Pew — Repeatedly Flooded Properties Will Continue to Cost Taxpayers Billions of Dollars
Floodwaters approach the roofline of this Houston home after Hurricane Harvey dumped record rainfall in parts of Texas in 2017. Houses in flood-prone areas are often subject to a continuous cycle of flooding, damage, and rebuilding.
Marcus Yam Los Angeles Times via Getty Images
Oct 1, 2020
By Laura Lightbody, Brian Watts — Action needed from Congress to reform outdated policies and reduce flood impacts
This year’s hurricane season is setting a record pace for the number of named storms, affecting Americans from the Gulf Coast to the Northeast with torrential rains and flooding and causing billions of dollars in damage. These storms and growing disaster costs are the latest reminder that Congress must reform outdated federal policies and programs to limit future flood risks and impacts.
For example, even with $16 billion in debt forgiveness in 2017, shortcomings in the National Flood Insurance Program (NFIP) have saddled it with debt of roughly $20.5 billion. This means that the NFIP has borrowed more than $36 billion from the U.S. Treasury to pay claims. But, rather than reform the program to make it more efficient and effective, Congress has simply extended it over and over again with no changes since 2014.
Among the NFIP’s flaws is the way it treats repetitive loss properties (RLPs)—those that have flooded and received insurance claim payments multiple times. Unlike private insurers, the NFIP lacks the legal authority to manage costs by refusing coverage to or dramatically increasing rates for properties with excessive claims.
Today, there are more than 5 million NFIP policies. Historically, RLPs comprise around 1 percent of NFIP insured properties, but over time they have accounted for more than 30% of claim payments. The NFIP has paid a cumulative $22.2 billion in claims to RLPs, an amount that surpasses the program’s total debt, according to the Government Accounting Office (GAO).
From 1989 through 2018, the Federal Emergency Management Agency (FEMA) recorded nearly 229,000 RLPs, with 82 percent of them in just 14 states. These properties are not limited to the coasts, either; they exist in every state, including in large concentrations in the Midwest.
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