Pharos-Tribune

April 2, 2014

OUR VIEW: Time to fix the real problem with flood insurance


Pharos-Tribune

---- — Those living in flood-prone areas have watched with weary eyes as the National Flood Insurance Program is drowning in a $24 billion sea of red ink. And although the scene has been playing out in national headlines, it is hitting home for many in Logansport and Cass County.

Local residents who are subsidized under the financially unstable program could soon be seeing increased premiums.

Lawmakers this month tweaked the troubled program for the second time in two years after acknowledging that a previous overhaul in 2012 had socked too many policyholders with rate hikes they couldn’t afford. The legislation, however, only put off the day of reckoning.

Yes, we’re happy homeowners and businesses are getting a break by having the increased premiums phased in instead of dropped in their laps all at once. But, once the full weight of the increased premiums is heaped onto homeowners, we’re in essence right where we started: Just waiting for something bad to happen and then looking to the insurance company to help get us back to normal.

Instead, let’s throw our collective effort into coming up with a real plan now that avoids real pain later. We need to adopt a proactive approach. An approach that gives homeowners and businesses the tools needed to lesson a catastrophe. No, we can’t stop Mother Nature’s wrath when she gets angry, but we can take steps to weaken the blow.

There are plenty of ideas being tossed around right now about how to offer that assistance to those in flood-prone areas.

One potential option promoted by some experts would be to make low-interest loans available to help people elevate their homes above the high-water mark.

Some politicians and policymakers in flood-prone states have proposed legislation that would give tax incentives to property owners who created catastrophic savings accounts, where property owners could put money aside to cover expected damage from future natural disasters, and also for the purpose of reinforcing a house against potential damage in a flood, earthquake, fire or tornado.

The Association of State Floodplain Managers has advocated for an income-based voucher system, as well as rate reductions for mitigation that stops short of full elevation of a home, like moving home heating and electrical equipment to less vulnerable parts of a house or installing water-tight doors and windows.

Any or all of these steps will help decrease the cost of recovery from flood damage. And let’s face it, the high cost of recovery is what’s killing the system in the first place. If the program continues to put out more money for recovery than it takes in in premiums, the cycle of increased cost to homeowners and businesses will only continue.

It’s time to stop that cycle. It’s clearly not working.

THE ISSUE The increase in premiums for the National Flood Insurance Program OUR VIEW A proactive approach is needed to stop the cycle.