Our perennial problem with the debate in Congress about the National Flood Insurance Program is shown in an offhand description of the issue in The New York Times.
“The cost of insuring expensive waterfront homes is about to skyrocket,” the Times headlined its report on NFIP.
That’s not untrue but it is a perception that is far from the reality of Louisiana’s coast — and thousands of homes far inland on rivers and bayous.
Since 1968, because flood insurance is not provided by private insurers except in very rare instances, NFIP has provided the insurance vital to both expensive and Louisiana’s much less expensive waterfront homes and businesses.
For years, fiscal conservatives in Congress have pushed for NFIP rates that more accurately reflect the long-term cost that actuaries predict for claims. But then along came Hurricane Katrina, with its massive flooding in metropolitan New Orleans.
The program borrowed billions from the U.S. Treasury to pay the claims. As the world started seeing more floods and intense storms — as with Ida, a hurricane rapidly growing in power, leaving little time to prepare — costs of flood insurance rose and coastal states were under pressure to let the average annual premium, about $739, go up to what is closer to “market” rates, if there were viable markets for the policies.
Louisiana’s delegation in Congress has worked hard for years to blunt the impact of new and higher rates. It’s a complex story. But as so often with policy, perceptions drive practices.
And most NFIP policyowners are not living in expensive waterfront homes.