Since President Donald Trump last signed a short-term extension to the National Flood Insurance Program, Americans have faced an unprecedented hurricane, fresh warnings from U.N. scientists over rising sea levels and confirmation that the past year was the country’s wettest on record.
Congress is expected to hand him a thirteenth 60-day extension of the program when the current one expires at the end of September. But significant reforms will be an uphill battle.
The flood insurance program has been plagued for years by outdated maps of at-risk flood zones and billions of dollars in accumulating debt, compounded by rising sea levels and increasingly powerful storms strengthened by warming oceans.
Some of those maps have not been updated for over 40 years and fail to alert homeowners to the true risks their properties face as climate change heightens threats to floodplains.
The result is that insurance premiums fail to reflect the true risks to properties, David Maurstad, chief executive of the National Flood Insurance Program, said.
He is encouraging homeowners to purchase flood insurance regardless of the locations of their properties on aging government maps.
“We’ve been working to make sure people understand right now that not enough people have the flood insurance they need – not only after big events like Dorian,” Maurstad told McClatchy, referring to the strongest major Atlantic hurricane to form so far this season.
“Too many people are in denial about their flood risk,” Maurstad said. “We need to continue to work hard to gain the trust of the American public, that the program is there to work for them.”
Maurstad said that the Federal Emergency Management Agency, which manages the program, has an “obligation” to communicate threats from a changing climate in its messaging on flood insurance.
But the program’s debt continues to grow for a variety of reasons. Primarily, experts say, premium rates are no longer “actuarially sound” and have become increasingly disconnected from growing flood risks. Hurricanes are incurring more costly damage on the nation’s major coastal cities. And to the consternation of FEMA, fewer people are buying insurance despite a rise in flooding events year after year.
Lawmakers remain at an impasse over how to proceed.
Divisions persist in Congress between representatives from at-risk areas – especially those along the coasts – seeking to cap premium increases on their constituents and allow continued construction in floodplains, and those from lower-risk regions opposed to subsidizing a seemingly broken government system.
Expectations are low that Congress will proceed with meaningful reform ahead of the September 30 deadline.
“Reauthorization of the program by Congress goes a long way,” said Maurstad. “We continue to think that a multi-year reauthorization is what the program needs.”
Several members of Congress, including Senate Minority Leader Chuck Schumer of New York, are expressing concern the program may lapse at the end of the month. In August, Schumer warned that a FEMA plan designed by the Trump administration to restructure premiums based on evolving risks would devastate local communities.
“After (Hurricane) Sandy, we learned we’re as vulnerable as anyone else. Unfortunately, when it comes to protecting our homes, there are crosscurrents in Washington,” Schumer said at an event in Long Island.
Schumer and other coastal members of Congress – ranging from Republican Sens. Bill Cassidy of Louisiana and Marco Rubio of Florida to Democratic Sens. Elizabeth Warren of Massachusetts and Cory Booker of New Jersey – are proposing a five-year reauthorization for the NFIP that would cap premium increases at 9 percent.
But a competing approach from a bipartisan group in the House, led by the top Democrat and Republican members on the House Financial Services Committee, would allow FEMA to increase premium rates to actuarially sound levels based on the risk associated with the locations of individual properties – a reform supported by the Trump administration. That bill unanimously passed through the financial services committee earlier this summer.
“The best way to understand the flood risk – a good signal, anyway – is what the insurance cost would be,” said Maurstad, explaining FEMA’s strategic thinking behind the agency’s rollout of its new pricing strategy, Risk Rating 2.0, that would use private sector data to shape updated flood risk models.
“Really, the issue is that we’ve had a program in place for 50 years now, and it’s reasonable to think that we’re going to learn things over those 50 years,” Maurstad continued. “Technology is going to change.”
FEMA has the ability to implement the new risk-based strategy under current authority without additional action from Congress, and plans to detail the new policy on April 1, 2020.
But Congress could increase flood insurance rates through legislation – or cap them, as Schumer has proposed.
While there are substantive policy disagreements thwarting a long-term reauthorization of the NFIP, Sen. Tim Scott, R-S.C., also said that action has been stymied because of lack of support from members of Congress of lower-risk states.
“The fact that we don’t have a long-term solution, or resolution, to flood insurance should not be surprising to anyone, when half the policies in the program come from Louisiana, South Carolina and Florida,” said Scott, who comes from coastal South Carolina that is especially vulnerable to flooding. “It tells you the difficulty of the uphill struggle for flood insurance to have traction everywhere in the nation.”
While FEMA officials caution residents that flooding can occur anywhere and from various sources – including in the Midwest, which experienced historic flooding this year – hurricanes put a spotlight on the NFIP crisis for coastal states. In South Carolina, North Carolina and Georgia, for example, where Dorian threatened to buzzsaw oceanside communities, only a fourth of all coastal homes are insured, amounting to $99 billion in property value.
Scott also described federal disaster relief funding as a double-edged sword: it’s crucial for flood-damaged states, but the government’s swift response to storms has also disincentivized people from purchasing flood insurance.
Adding to the intraparty, regional divides, there are philosophical objections among hardline Republicans to the very concept of the federal government administering disaster insurance.
Lawmakers also have become complacent because they know approval of a short-term extension is likely each time a deadline nears. They see little need to devote limited time and resources to a fight over how to reform a complicated, arcane program.
Asked what he thought Congress can do regarding NFIP at bare minimum, Scott replied simply: Another reauthorization.
But Maurstad characterized short-term extensions as “disruptive” to the program, to the market and to the insured.
“We’ve seen this movie before where Congress has kicked the can down the road,” said Shana Udvardy, a climate resilience analyst with the Union of Concerned Scientists. “I think we will definitely see an extension – I don’t think there’s any appetite to see the program lapse.”
Emma Dumain contributed to this report.