Base Premiums On Flood Risks

Of course federal flood insurance premiums should reflect risk. But thousands of Ohio Valley residents are being told of drastic premium increases that don’t seem to be based objectively on potential damage from high water.

By a better than two-to-one margin, members of the U.S. Senate voted last month to suspend big increases in flood insurance premiums for a few years. The delay is intended to give National Flood Insurance Program analysts time to devise a realistic premium structure.

But some members of the House of Representatives, including Speaker John Boehner, R-Ohio, have balked at following the Senate’s lead. They are backed by some conservatives who point out the flood insurance program has a debt of $24 billion. That, they note, is because the NFIP did not set premium rates properly for much of its history.

Beyond any doubt, that is true. But nearly all of the NFIP’s deficit is due to massive claims from coastal areas devastated by Hurricane Katrina and Superstorm Sandy.

Several weeks ago, area residents began receiving notices their flood insurance premiums would be skyrocketing. As we have pointed out, at least some of the new charges bear no resemblance to reality. One man with property valued at $60,000 was informed his premiums would be $8,000 a year.

That is absurd.

Critics of Senate action have said changes to the flood insurance program, enacted in 2012, should be allowed to proceed. One of their key points is that the 2012 law requires the NFIP to modernize flood zone maps on which insurance premiums are based.

Fair enough.

But the maps have not yet been modernized. How is it, then, that the NFIP is raising premiums drastically for inland residents such as those in the Ohio Valley? What justification can officials offer for increasing those premiums to make up for deficits that resulted from coastal disasters?

So yes, by all means allow the key feature of the 2012 law – basing premiums on risk, not someone’s guesses – to proceed. Meanwhile, the House should go along with the Senate, so the flood insurance program can, by charging more to those who cost it the most, get its head back above water.