Congress must be generous in helping to repair the damage, to lives and to property, from Hurricane Harvey. The full extent of the destruction may not be known for a long time but is evidently catastrophic, just as the damage wrought by Katrina and Sandy was. Even as they demonstrate that they have a heart, lawmakers must also show that they have some brains. Specifically, the United States is long overdue for smart reforms to one of the major government institutions designed to help people cope with the risk of natural disaster: the National Flood Insurance Program.
Now almost half a century old, the NFIP grew out of what was, at the time, a basic reality of the insurance business: Flooding risks were actuarially imponderable, so insuring against them was uneconomic for the private sector. To fill the gap, the federal government offered coverage on two conditions: that local communities would take appropriate land-use and other measures to prevent development in risky low-lying areas; and that homeowners would pay actuarially sound premiums.
Elegant in theory, the plan gradually succumbed to real estate interests, with the result that flood insurance enabled rather than managed development along coasts and in other flood-prone areas--ultimately putting more people and property at risk. As it happens, well-to-do people benefit disproportionately from this program; they're the ones who tend to build big houses on the beach.
Coincidentally, the program is due for reauthorization on Sept. 30. Ideally, this deadline would galvanize Congress to ensure enough money is available to pay current commitments, while reforming NFIP for the future. What's needed are tougher flood-risk mitigation requirements, more realistic premiums and encouragement for private-sector involvement in the business, based on modern technology that may enable insurance companies to underwrite risks they could not have underwritten in the 1960s.
Commentary on 09/05/2017