Lawmakers try to determine best path forward for debt-ridden National Flood Insurance Program

Lawmakers try to determine best path forward for debt-ridden National Flood Insurance Program
Source: WAFB
Source: WAFB
Source: WAFB
Source: WAFB

BATON ROUGE, LA (WAFB) - The fate of a nationally-funded program that played a role South Louisiana's recovery after the flood is in limbo, resting in the hands of those on Capitol
Hill in Washington, D.C.

After the August 2016 flood, more than 29,000 people filed flood insurance claims through the National Flood Insurance Program (NFIP). So far the program has paid out more than $2.4 billion dollars.

Created by Congress in 1968, the NFIP has helped keep Louisiana afloat. Over just the past four decades, the Bayou State has collected more in losses than the next three states combined, according to Louisiana's Insurance Commissioner Jim Donelon.

In Louisiana, trouble often is waiting just around the corner. The past year-and-a-half was no exception.

"In the last 18 months, 56 of our 64 parishes have been declared disaster parishes," Donelon said.

However, the program now stands at a crossroads. It runs out of funding on Sept. 30. If Congress does not act, it will go away.

"It will tank our entire economy, we'll be in a depression so fast," said Sen. John Kennedy, noting that losing the NFIP would have a devastating effect on
property values.

Yet most agree that just maintaining the status quo is not enough. When asked if the program was sustainable, Donelon said simply, "If you can print money, yes."

Donelon said thanks in part to the high costs of Hurricane Katrina and Superstorm Sandy, the NFIP is currently $25 billion in debt.

Louisiana's two senators have each filed their own bills renewing and reforming the program. Both put greater focus on flood mitigation.

"If we can actually prevent the flood, there's a lot of money that's saved on the back end helping people recover," Sen. Bill Cassidy said.

Some NFIP critics say mitigation alone is not enough, however.

"It's clear that we're falling short in actually making people safer," said Rob Moore, a senior analyst with the Natural Resources Defense Council.

Moore said he believes the NFIP should be redesigned to make it easier to buy out properties rather than continuing to spend taxpayer dollars fixing them. He authored this report, outlining how that plan could be more cost-effective.

Just recently, an article in The Washington Post highlighted a home in Pointe Coupee that has flooded 40 times. While the house is valued at just $55,921, the NFIP has doled out nearly $428,379 to cover flood claims. 

As the story notes, while the extreme "severe repetitive loss properties" are only a fraction of the NFIP's 5 million policies nationwide, they account for
about 30 percent of the program's claims.

"The way the program is currently structured is financially unsound, it leaves people in harm's way that would prefer to move somewhere safer," Moore said.

Donelon points out, some of the highest risk areas of Louisiana cannot afford to be bought out.

"We're still going to have a need for people to be living in our working coast area, that provides so many important aspects of our nation's economy," he said.

There are plenty of other ideas on the table for how to reform the program, including opening the door to more private insurers. Cassidy's plan accounts for
those private companies.

Kennedy said he is fine with letting private insurers into the mix, so long as they do not cherry pick just the lowest risk properties, leaving the federal
program to care for all the costly homes.

Overall, the hope is to keep costs down and get more people to buy in, all in preparation for the next storm.

"It may only happen one time in a thousand years or 500 years but it only takes one time," said Kennedy, noting that he believes flood insurance is as important as homeowner's insurance.

Copyright 2017 WAFB. All rights reserved.