fairborndailyherald.com

Editorial

March 28, 2014

Nation’s flood insurance program still being broken


In an act of compassion, the government will postpone reforms to the National Flood Insurance Program. Premiums skyrocketed beyond anyone’s expectations, and still-suffering Hurricane Sandy victims faced being priced out of their homes. Families were desperate for relief, and lawmakers provided it.


President Obama is expected to sign a four-year moratorium this week. But this delay, while humane, leaves in place a broken system that is $26 billion in debt and encourages property owners to build — and rebuild — in the riskiest flood zones.


Congress must ensure that its reforms, designed to make us more resilient after devastating storms, aren’t undone.


What’s most frustrating is that the law being shelved — the 2012 Biggert-Waters Act — was a rarity: a bipartisan solution to a complicated, long-term problem: Because government subsidies kept flood insurance premiums artificially low for decades, the National Flood Insurance Program was underfunded. After Hurricanes Katrina and Sandy, the government was forced to borrow billions from taxpayers to cover the claims. Biggert-Waters increased insurance rates so that, over time, premiums would match the risk.


But when new, higher insurance bills began arriving last fall, sticker-shock set in. Homes were suddenly unaffordable and impossible to sell at full price.


So while the short-term bailout was crucial, it didn’t solve the underlying problem: If property owners don’t pay higher premiums, the system collapses. The danger now is that a four-year delay is long enough for Congress’ reforms to be forgotten or overturned.


In its current state, the U.S. flood insurance program is unsustainable: Government subsidies let policyholders underpay for decades. Cheap insurance encouraged overdevelopment in flood-prone zones with little concern for the cost to rebuild.


Softening the blow for homeowners was humane, but Congress should study alternatives to help keep low- and middle-income families in their homes. Biggert-Waters can’t be allowed to fade away. The alternative — an insurance program too broke to cover its claims — is already a proven failure. — The Star-Ledger