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Flood Insurance Costs Coming to a Head

Recent news stories highlight the challenge of taking away an entitlement.

The issue is that the Piper is about to play and no one wants to dance to the new tune.  Back in 2012 Congress passed legislation that would have flood insurance premiums rise to reflect the true costs of covering losses due to flooding.  The truth is the program has been subsidized by the Federal Government (citizens paying taxes) for many years.  

 

Now with the deadlines coming due homeowners and their legislators are looking for a reprieve from the implementation of the new premiums.  Some of the rate hikes also have to do with new FEMA flood maps that show an increasing hazard from flooding.  See a recent editorial FEMA or Congress, somebody do something about flood insurance rates

 

As I've written about before, risks are continuing to rise.  Much of the risk from a hazards point of view will come from severe weather and flooding in particular.  Look at the severe floods we've had so far this year.  Colorado being only the latest example.  If we are going to get the Federal budget under control one of the steps in that direction would be not to subsidize other's risky behaviors.  I hope the legislation that passed included not insuring properties with repetitive losses from flooding.  

 

You know that it is extremely expensive to insure potential losses from land movement (landslides).  There is no government subsidy and therefore people have to pay a market rate.  What this generally means is that they forgo the insurance because of the cost and "take the risk" with the view they desire so much--since these properties are usually on hillsides.   

 

Knowing how things normally work--I'm betting that the insurance premium can gets kicked down the road on implementation of the new rates.  The Piper will be told to put away his instrument until a future day when a budget crisis drives reform.

 

 

 

 

 

Eric Holdeman is a contributing writer for Emergency Management magazine and is the former director of the King County, Wash., Office of Emergency Management.
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