Our Opinion: A Flood Zone Insurance Requirement May Be Necessary | Latest headlines

The National Flood Insurance Program has never covered most of the risk to coastal buildings, while encouraging overbuilding in flood zones by selling policies for too little to cover their costs. Last fall, it finally began more realistic pricing for new policyholders, and in April it began charging existing policyholders according to its “Risk Rating 2.0” system. Premium increases are limited to 18% per year.

The Federal Emergency Management Agency, which administers the NFIP, said the new rating system more accurately reflects flood risk and ensures that National Flood Insurance will last for generations. Prices now take into account the property’s distance from water and restoration costs.

FEMA said policies for most properties would increase by an average of $120 a year or more, with about 5 percent seeing increases of more than $240 a year, especially in the most flood-prone coastal areas. The national average flood insurance premium is $700 per year.

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For others, rates fell. One-fifth of New Jersey residents will pay less, according to FEMA.

The agency made the changes under pressure to stop putting taxpayers at risk of flood damage to coastal properties and to reduce its $20.5 billion debt from paying more claims than its insurance rates carried.

He told Congress that the new rating system would also get more people to sign up for coverage. This is significant because there are only 5 million national flood insurance holders, while the research firm First Street Foundation estimates that 14.6 million properties in the US are at significant risk of flooding. If more property owners at risk of flooding had insurance, prices could be reduced for everyone covered.

But a FEMA report recently obtained by the Associated Press estimates that a million fewer Americans will buy flood insurance by the end of the decade. This would be a 20% drop from current inadequate coverage levels.

A senior executive with the National Flood Insurance Program responded to the report by suggesting that the increase in policies purchased may be the result of marketing efforts, clearer flood risk messaging, price reductions and other factors. Sen. Bob Menendez, DNJ, said affordability is an issue. “This report makes crystal clear that FEMA has failed to be transparent with policyholders, Congress and ultimately the American public,” he said.

Politicians for decades have pressured FEMA to keep interest rates below the actual risk costs for their constituents near rivers, oceans and bays. It is easier to get the taxpayers as a whole to cover the deep debts of certain interest groups, especially before an election.

In the highest risk area designated by FEMA – the area where 100-year floods occur – flood insurance is required for those with government-backed mortgages and other bank loans. Applying this requirement to other flood zones would help.

But while the federal government continues to signal that it will provide massive emergency funding to flood victims after every major storm, many will choose to jump at the chance that someone else (taxpayers) will cover their costs and debts.

Flood insurance should now be a requirement in most FEMA flood zones. Those with little risk would pay little for full coverage in the event less likely damage occurs.

But even that is probably not enough, given that many buildings at risk near rising seas and river flooding are not mortgaged.

Flood insurance may be required for all buildings in certain flood zones. Those who assume the risk of flooding must pay the full amount of coverage for their share of the unavoidable damage.

This is the only acceptable way to stop the promotion of intensive redevelopment of coastal properties and the rapidly increasing liability they create for the public, mostly away from the coast. The public should be free to respond generously in times of emergency, freeing people near water from the normal responsibility of a property owner.

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