To protect property owners and taxpayers, fix federal flood insurance

Without changes, the flood insurance program will collapse, and property owners will be on their own.

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Flooding conditions along the Fox River on the south end of Fox Lake as seen from the air in 2013.

Flooding conditions along the Fox River on the south end of Fox Lake as seen from the air in 2013.

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Owners of flooding-prone property need insurance reform before their finances are someday left high and dry.

More than 400,000 Illinois homes are at risk of flooding, and many of the owners rely on federal flood insurance if they want to rebuild after water damages or destroys their property.

But the existing federal flood insurance program is insolvent to the tune of more than $20.5 billion, a figure that will grow as ever-stronger and more frequent storms hit the state, even with a new Federal Emergency Management Agency program designed to more fairly spread premiums.

Annual flooding costs across the nation could increase 26% by 2050. Without changes, the end game is pretty clear. At some point, the flood insurance program will collapse, and property owners will be on their own.

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The Metropolitan Water Reclamation District buys flood prone properties every year to prevent the cycle of constant rebuilding and to restore natural habitat. But that takes care of only a few properties each year.

To make a big difference across Illinois and the nation, Congress should give careful consideration to the Protecting Families and the Solvency of the National Flood Insurance Program Act of 2022, introduced by U.S. Reps. Sean Casten, D-Ill., and Earl Blumenauer, D-Ore., which Casten says has bipartisan support.

The bill would focus the government’s efforts on buying properties repeatedly damaged or destroyed by floods and relocating the residents elsewhere in the community. That way, taxpayers don’t have to pay to repair or rebuild the same properties time and again.

Taxpayers also are exposed to billions of dollars of additionally liability because tens of thousands of homeowners with flood-prone property and with federally backed mortgage insurance don’t carry flood insurance on their homes, a federal study found early this year.

Flood insurance is hard to get right. Private insurance companies have never figured out how to set up a risk pool that can share expenses at an affordable price. Government hasn’t been able to offer flood insurance without large taxpayer subsidies.

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That’s because “flooding is the only expense that is neither rare nor unpredictable,” Casten told us.

Even when it works, the National Flood Insurance Protection program can take years to navigate, and its co-pay provision can make rebuilding too expensive for low-income property owners. Relocating people quickly would make many of their lives easier.

Often, people are reluctant to move after their homes are destroyed by flooding. They may like living along a river. They may have built up sentimental attachment to their homes over the years.

But rebuilding in the same place again and again, partly at taxpayer expense, is not sustainable. It’s better to turn the land back over to nature, which can provide a buffer against flooding for an entire community.

After a half-century, federal flood insurance hasn’t proved to be actuarially sound. It’s time to put up the sandbags against a flood of future losses.

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