Insurance

Lawmakers need to renew flood program

Flooding has been on the minds of many area residents during the past few weeks. Soon it, or rather, insurance to cover victims of it, will be considered by members of Congress.

Authorization for the National Flood Insurance Program expires Sept. 30. Between now and then, lawmakers will have to either renew the existing system or devise something better.

That may not seem difficult. The program is deeply flawed. But members of Congress have known that for years and, to date, have merely kicked the can down the creek, so to speak.

For some property owners, especially along seacoasts, the system has become something of an entitlement. It provides them insurance at a fraction of the cost of their actual risk.

Because of that, the NFIP has required massive subsidies. Technically, it owes the U.S. Treasury more than $25 billion, though that will never be paid.

An attempt to get the program back on dry fiscal ground was made through the infamous Biggert-Waters Act. It kicked in abut four years ago and thousands of West Virginia and Ohio homeowners were informed their flood insurance premiums were skyrocketing. Inundated by complaints, Congress took temporary steps to provide some relief.

Meanwhile, the NFIP is under water and premiums remain unrealistic.

About three years ago, we looked into the system and found that about one-third of claims paid since the NFIP’s inception in 1978 had gone to residents and businesses in Louisiana. West Virginians accounted for fewer than 1 percent of claims.

Yet Mountain State residents were paying higher premiums than what were being charged in Louisiana. West Virginians and many other inland residents subject to relatively minor losses from flooding were subsidizing coastal policyholders in the crosshairs of devastating hurricanes.

Private-sector insurance — except, of course, when under government orders in situations such as the Affordable Care Act — charges premiums based solely on risk. It has been suggested the NFIP should be privatized.

It would not be the first time an unworkable government insurance program has been improved enormously by being scrapped and replaced by a private-sector system. A few years ago, it happened right here in West Virginia, when the government-run workers’ compensation was privatized.

It was supplanted by the private BrickStreet Mutual Insurance company, which now charges lower premiums and costs taxpayers in general nothing. Something similar should be considered for the NFIP. It’s time to stop soaking many flood insurance holders and taxpayers in general.

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