Let flood insurance rates increase, group says

Malia Rulon Herman in USA Today: Delaying premium rate hikes on National Flood Insurance Program policies would put the program on unstable financial ground, a coalition of insurance and tax policy experts said Wednesday. Democratic Sen. Robert Menendez of New Jersey and more than two dozen other Democratic and Republican senators are pushing legislation that would delay the premium increases for four years, until Congress is able to make sure the rate increases are affordable.

Menendez said at a news conference Tuesday some people could lose their homes over the rate increases or could find themselves unable to find buyers if they want to sell. The bill to delay the premium increases was expected to come up for a Senate vote next week.

Members of SmarterSafer.org, a group dedicated to reforming federal disaster policy, offered a different view. They referred to a report out this week from the Congressional Budget Office that says delaying the rate hikes would cost $900 million over five years and would cause the National Flood Insurance Program to lose $2.1 billion over 10 years.

Those losses will cut into the program's bottom line and could force it to bump up against its borrowing cap of $30.4 billion, said Steve Ellis, vice pre
sident of the nonpartisan watchdog group Taxpayers for Common Sense. "Basically, this bill will make the flood insurance program operate on a hand-it-out-when-needed basis," Ellis said.

R.J. Lehmann, a senior fellow at the R Street Institute, said only 9% of homes with subsidized flood insurance rates are owned by people in the bottom 30% of income-earners. Most of the homeowners are in the top income brackets, he said. "So delaying the rate increases... does include subsidizing wealthier homeowners at the expense of taxpayers," he said....

Hurricane Sandy flooding on Avenue C in Manhattan, shot by David Shankbone, Wikimedia Commons, under the Creative Commons Attribution 3.0 Unported license