We still struggle with learning the lessons about equity in all disaster policy. Who should bear the costs of preparing for a disaster and rebuilding after it, and how? Should only people directly in harm’s way pay, and should payment be different for low-income folks?
These questions are at the core of the Homeowner Flood Insurance Affordability Act of 2013, currently being considered in both the U.S. House and Senate. This bipartisan bill intends to delay many of the provisions of last year’s Biggert-Waters Flood Insurance Reform Act, which restructured the FEMA National Flood Insurance Program (NFIP) by reducing subsidies provided to some of the program’s policyholders who had not been charged premiums based on the actual risks that their homes face.
As flood hazard boundaries along coasts and waterways shift, these risks are significantly increasing. One of the motivations behind the original bill, then, was to simply make the NFIP program financially solvent. In the wake of Superstorm Sandy, the NFIP is $24 billion in the red.
By effectively swallowing the costs from the actual risk of being prone to flood damage, the NFIP has also been criticized since its 1968 launch for incentivizing development and growth of communities on environmentally precarious land. Removing those incentives and potentially increasing the adaptability and resilience of these areas was another key motivation of the 2012 Biggert-Waters Act.
Unfortunately, affordability and equity were not central to the Act’s thinking. The skyrocketing premiums for flood insurance policyholders are more than many of them can bear. As a consequence, there is bipartisan support for a four-year delay in order to have FEMA perform more intensive affordability studies and refine the law’s administration.
But many of the potential benefits of the original bill will also be delayed, including reducing NFIP’s debt burden. What would happen to those coffers if another major disaster should strike within those four years?
The current bill is one way to introduce affordability into this piece of our national disaster mitigation framework, but there are other ways that don’t involve pushing back the provisions. For example, colleagues at the Wharton Center for Risk Management and Decision Processes have proposed a means-tested voucher and low-interest loan program to help lower- and middle-income households cover the costs of insurance while physically improving their homes’ construction.
Feasible responses to questions of affordability and equity that increase our disaster mitigation capacity will always be better than the more costly, inefficient, and chaotic efforts of disaster relief and recovery. Let’s look at the choices before us and learn a few more lessons.