Flooded subdivision

Houston residential area after Harvey


By Joseph A. Davis
Texas Climate News

Hurricanes Harvey, Irma, and Maria delivered massive blows to many U.S. home and business owners – and to the federal government and insurance industry that are expected to pay for hundreds of billions in damage.

But will they? Flood insurance, too risky for most insurers to touch, only exists because it is backed by a federal program that has been bleeding, and now is hemorrhaging, cash. The National Flood Insurance Program (NFIP) runs out Dec. 8, and most signs suggest a politically deadlocked Congress will – again – avoid the issues and punt.

Still, a real debate is likely to take place in coming months, and maybe even a rethinking of the ways the United States handles flood risk. Stay tuned.

Yes, it is a Texas thing. Gov. Greg Abbott estimated that Harvey damage could reach $180 billion (it could be less). And let’s please remember than only about one-fifth of the people suffering damage in Texas actually had flood insurance. The rest will endure loss or pay out of their own pockets, if they are not lucky enough to get FEMA grants. Being on the Gulf, where the waters are warmer, the Texas coast is prone to hurricanes, as Texans know all too well.

Yes, climate change has much to do with it. Climate change was not the simple cause of Harvey and Irma, but scientists say it made them worse and intensified their damage. More rainfall, higher wind strength, bigger storm surges, and rising seas are part of the equation – suggesting future risks will exceed historic risks.

But other factors have amplified flood damage much more. One is barely checked development and growth within areas at risk of flooding. Yet another is buildings that fail to survive or protect against flooding. Another is water-handling infrastructure that fails to protect against flooding, and in some case makes it worse. Still another is a set of attitudes and beliefs that encourage people to rebuild in flood-damaged areas. Those are all Texas things, too, some think.

The authorization for the NFIP was set to expire Sept. 30. But Congress folded a stop-gap three-month extension into the hurricane aid/debt ceiling/appropriations bill that President Trump signed Sept. 8. Three months may not be enough time. The stopgap fits a long pattern of short-term reauthorizations as Congress has bickered and dithered over many years. Most players agree the program is broken and needs fixing – but they disagree profoundly on the facts and how to fix it.

The House Financial Services Committee had been working on a fix, and approved a bill (H.R.2875) on June 21 by an encouraging 58-0 vote. It hasn’t reached the House floor. That happened before Harvey, Irma, and Maria made the whole situation worse – not least by wreaking tens or hundreds of billions of dollars in damage likely to put the NFIP much deeper in the hole.

[Update: On Sept. 28, a day after this article was published, there was another brief flurry of legislative activity on one aspect of the multifaceted issue. The House passed a provision to ease the purchase of private flood insurance by owners of high-risk homes. Republican and Democratic senators, however, objected to including that language in the bill reauthorizing the Federal Aviation Administration. It was removed before the FAA measure went to President Trump for his signature.]

A key fact about the NFIP is that when payouts on claims exceed revenues from premiums, the government borrows to cover the red ink. We have seen a flood of red ink since Katrina in 2005. Before the flags went up for Harvey, the NFIP was in debt to the Treasury to the tune of about $25 billion, with no prospect of paying it back. Now it’s going to be much worse.

The story of flood insurance in the U.S. goes back at least to the Great Mississippi Flood of 1927. After that, most private companies really wouldn’t touch flood insurance (or, at least, offer insurance at premiums people could afford). Congress created the modern NFIP in 1968.

The federal government itself is the insurer. The big catch is that it will not insure properties in communities that don’t have programs to keep development out of the flood plain or risky areas. NFIP is run by FEMA, the Federal Emergency Management Agency. Before they will issue mortgages, most banks require properties in risky areas to have flood insurance. There are about 5 million NFIP policies.

Not to be left out, private insurance companies are the ones who sell and service the federal NFIP insurance. One study says private companies get about one-third of the amount property owners pay in premiums.

One key goal of NFIP reform and reauthorization bills, arguably, would be to put the program back on sound financial footing. Would that mean forgiving the debt (as ranking House Democrat Maxine Waters of California has urged)? It will be like trying to bail out a sinking boat.

Some history to remember: The devastation of Superstorm Sandy in 2012 was in the tens of billions, and it prompted Congress to “reform” the NFIP with a 5-year extension (known as the Biggert-Waters Act) the same year. In an effort to make the program solvent, it raised premiums.

Those paying the premiums howled. Loudly. Not too much later, Congress reformed the program again, passing the Homeowner Flood Insurance Affordability Act (signed in March 2014), which lowered many premium increases – effectively un-reforming the program. The incident illustrates the political dynamics that make it hard to fix the NFIP.

Another issue plaguing the NFIP that lawmakers will find hard to settle: maps. Maps of the flood plain and other flood hazards are key to who gets insurance – and who needs it.. That’s why many homeowners and communities would rather not be included in the flood plain. This is even more true for people living in houses already built in the floodplain. To reduce covered risk and keep people out of the flood plain, the feds have an interest in mapping the flood plain fully and truly.

Climate is also an important factor here: recent events suggest that the so-called “100-year” flood has become far more frequent. There have also been real technical advances in mapping. But politics may win out over science. Especially climate science. Especially in the House of Representatives.

The NFIP’s ostensible goal of keeping people from building houses in the flood plain is subverted another way: disaster aid. Who could be against disaster aid? (Well, that’s actually a complex question, and actually another Texas thing.)

Congress’ first (and political) impulse after a disaster is to run in with money – as it showed with the September debt/aid bill. This history of federal disaster aid (not all conservatives approve) goes back at least to 1927 and Calvin Coolidge. In emergencies, FEMA provides disaster aid – essentially grants – to people whose houses have been ruined.

Most of the Harvey aid in the debt ceiling was for disaster aid – not the NFIP. Many homeowners whose stories we hear in the media reinforce a familiar narrative: the doughty homeowner determined to rebuild.

The NFIP insures a significant number of “repetitive loss” properties – something all the reforms have yet to stop. According to one study, some 30,000 properties in the program have flooded multiple times. One Houston-area home with flood insurance has flooded 22 times since 1979, the Wall Street Journal reported in an examination of the issue this month. The Pew Charitable Trusts, a nonprofit think tank, says repetitive loss properties cost the NFIP billions of dollars.

Any legislative fix to the NFIP will be politically and technically difficult. The NFIP and the issues surrounding it are extremely complex. The House committee bill, which is pretty much the only ball on the field right now, is actually a package of some six or more separate bills. The magnitude of the Harvey, Irma, and Maria disasters could give Congress some impetus to act. But a real fix might require many congressional Republicans to overcome their denial of climate-change science.

There really are efforts to find a bipartisan solution. But the House committee bill, which got a unanimous vote, faces a serious block of Republican opposition on the way to the floor. There is also a Senate bill waiting on the bench, which is quite different from the House bill.

And the key issue of whether NFIP premiums get higher or stay where they are will be a difficult test. Ideology will be a big factor, too. As the bills go forward, there will be a lot of talk about letting the marketplace fix the problems. Keep an eye out for efforts to fix the marketplace.


Joseph A. Davis, a veteran journalist covering environmental and energy issues in the nation’s capital, is the Washington correspondent of Texas Climate News.

Image credit: Staff Sgt. Daniel J. Martinez / Air National Guard