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Editorial: Reject plan to undo fix to flood insurance program

Floodwaters swamp houses and businesses along Fire Island

Floodwaters swamp houses and businesses along Fire Island Avenue in Babylon Village due to superstorm Sandy on Oct. 30, 2012. Credit: Jessica Rotkiewicz

The National Flood Insurance Program, $24 billion in debt, got the fixes it needed in 2012 when important reforms were passed to keep the program solvent. Now, though, some politicians in Washington, facing strong pressure from ratepayers and industry groups, are trying to undo crucial improvements, and they should be stopped.

The national program was created in 1968 by the federal government because private insurance companies mostly didn't offer flood coverage. Such firms couldn't withstand the influx of claims that surged in once the waters from a huge flood surged out. The program was meant to be self-supporting through market-rate premiums paid by property owners who faced flooding danger. Over time, though, the premiums paid got out of kilter with the risk. Many policies are subsidized, including about 32 percent of the 80,000 policies on Long Island. Hurricane Katrina, and then superstorm Sandy, caused enough property damage to highlight the program's broken economics. Bipartisan legislation was passed to bring the numbers into line by ending all subsidies, over time, on second homes, commercial properties and those with chronic flood problems. In addition, the law ended the practice of passing subsidies on to new owners when homes were sold.

Now, property owners and real estate interests are complaining that property values will be eroded if sellers can't pass unreasonably low rates on to buyers. But that also means that unreasonable costs are pushed on to taxpayers who don't live in flood zones but are expected to pay for those who do.

The Senate has moved to restore the transferability of the subsidies. The House has not, and Speaker John Boehner, ever the fiscal conservative, has shown some reluctance to go along. Boehner needs to stick to his guns and maintain this sensible plan to, over time, put the risk of owning flood-prone properties back on the owners.


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