Is Out Of Date Science Running The NFIP Into The Ground?


Is Out of Date Science Running the National Flood Insurance into the Ground?

By: Adam Matheny

Here in the U.S., the National Flood Insurance Program (NFIP) covers approximately 5.2 million property owners. The NFIP has been slated for a much-overdue overhaul by the Senate. The overhauls are supposed to address the way in which the math surrounding flood risks are calculated. Until lawmakers can figure out how to fix a system that is badly broken, the system may never get the help it needs to remain solvent.

The Downward Spiral

The Federal Emergency Management Agency (FEMA) oversees the NFIP, which currently seems to be in a constant downward spiral caused in part by the significant increase in claims for which it does not have the funds to cover. In fact, following Hurricane Katrina back in 2005, the NFIP has been operating in the red and has used every dime of the $30.4 billion borrowed from the Treasury.

While President Trump issued an order forgiving $16 billion of that debt, the continuous extremes in weather including hurricanes, floods, nor’easters, and more, continue to stretch a budget that has long passed its breaking point. According to Robert Moore, a senior analyst at the National Resources Defense Council, “In its current form, the NFIP is ill-suited to deal with the challenges we face today, and the flood risks we face 5, 10, or even 50 years from now.”

The Majority Agree

The majority of agencies including insurance companies, no matter their politics, all agree that the situation is dire and that much of this could be the direct result of FEMA continuing to use flood zone data from the 1980s. The use of such dated information made it impossible for them to accurately predict the damage claims caused by the massive storm in 2012. Worse yet, despite the “common knowledge” that the floodplains have changed significantly over the past 30 plus years, development of them continues at a very rapid pace.

According to FEMA, 13 million people are currently living in “100-year-flood-zones.” Yet a far more comprehensive study showed that the number is much higher. In fact, the study shows that approximately 41 million Americans live in these areas. Looking ahead, an article published in Nature states that by the year 2050, those who live in flood zones will begin to see this type of flooding every one to five years. Starting to sound like we should all be buying more flood insurance, doesn’t it?

Its All Down To The Map

The biggest problem with the situation is that not only is FEMA using a map that is over 30 years old, but that they are also using a map that makes absolutely no provisions for the future. Yet despite the amount of data available that is far more recent than anything FEMA uses, lawmakers say they are afraid of making any changes to flood insurance standards. The reason they give is that they do not have enough information to make any decisions.

Among the suggested changes are the installation of hard flood barriers, further increasing the building code standards in flood-prone areas and take a close look at the current rules regarding buyout vs. continually paying to rebuild flood after flood.

Another Option

home, the owner is paid the “pre-storm” value of the home, the remains are cleared, and the property is allowed to return to its natural state. The problem is that not only does the homeowner have to wait for what could be years in a home that is badly damaged, they are afraid of investing in repairs out of fear it will be money the government will not reimburse them. Yet if the government continues to pay the homeowner to rebuild after each flood, the cost is likely to be far more significant. This is especially true when you multiply that figure by the number of homes damaged in this type of flooding.

By the time that FEMA has paid for damages more than a few times, they will have spent the same amount of money as it would have cost to buy the house the first time. Coupling this with having access to the very latest in data, calculations, mapping, and science would allow FEMA to make the right decisions based on current risk factors.

What Is The Future Of The NFIP?

Until changes are made, Congress may have no choice but to increase the lending capabilities of NFIP well beyond the current $30.4 billion or forgive more of the debt than Pres. Trump has already done. If Congress should try to force the Senate’s hand by letting the NFIP lapse, the result would be an instant decrease in the NFIP’s ability to borrow money to only $1 billion. In turn, this would leave millions of American homeowners unable to renew their NFIP insurance policies, which could be disastrous.

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