Returning to the "old premium system" for the National Flood Insurance Program as suggested in your Nov. 23 editorial "Amend Flood Insurance Law," would be a serious mistake for Congress and the American people, forcing all of us to pay even more than we already have to protect coastal properties.
Flooding is by far the most common natural catastrophe, and can devastate communities near and far from the coast. Under the reforms to the NFIP last year, subsidies are being phased out and rates for federally-backed flood insurance have started to move toward a level that reflects the actual risk from flooding facing a property. The goal is not for inland homeowners to subsidize coverage for the coast, but to ensure that everyone who faces a significant risk from flooding pays an insurance premium reflecting that risk.
This means that property owners both inland and on the coast will begin paying what they should be, and would have been had the NFIP been allowed to operate as an actual insurance program. In truth, it was the old premium system that forced inland homeowners and businesses to subsidize coastal flood insurance. Because the NFIP was unable to charge adequate rates, it was forced to borrow billions of dollars from the Treasury to pay claims any time a major storm hit. That debt, currently at roughly $28 billion, comes entirely from the pockets of taxpayers across the country.
As with any legislation, there have been some unforeseen consequences, such as the steep increase in rates for homes sold after the law's enactment. NAMIC believes these problems can be addressed with targeted measures that ensure only those who truly require assistance paying for their flood insurance are given federal subsidies, and that homeowners as well as the taxpayers are protected from future flooding.
Jimi Grande, Senior Vice President
Federal and Political Affairs
National Association of Mutual