McCoy & Hiestand Attorneys at Law
Flood Insurance

By Bryan Silver

The past year has certainly put our flood insurance program to the test, with storms like Hurricane Matthew and historic flooding in Louisiana. Yet, when you consider what might be waiting in the wings as we progress into a potentially storm-filled future, the current numbers seem like just a drop in the bucket.

While no one denies that our federal program is reeling from hit after hit, one must wonder if the pro-gram can recover or if it was ever designed to weather this kind of punishment in the first place.

To better understand where we’re going in regards to government-sup-plied flood insurance, it helps to under-stand where it all originated. In 1968, Congress passed the National Flood Insurance Act. It was an attempt to alleviate the economic burden associated with catastrophic flooding in high-risk areas. The result was the National Flood Insurance Program (NFIP) which offered flood insurance with subsidized premiums to area property owners, and in return participating communities were expected to adopt and enforce a certain level of flood plain management. While there have been amendments and changes over the years, the program continued to work well—then in 2005 Hurricanes Dennis and Wilma devastated parts of Florida and Katrina and Rita ravaged the south central U.S. Previous to this point in time, the NFIP had a cap on what it could borrow from the U.S. Treasury to pay out on claims. Initially $1 billion, it had been increased to $1.5 billion by the mid-1990s. By 2010, it was raised to $20.725 billion—and thus began a downward spiral that was further perpetuated by Superstorm Sandy in 2012 and the events of 2016 in Louisiana and parts of the Southeast.

Looking at recent years, the NFIP, on average, takes in any-where from 3.2 to 3.5 billion in flood insurance premiums. Even with yearly payouts, it seems like a solvent program. Then, look at 2013 when Sandy hit, claims skyrocketed the amount to 8.2 billion and the potential problem is evident. The system works when you’re only covering the “flood of the century,” but not so much when the frequency of large-scale flooding events is less than a decade.

The evidence more than suggests that our cur-rent program is not designed to handle what the future might bring. While many are clamoring for changes that take climate change into account, there are others who are scrambling to limit the government’s liability in future situations. Currently, the congressional authorization for the NFIP is set to expire on Sept. 30, 2017—only eight months after a new administration takes office. It’s hard to judge how this will play out, but action definitely needs to be taken. Many are worried about the rezoning of flood areas and what that might mean for their homes and businesses.

Others feel the government should take more proactive measures, such new building codes and improved infrastructure. And there is yet another group that feels the issue transcends govern-ment efforts and citizen responsibility, that this is a situation where we need to come to terms with Mother Nature.

Brian Deese, a White House senior adviser on climate, might have put it best, “We are going to need to have very tough conversations about things like the federal Flood Insurance Program and start to recognize what major insurance companies are recognizing, which is the 100-year flood standard is less useful when 100-year floods are occurring every five years.

This article originally appeared in Vol 8, Ed 4 of Living Safer Magazine.

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