In an extraordinary turnabout, House members seem set to abandon bedrock principles of fiscal conservatism by voting on a bill to undermine the Biggert-Waters flood insurance reforms. Those reforms would have put the highly-indebted National Flood Insurance Program (NFIP) in a more solvent position, benefiting taxpayers who have been footing the growing bill for costs of flooding. They would have also helped shine a light on the growing risks and costs of development along parts of our coasts threatened by sea level rise, storm surge, and flooding.
The House bill permanently reinstates unfair subsidies
The Grimm-Cassidy bill goes even further than a Senate bill passed at the end of January that delayed Biggert-Waters reforms by four years, as well as a previous proposal sponsored by Representative Waters to delay provisions of the Biggert-Waters act. Rather than finding a sensible middle-of-the-road compromise that would protect coastal communities and taxpayers, the House seems to have resorted to an extremely short-sighted political maneuver.
The most damaging provision in the bill (see section 4) seeks to permanently restore grandfathered insurance premiums, in some cases based on decades-old flood risk maps. To pay for this costly provision, the bill also imposes a surcharge on all policyholders regardless of their true flood risk (see section 6). The annual surcharge would be $25 for most homeowners and $250 for businesses and second homes.
Addressing affordability
Rather than addressing genuine affordability concerns in an environmentally responsible way, this bill perpetuates and furthers an unfair system where some of the most risky properties will continue to be subsidized at the expense of other policy holders and taxpayers. Wealthier property owners, who own a disproportionate share of the value of at-risk coastal property, stand to benefit the most. Furthermore, it will leave homeowners unaware of their true flood risks.
Of course, Congress must address flood insurance affordability. Phasing in premium increases more slowly and accompanying that with a means-tested voucher program are among the options they should explore, as we laid out in a memo to House members last week.
Prioritizing coastal resilience
Here’s the thing: without flood risk maps and insurance premiums that reflect true flood risk, communities and homeowners won’t have the information or the incentive they need to take protective steps. That’s a real problem for those already on the front lines of rising sea levels, from New Jersey to Florida. Rolling back insurance rates will do nothing to address the underlying causes of growing risks and costs of flooding: sea level rise and development in the floodplain.
And much more needs to be done to help communities in their efforts to build resilience to the impacts of climate change. President Obama’s proposal for $1 billion Climate Resilience Fund, part of his FY15 budget proposal, is a good start and should be fully funded by Congress. Ultimately Congress must realize that protecting their constituents requires much more than keeping insurance rates down — they must reduce the risks by placing limits on climate disrupting carbon emissions.
Still a chance for a more balanced outcome on flood insurance reform?
The vote on the House bill is imminent. There is still an opportunity, albeit a slim one, for good sense to prevail and for members to seek a more balanced approach to fixing Biggert-Waters. There are lots of good ideas out there. Gutting flood insurance reforms is bad for homeowners, taxpayers, and for climate resilience.