it as effectively bankrupt, with responsibility resting in part with Capitol Hill.

"Traditionally, the Congress has tended to look at the flood insurance program as a service and not really as a program based on classical insurance principles," said David Conrad, a senior water resources specialist at the National Wildlife Federation, an advocacy group in northern Virginia.

So what are the objections of the senators to reforming the flood insurance program? That’s right,  the premiums would go up to make flood insurance reflect the actual risk of building and living along the coast. 

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