After Sandy, flood insurance reformers spring into action

Groups on the left and right are looking to use super-storm Sandy to advance federal flood insurance reform, groups involved in that debate told The Hill.


Changes to Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program included in a $105 billion bipartisan transportation bill signed this past summer already addressed many flood insurance concerns.

Liberals and conservatives acknowledged that while those tweaks were substantive, they did not resolve every issue with the program. Now, with Sandy bringing flood issues to the forefront, they are trying to convince both sides of the aisle that it's time to do more.

“We’ve had a very effective right-left coalition on flood insurance, and it will strengthen that existing coalition,” Eli Lehrer, president and co-founder of the R Street Institute, told The Hill.

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Under the law passed over the summer, FEMA must update its floodplain mapping, which will likely incorporate area now considered at risk because of climate change effects like rising sea levels. That will raise federal flood insurance premiums to reflect risk realities, in turn stunting migration to vulnerable regions.

Fiscal conservatives were instrumental in securing those changes, and conservative groups see Sandy as an opportunity to remove more pressure from the federal balance sheet.

Meanwhile, liberal groups want their congressional allies to advance flood insurance alterations to better recognize climate change’s role in flooding and extreme weather events.

At issue is FEMA’s role as the primary insurer for areas vulnerable to flooding.

FEMA had for years undercut the private sector to encourage development of coastal or floodplains regions. Private insurers either offered high premiums or refused to cover those areas, deeming them too risky.

With FEMA left as the main insurer for flood-prone regions, the cost of the insurance program exploded. It was nearly $18 billion in debt when the transportation bill passed in July, and that figure will likely rise when Sandy’s toll is tallied.

Conservatives might now refuse to raise the program’s $20.8 billion debt cap unless they can win key concessions.

Atop of the conservative wish list is a requirement for FEMA to purchase private sector reinsurance, Lehrer said. Ultimately, that could help accomplish conservatives’ goal of shifting the program away from taxpayers and onto the private sector, he said.

Lehrer said he plans to push that idea with congressional Republicans, along with a tweak that would force FEMA to raise premiums faster than called for in the bill signed by President Obama in July.

The National Wildlife Federation and Ceres, a business sustainability group that works closely with industry, told The Hill they would escalate their flood insurance advocacy with a focus on congressional Democrats in the next Congress.

Specifically, they want FEMA to tighten standards for disaster payments to states. They say FEMA should not pay out if state hazard plans fail to account for climate change.

FEMA also should put more East Coast, Gulf of Mexico and Pacific Coast lands under a law that bars the agency from insuring areas consistently subjected to large storms, John Kostyack, executive director of wildlife conservation with the National Wildlife Federation, told The Hill.

“We as a society should decide which places we want to subsidize development in, and it makes no sense to be subsidize development in places where you put people at risk and where it is extremely valuable for wildlife,” Kostyack said.

Josh Saks, legislative director with the National Wildlife Federation, said the group will also emphasize deflecting attempts to get FEMA to bail out state flood insurance programs. He said some lawmakers already have introduced bills to that effect.

Other changes, such as using flood program dollars to incentivize stronger state building codes and encourage better land use, could help more areas withstand flooding and other extreme weather events, Frank Nutter, president of the Reinsurance Association of America, said in a Friday media call.

Steve Ellis, vice president for Taxpayers with Common Sense, said a provision stripped from the transportation bill at the last minute could work its way back into reform discussions.

That measure would require people who live in a floodplain with 1 percent chance of flooding each year to purchase flood protection from FEMA. He said Sandy's aftermath could revive efforts for such legislation.

Coastal Democrats, such as Sens. Jack Reed (Conn.) and Sheldon Whitehouse (R.I.), have been champions of such reform, Cynthia McHale, director of Ceres’ insurance program, told The Hill.

McHale said framing flood insurance reform around climate change has been politically divisive. She said, however, some more moderate Republicans might be open to that message when election-season rhetoric dissipates because of the potential federal debt relief.

“Ultimately, there is a huge taxpayer liability here. These are federal programs that are insolvent,” McHale said. “If we don’t take action now on resiliency, someone going to have to pick up the tab for that — and it’s going to be bigger.”