• Federal Flood Insurance Links

    On Saturday afternoon August 27, I wrote this overview of the National Flood Insurance Program. A few round up links that I will add to this post as I see them:

    • Suzy Khimm asking whether the federal government should subsidize building in flood prone areas
    • Matt Yglesias noting that the hatred of federal spending seems to miss subsidies such as the NFIP that subsidize living in flood prone areas
    • The Raleigh (N.C.) News and Observer noting that six breaches/inlets have been cut between the proposed new bridge I discussed in this post and Frisco, N.C. on Hatteras Island which makes the new bridge a candidate for “bridge to nowhere” if Hatteras Island and NC 12 cannot be stabilized
    • The Bipartisan Policy Center (Domenici/Rivlin) deficit reduction plan (p. 115) included a proposal to eliminate the subsidy for flood insurance provided to dwellings built prior to the flood risk assessments done by the Army Corps of Engineers in the early 1970s. Premiums for structures built since then are supposed to be set at a level to recoup the expected value of future loses (though there are some problems here that need to be addressed that prevent this from happening; for example, premium increases are capped at 10% annually). Ending this “grandfathered subsidy” would save the following cumulative amounts through the years noted according to Domenici/Rivlin:
    • Kevin Drum focuses on the market failure aspect of federal flood insurance.
    • Patrick Appel in the Daily Dish links to the debate and provides some reader comments that note exasperation with knee-jerk rejection of federal flood insurance subsidy
    • Felix Salmon wants premiums in the NFIP to reflect the true cost of losses
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    • Not only should we not subsidize building in flood prone areas, we should slowly raise premiums until they cover the true costs of insurance plus the costs of rescue and clean up after a disaster.