Tags: Pinter | flood | insurance | reform

Flood Zone Expert: Flood Insurance Reform Will Create 'Humanitarian Crisis'

By    |   Friday, 30 August 2013 08:01 AM

Reform of the National Flood Insurance program will destabilize the program and "create a humanitarian crisis in waiting," warns a flood zone expert.

Insurance premiums will skyrocket, and home values will plunge, predicts Nicholas Pinter, a professor of geology at Southern Illinois University, in an op-ed for The New York Times. Unable to afford soaring insurance costs, homeowners will drop the program en masse.

Although the flood insurance program needed reform, the legislation that Congress passed puts too much of the burden on policyholders.

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"The problem is that Congress has placed the burden for the program's enormous debt on policyholders," Pinter argues. "Not only is this unjust, but it won't work."

Created in 1968 to control soaring federal payouts for natural disasters, the program was laden with overgenerous subsidies and unsound from the start, Pinter says. Many policyholders pay subsidized premiums well below risk-based rates.

The program limited construction in flood zones to some extent, but a succession of floods in the Midwest and hurricanes put the program in about $25 billion of debt

Reform phases out subsidies for structures that flood repeatedly and that already existed when the original program began. Plus, newer homes that once met floodplain ordinances could see rates jump when new flood-risk maps are completed.

Soaring premiums will destabilize the program by prompting homeowners unable to afford insurance to drop converge, Pinter warns. "Moreover, driving the most financially stressed residents out of the program will create a humanitarian crisis-in-waiting."

Congress should consider slowing reforms or providing insurance assistance based on the homeowner's income. Congress, he argues, created the problem and should accept responsibility, instead of leaving policyholders holding the bag.

The Federal Emergency Management Agency can reduce future damages by requiring homes to be elevated and flood-proofed. However, its flood-mitigation programs are fraught with delays. Politicians demand immediate action while the media spotlight shines, and long-term mitigation solutions languish.

Homeowners in coastal areas are alarmed at huge increases in their insurance premiums.

"The impact on our community is going to be severe," said Anita Ford, owner of a waterfront home in Treasure Island, Fla., according to ABC Action News. "What it's going to do to our real estate market in these coastal communities, it's going to be devastating."

Ford said her premium would jump from about $3,000 to almost $10,000 a year.

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Reform of the National Flood Insurance program will destabilize the program and "create a humanitarian crisis in waiting," warns a flood zone expert.
Pinter,flood,insurance,reform
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2013-01-30
Friday, 30 August 2013 08:01 AM
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