While the National Flood Insurance Program remains a flawed entity plagued by debt and mismanagement, simply eliminating it altogether would be disastrous for consumers and the real estate market. New reforms that alleviate some of the NFIP’s problems while giving the government insurer more financial flexibility is a sound intermediate step in fixing the nation’s flood insurance system.
In an article published in the Las Vegas Review-Journal, Matt Gannon of the National Association of Mutual Insurance Companies and Joshua Saks of the National Wildlife Federation argue that the program needs to be extended and that strong reforms need to be implemented to keep the program afloat while eliminating the subsidies that are harmful to both the environment and taxpayers.
Since 1968, the NFIP has been instrumental in protecting America’s families, homes and businesses from financial ruin when flooding occurs. However, the program is in need of major reform to ensure it can continue to safeguard Nevada’s communities and protect the environment. Without significant reform, NFIP will not be sustainable, American taxpayers will continue to be asked to bail out the program and the federal government will continue to subsidize development in hazardous and environmentally sensitive areas.
While Congress is sharply divided on many issues, flood insurance reform receives widespread bipartisan support. The U.S. House of Representatives passed a long-term reauthorization of the NFIP in July by an overwhelming bipartisan vote, and the Senate Banking Committee unanimously reported a similar bill in September. In February, a bipartisan coalition of 41 U.S. senators wrote a letter to Senate Majority Leader Harry Reid urging that legislation be sent to the Senate floor as expeditiously as possible. That bill, however, has yet to be introduced to the full Senate.
Gannon and Saks believe that, while not perfect, new legislation that was considered in the House and Senate last year could solve some of the problems facing the NFIP while keeping the program afloat financially. By allowing the NFIP to purchase reinsurance and phasing out bad subsidies the new reforms would allow the NFIP to prepare for future claims while not continuing to fleece taxpayers. In addition, the proposed bill would aid mitigation and environmental protection by requiring accurate flood maps and by discouraging new construction in sensitive coastal and river front habitats.
These reforms will also ensure that the program no longer encourages harmful development in high-risk areas, which not only puts people and property at risk, but destroys some of the most environmentally sensitive habitats and ecosystems. By reducing the development of these areas, we can reduce flood risk while protecting water quality, allowing underground aquifers to refill and provide valuable open space for hunters and anglers.
Furthermore, Senate action will bring stability to the troubled program. Congress has kicked the can down the road since 2008, passing many short-term extensions.
Gannon and Saks are correct; major reforms of the NFIP are needed. Continuing to delay only risks the collapse of the program, which would leave thousands of homes without coverage after a major event and the taxpayers on the hook for billions in damages.
