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Tuesday, October 11, 2005
Law - More on flood insurance issues
The ILB has posted several entries on flood insurance, in cluding these from: 9/4/05 and 9/29/05 (which includes additional links). Today the Washington Post has a story headlined "Repeat Claims Strain Federal Flood Insurance: Program Often Funds Risky Rebuilding." A quote:
The National Flood Insurance Program was established by Congress in 1968 to cover property owners who build in flood-prone areas, which are considered too great a risk by private insurers. It followed years of devastating floods and political debate over whether the government should step in to offer insurance.Nearly from its inception, the program has struggled to pay all its claims. It collects $2 billion in annual premiums but has no reserves, heavily subsidizes some of its riskiest customers and relies on the Treasury to bail it out when losses exceed income. Losses this year from Katrina and Hurricane Rita alone could top $10 billion, experts say, forcing the program to borrow billions from taxpayers with no guarantee of repayment.
Many claims will come from properties that flood repeatedly. As coastal development has increased and more storms have hit the area, properties with repeated losses along the Gulf Coast have been making a growing share of the claims against the government-backed program, according to a Washington Post analysis of federal data. Among the tens of thousands of such properties are older buildings in cities such as Houston and New Orleans, and in small outlying towns. Thousands of others are in resort communities such as Dauphin Island. Overall, the five Gulf Coast states account for $6 billion in claims since 1978 -- half of the total nationwide.
Officials at the Federal Emergency Management Agency, which administers the flood program, say they cannot prevent anyone from building in a flood-prone area. They can only set building and elevation rules for property that qualifies for federal insurance. They say those requirements save taxpayers $1 billion a year in disaster costs.
Some researchers, however, question that assertion and say that FEMA's policies feed a vicious circle: They enable a boom in coastal development that leads to increasingly costly flood insurance payments that in turn fuel even more development. The researchers argue that FEMA and Congress ought to make such programs contingent on communities doing everything possible to lessen risks, including pulling back from the shoreline.
Posted by Marcia Oddi on October 11, 2005 12:58 PM
Posted to General Law Related