Sticker shock

The National Flood Insurance Program needs to be reformed, but fixing a $24 billion problem can’t happen overnight. Those affected by flooding need time to adjust to the premium increases mandated by the Biggert-Waters Act passed in 2012.
Fortunately, there appears to be relief coming for the program’s 5.5 million flood insurance policyholders. That includes 1,106 in Findlay and 289 in Ottawa.
The U.S. House passed a bill Tuesday that caps premium increases for individual property owners at 18 percent annually and reinstates subsidized rates for homes that were in compliance under old rules. It would also provide for refunds to policyholders who have already paid excessive rates under Biggert-Waters, which went into effect in October.
While the bill must still pass the Senate, considering that some policyholders saw their rates double or more, the proposed changes would help ease the sticker shock.
Biggert-Waters was intended to move the flood insurance program, overseen by the Federal Emergency Management Agency, toward solvency. The reform called for premiums to be gradually increased to the point where the program would no longer have to be subsidized by taxpayers.
Premiums were to rise until they reflected what the government considers a property’s “true insurance risk.” It also called for bumping properties with subsidized premiums to a “true flood risk” rate when they are sold.
But the reform came under review because of concerns that premium increases would drive some property and business owners into debt and result in more foreclosures. That, in turn, could cause serious damage to housing markets in flood-prone communities.
The debate has forced a bipartisan effort to resolve the problem. In January, the Senate approved a bill that would have delayed premium adjustments for four years, but the House legislation pushed to address the major problems of Biggert-Waters.
The issue has caused consternation for lawmakers from both sides of the aisle, but especially those from flood-prone districts who face re-election this year. In recent days, it has led leaders from both parties to get involved in the discussion.
Flooding issues should be nonpartisan.
Insurance premiums should be adjusted for those who choose to live on the water’s edge to reflect true flood risks, but not so dramatically that it forces them to abandon their homes or go bankrupt.
The program is running in the red because policyholders have been undercharged for flood insurance for years, while losses have mounted primarily due to Superstorm Sandy and Hurricane Katrina. But the fix, Biggert-Waters, went too far, too fast, by calling for unreasonable premium increases.
As this area has learned with the Army Corps of Engineers, the federal government seldom moves quickly to rectify problems. But Congress must continue to work out a compromise to insurance reform that lessens the financial pain for those who have, in many cases, already been hurt by flooding.

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